2024 (4) TMI 489 - AT - Income Tax

Exparte order passed - Addition u/s 69A - party-wise scrap sales have not been co-related with the bank statements and the sales are all in one handwriting, which have been fabricated by the assessee to prove the source of cash deposits - HELD THAT - We have gone through the bank statements and also few sample sales bills and vouchers, all the transactions are less than Rs. 25,000/-. Further the assessee filed the Return of Income for the previous Asst. Year 2010-11 as well as subsequent assessment years invoking provisions of section 44AB of the Act. In the assessment order passed u/s. 147 r.w.s. 144B of the Act dated 21.03.2023 for the Asst. Year 2017-18, the AO called for information u/s. 133(6) and verified the cash deposit in Industrial Sind Bank and Bank of Baroda. Further the assessee filed the Return of Income u/s. 44AD of the Act showing 8% profit, whereas the assessee offered income at 10.19% to be the profit on the scrap sales, which was accepted by the Assessing Officer and passed a Nil demand. Thus in our considered opinion, the Ld. CIT(A) is not correct in confirming the entire addition made by the Assessing Officer which was also an exparte assessment order. Even in the present assessment year, the assessee offered 8.35% on the sales turnover, which is well above 8% as prescribed u/s. 44AD of the Act. Therefore we have not hesitation in deleting the addition made by the Assessing Officer. Decided in favour of assessee.

Summary

Issues Involved:
The appeal against the appellate order confirming addition under section 69 of the Income Tax Act, 1961 for the Assessment Year 2011-12.

Summary:
The appeal was filed due to a delay of 8 days, which was condoned upon explanation by the Assessee. The case involved cash deposits made by the Assessee in the business of buying and selling scraps. The Assessing Officer treated the cash deposits as unexplained income under section 69 of the Act, leading to an exparte assessment order.

The Assessee filed an appeal before the Commissioner of Income Tax (Appeals) providing detailed explanations, but the addition was confirmed based on discrepancies in the sales records. The Assessee then appealed to the Appellate Tribunal raising multiple grounds challenging the addition made under section 69 of the Act.

During the proceedings, the Assessee presented documents and assessment orders from previous years to support their case. The Tribunal observed that the assessment order was exparte, notices were served after the hearing dates, and discrepancies in the sales records were not substantial. The Tribunal also noted that the Assessee had complied with other tax provisions in subsequent years, offering a higher profit percentage than required under section 44AD.

As a result, the Tribunal allowed the appeal, concluding that the addition made by the Assessing Officer under section 69 was not justified and should be deleted.

Judgment Highlights:
- Delay of 8 days in filing the appeal was condoned.
- Cash deposits by the Assessee were treated as unexplained income under section 69 of the Act.
- Discrepancies in sales records led to the addition being confirmed by the Commissioner of Income Tax (Appeals).
- Tribunal found the assessment order to be exparte and discrepancies not substantial, leading to deletion of the addition under section 69.

This judgment highlights the importance of proper assessment procedures and the need for substantial evidence before confirming additions under relevant sections of the Income Tax Act.