2023 (6) TMI 1413 - AT - Income Tax

Additions made under the head unaccounted cash found and under the head unaccounted stock found during the course of survey and disallowance u/s 80C - CIT(A) deleted addition - HELD THAT - From the perusal of the order of Ld. CIT(A), it is noted that he has placed reliance on confirmation letters and income-tax returns of the tenants in respect of which it was claimed that their stock was also lying at the business premises where the survey was conducted in order to explain the discrepancy found in the stock in the course of survey. Similarly, in respect of cash found during the survey, the cash book was furnished before the ld. CIT(A). Also, the documentary evidence for the premium paid to claim deduction u/s. 80 C was presented before the Ld. CIT(A). In the interest of justice and fair play, Ld. CIT(A) ought to have given a reasonable opportunity of being heard to the ld. AO so as to examine and verify these documents and records and obtain a remand report before disposing of the appeal by giving relief to the assessee. Addition towards difference in the total credit entry in the bank account and the gross sales as reported by the assessee in the P L Account which is on account of VAT/ GST collection - HELD THAT - From the perusal of the order of Ld. CIT(A), we note that assessee has elaborately explained his case by explaining the methodology of accounting adopted in respect of sales and VAT in his books of account. CIT(A) has given his finding after considering the submissions made by the assessee and allowed the relief. Cognizance of section 145 r.w.s.145A(ii) and relevant ICDS IV for revenue recognition has not been taken into consideration which have become applicable from AY 2017 -18, the year under consideration before us i.e. AY 2017-18. Therefore, in the interest of justice and fair play, finding force in the submissions made by Sr. DR, we remit the matter back to the file of Ld. CIT(A) to adjudicate afresh on this issue by taking into consideration the provisions of section 145 read with section 145A(ii) and relevant ICDS IV. Appeal of the revenue is allowed for statistical purposes.

Summary

Issues:
1. Addition of unaccounted cash and stock during survey, and disallowance of deduction under section 80C.
2. Addition of unexplained cash credit due to difference in bank account entries and gross sales.
3. Admissibility of fresh evidence without providing opportunity to Assessing Officer.
4. Compliance with Income Computation and Disclosure Standard (ICDS) in revenue recognition.

Analysis:

Issue 1:
The Revenue challenged the CIT(A)'s deletion of additions made under unaccounted cash and stock found during a survey, and disallowance of deduction under section 80C. The CIT(A) allowed the claims based on the documents produced by the assessee during the appeal, including books of account and confirmation letters. However, the Tribunal found that the CIT(A) should have given an opportunity to the Assessing Officer to examine these documents before making a decision. The matter was remitted back to the CIT(A) for fresh adjudication after providing a reasonable opportunity to both parties.

Issue 2:
The Revenue contested the deletion of an addition made by the Assessing Officer towards unexplained cash credit, attributed to the difference in bank account entries and gross sales. The CIT(A) accepted the assessee's explanation that the difference was due to VAT/GST collection. However, the Tribunal noted that the CIT(A) did not consider the Income Computation and Disclosure Standard (ICDS) requirements for revenue recognition. The matter was remitted back to the CIT(A) for reconsideration in light of the relevant provisions.

Issue 3:
The Revenue raised a concern about the admissibility of fresh evidence without providing an opportunity to the Assessing Officer to examine it, as required by Rule 46A of the Income-tax Rules, 1962. The Tribunal found merit in this argument and remitted the issue back to the CIT(A) for proper consideration after allowing both parties a reasonable opportunity to present their case.

Issue 4:
The Revenue argued that the CIT(A) did not consider the provisions of section 145 and 145A(ii) along with ICDS IV for revenue recognition. The Tribunal agreed and remitted the matter back to the CIT(A) for a fresh adjudication, directing both parties to have a fair opportunity to present their arguments. The decision was made in the interest of justice and compliance with the applicable standards.

In conclusion, the Tribunal allowed the Revenue's appeal for statistical purposes, remitting all the issues back to the CIT(A) for reconsideration while emphasizing the importance of providing a fair opportunity to both parties and ensuring compliance with relevant legal provisions.