2022 (5) TMI 358 - AT - Income Tax

Disallowance of purchase expenses claimed - HELD THAT - We observe that though the Assessee submitted the relevant missing bills before the Assessing Officer on 23.11.2017, however, the AO failed to consider properly and in hurried manner without affording reasonable opportunity to explain the documents submitted by the Assessee, passed the order on 29.11.2017. Hence, considering the peculiar facts and circumstances, as the Assessee did not get proper opportunity of being heard and/or to explain the queries and documents submitted before the authorities below, hence without going into the merits of the case, we deem it appropriate to remand the case to the file of the Assessing Officer for just decision of the case. Consequently, the case is remanded to the file of the Assessing Officer to re-examine the facts and documents qua addition of Rs. 35,42,719/- only and to pass an order afresh, suffice to say by affording reasonable opportunity of being heard to the Assessee. Appeal filed by the Assessee stands allowed for statistical purposes.

Summary

Issues involved:
1. Disallowance of purchase expenses by the Assessing Officer.
2. Violation of principles of natural justice by the Assessing Officer.

Detailed Analysis:
1. Disallowance of purchase expenses:
The Assessee filed an appeal against the order passed by the Commissioner of Income tax affirming the disallowance of Rs. 35,42,719 out of purchase expenses claimed. The Assessing Officer made the disallowance after finding discrepancies in certain bills provided by the Assessee. The bills were suspected to be recently manufactured, with missing TIN numbers and altered dates. The Assessee challenged the addition before the Commissioner, arguing that payments were made through bank accounts and the bills were genuine. The Assessee contended that no TIN was required for suppliers of sand and suggested that the Assessing Officer could have sought further evidence to verify the bills' authenticity. However, the Commissioner upheld the disallowance, noting discrepancies in the bills and the unusual situation where payments were made before bills were raised. The Assessee then appealed the decision.

2. Violation of principles of natural justice:
During the appeal hearing, the Assessee emphasized that the Assessing Officer did not afford a proper opportunity to explain the discrepancies in the bills submitted. The Assessee provided missing bills on a test check basis, but the Assessing Officer hastily disallowed the expenses without due consideration of the documents. The Assessee argued that the Assessing Officer violated the principles of natural justice by not allowing a fair opportunity to address the discrepancies and rushed the assessment order. In light of these arguments, the Tribunal decided to remand the case back to the Assessing Officer for a re-examination of the facts and documents related to the disallowed expenses. The Tribunal emphasized the importance of affording the Assessee a reasonable opportunity to be heard and explain the documents submitted. As a result, the appeal filed by the Assessee was allowed for statistical purposes, and the case was remanded for a fresh decision by the Assessing Officer.