2023 (12) TMI 627 - AT - Income Tax

Addition u/s. 69B r.w.s. 115BBE - difference of value of stock of Gold and Silver - assessee has not shown the correct figures of opening and closing stock and suppressed the figure in audited balance sheet or auditor has failed to do audit correctly and truly - HELD THAT - AO ought to have considered the data filed by the assessee before GST Authorities namely the monthly return in Form 3B and Annual return in Form 9 and 9C. As claimed that the AO failed to appreciate that the valuation of the stock has a cascading effect, the assessee will get higher value on carry forward of stock as opening stock in the succeeding year. Thus, it is claimed that the addition made by the A.O.is against the provisions of law. As observed that the tax-audit report filed by the assessee does not carry the details of purchases as well sale of Gold and Silver. The assessee was asked by the authorities below to file revised tax-audit report, but the assessee failed to file the same. The purpose and purport of tax- audit report is to assist the authorities to compute correct tax liabilities in framing assessment. The tax-audit report is certified by qualified Chartered Accountant, and if any discrepancies are found in the tax-audit report, it is incumbent on the assessee to obtain and file Revised Tax-Audit Report. AO also asked assessee to file documents for preceding years, which the assessee did not file. We have observed that the assessee has filed voluminous paper book containing 688 pages, and the claim made by the assessee requires verification by the authorities below. Thus, it will be appropriate, if the matter is restored to the file of the AO for consideration of the claim of the assessee afresh and frame denovo assessment. The assessee is directed to co-operate with AO and file all necessary and relevant details called for by the AO during set aside/remand assessment proceedings - AO shall give proper opportunity of being heard to the assessee in accordance with principles of natural justice in accordance with law. Estimating profit @ 0.15% being the difference of STR report and turnover wherein the STR report was not provided to the assessee - We deem it fit to set aside the matter back to the file of the Assessing Officer with a direction to pass fresh assessment order by giving adequate opportunity to the assessee to explain its case. Needless to say, the assessee should cooperate with the Ld. A.O. in completing the fresh assessment.

Summary

Issues Involved:
The issues involved in the judgment are related to the correctness of the additions made by the Assessing Officer under section 69B of the Income Tax Act, 1961 and the estimation of profit based on certain discrepancies in the audit report and turnover figures.

Assessment Year 2018-19:
The appeal was filed by the Assessee against the appellate order passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, arising from the assessment order under section 143(3) of the Income Tax Act for the Assessment Year 2018-19.

Discrepancies in Stock Valuation:
During scrutiny assessment, it was found that the Assessee had discrepancies in the valuation of Gold and Silver stock, leading to the addition of Rs. 79,62,20,983 under section 69B r.w.s. 15BBE of the Act. The Assessing Officer highlighted errors in the audited balance sheet and discrepancies in turnover figures reported in the STR report.

Appeal Dismissed by NFAC:
The Assessee's appeal before the Ld. NFAC was dismissed as the submissions failed to provide concrete evidence to refute the discrepancies highlighted in the audit report. The NFAC emphasized the importance of the accuracy of audit reports in Form 3CD and the need for corroborating evidence to challenge the findings.

Grounds of Appeal:
The Assessee raised grounds of appeal against the order passed by the Ld. CIT (A), challenging the additions made by the Assessing Officer under section 69B and the estimation of profit. The Assessee sought reconsideration and modification of the grounds of appeal.

Contentions and Submissions:
The Assessee's counsel submitted a detailed Paper Book containing relevant documents to support the claim that errors in the audit report were inadvertent and clerical in nature. The Assessee requested a reconsideration of the matter by the Assessing Officer based on the correct valuation of stock and other supporting documents.

Judgment and Directions:
After careful consideration, the Tribunal found merit in the Assessee's contentions regarding the errors in the audit report and the need for a fresh assessment. The Tribunal directed the matter to be restored to the file of the Assessing Officer for a denovo assessment, emphasizing the importance of cooperation from the Assessee and the need for a fair opportunity to present their case.

Conclusion:
The appeal filed by the Assessee was allowed for statistical purposes, and the matter was remanded back to the Assessing Officer for a fresh assessment, with specific directions to consider the Assessee's claims and provide a fair opportunity for explanation and cooperation.