2022 (2) TMI 1137 - AT - Income Tax

Completion of assessment u/s 144 - HELD THAT - CIT(A) has concluded that assessment order has actually been passed under section 143(3) and not under section 144 which appears to be an inadvertent typographical error. Hence, this ground need not be adjudicated upon. Addition on account of alleged excess proprietary capital - addition on account of alleged bogus sundry creditors - assessee submitted that an opportunity may be granted to him to produce details, evidence etc. which the Ld. AO and the Ld. CIT(A) have alleged that the assessee has not produced before them - HELD THAT - In the interest of justice, we are of the opinion that the assessee deserves to be given one last opportunity to present his case before the Ld. AO. We, therefore, remit the above two issues involved in this appeal to the file of the Ld. AO for framing the assessment afresh in the light of the details/information/documents already on record and which he may require the assessee to furnish during the course of fresh assessment proceedings before him. Undisclosed profit on suppressed turnover - HELD THAT - CIT(A) has recomputed the amount of suppressed turnover and net profit rate to be applied thereon based on the audited balance sheet and accordingly granted part relief of ₹ 1,90,360/- to the assessee. We do not find any reason to interfere with the finding of the Ld. CIT(A) and therefore confirm the Ld. CIT(A)'s order on this issue.

Summary

Issues:
1. Assessment completed under section 144
2. Addition of excess proprietary capital
3. Addition of bogus sundry creditors
4. Addition of undisclosed profit on suppressed turnover

Assessment completed under section 144:
The appellant contested the assessment under section 144, claiming it was bad in law. The AO initiated proceedings under section 147/148 based on a differential amount in sales and TDS. The appellant argued that the original return filed should be considered in response to the notice under section 148. The CIT(A) clarified that the assessment was completed under section 143(3), not section 144, and made the impugned additions.

Addition of excess proprietary capital:
The AO added ?7,03,898 due to the difference in proprietary capital declared by the appellant. The CIT(A) upheld this addition as the appellant failed to provide evidence justifying the capital amount shown in the balance sheet. The appellant could not explain the opening capital amount, leading to the confirmation of the addition.

Addition of bogus sundry creditors:
The AO added ?56,40,341 concerning sundry creditors as the appellant did not provide any details or confirmations during assessment proceedings. The CIT(A) confirmed this addition, noting the lack of evidence or confirmations presented by the appellant.

Addition of undisclosed profit on suppressed turnover:
The AO calculated undisclosed profit based on the difference in sales shown by the appellant and Form 26AS. The CIT(A) recomputed the suppressed turnover and net profit rate based on the audited balance sheet, granting partial relief of ?1,90,360 to the appellant. The Tribunal confirmed the CIT(A)'s order on this issue.

The Tribunal granted the appellant an opportunity to produce details before the AO for issues related to excess proprietary capital and bogus sundry creditors. The Tribunal partly allowed the appeal, remitting the mentioned issues back to the AO for fresh assessment based on existing and additional information.