2022 (5) TMI 1126 - AT - Income Tax

Net profit estimation - CIT(A) re-computing the net profit of the assessee - AO in the absence of books of account and documents and required verification etc. re-computed the net profits of the assessee against nil income by disallowing the deduction claimed by the assessee u/s. 80IC - HELD THAT - We find that the Tribunal in the bunch of appeals with lead case DCIT vs M/s. Parasnath Coke Industries 2022 (3) TMI 1375 - ITAT KOLKATA has restored the matters for de novo assessment. Thus facts and issues involved in the captioned appeals being identical to the aforesaid case and as also requested by both the ld. representatives of the parties, the matter in these appeals is also restored to the file of the AO for de novo assessment in each case.

Summary

Issues:
Appeal against orders of CIT(A) - Recomputation of net profit, Allowance of expenses, Failure to prove business activities, Acceptance of Cash Book, Violation of Rule 46A of Income Tax Rules, Restoration for de novo assessment.

Analysis:
The Appellate Tribunal, Kolkata, heard nine appeals by the Revenue against separate orders of the Commissioner of Income Tax (Appeals) - 12, Kolkata, all dated 19.02.2019. The appeals were related to the re-computation of net profit, allowance of expenses, failure to prove business activities, and acceptance of a Cash Book by the CIT(A). The Revenue contended that the CIT(A) erred in giving relief to the assessee based on assumptions and presumptions without proper appreciation of facts and evidence. The Tribunal noted that in similar cases, matters were restored for de novo assessment. The Assessing Officer re-computed the net profits due to the absence of books of accounts and supporting documents as the factory was sealed. The CIT(A) called for a remand report, but it lacked detailed information due to time constraints. The CIT(A) then decided the issues and computed the net profit. Both the Revenue and the assessee requested restoration for de novo assessment, which was granted by setting aside the CIT(A) orders.

The Tribunal observed that the facts and issues in the appeals were identical to another case, "DCIT vs M/s. Parasnath Coke Industries," where matters were also restored for de novo assessment. The Tribunal agreed with the submissions of both parties and set aside the CIT(A) orders, restoring the cases to the Assessing Officer for fresh assessment. The appeals of the assessees were treated as allowed for statistical purposes. The Tribunal emphasized the need for a thorough probe due to substantial revenue involved and the complexity of the cases. The matter was directed to be re-examined by the Assessing Officer to ensure a comprehensive assessment based on complete and verified information.

In conclusion, the Tribunal's decision focused on the necessity for a detailed assessment based on complete records and evidence. The restoration for de novo assessment was deemed appropriate to address the issues raised by the Revenue and the assessee regarding the computation of net profit, allowance of expenses, and the acceptance of the Cash Book. The Tribunal's order aimed to ensure a fair and accurate assessment process in line with the provisions of the Income Tax Act and Rules.