2024 (5) TMI 341 - AT - Income Tax

Disallowance being 25% of Material Purchase and Indirect Expenses - assessee could not submit any documentary evidence except for the ledger, which can prove the genuineness of the purchase of Material - HELD THAT - We find that the assessee had not produced the complete books of accounts along with bills and vouchers and other documentary evidence to substantiate the claim of the assessee before the AO. It is quite evident that the material referred by the assessee is relevant to determine the total income and tax liability of the Assessee correctly. Since the Assessee has produced the documents before the Tribunal in support of his claim, in the facts and circumstances of the case and as the lower authorities had no opportunity to verify the documents produced before us, without commenting anything on the merit of the case, we admit the additional documents produced by the Assessee and in the interest of justice, restore the matter to the file of the AO with a direction to consider the documents produced by the assessee and adjudicate the issues, after giving due opportunity of being heard to the assessee. Accordingly, we partly allow the appeal filed by the assessee. Appeal filed by the assessee is treated as allowed for statistical purposes.

Summary

Issues involved: Appeal against order of Ld. CIT(A) for AY 2015-16 regarding addition of 25% of material purchase and indirect expenses, and setting aside order u/s. 259 of the Act, 1961.

Facts of the case: The assessee, a Government Contractor, filed return declaring income. Case selected for limited scrutiny. Assessee asked to provide evidence for material purchase and indirect expenses. Assessee failed to submit required evidence despite multiple notices. Assessing Officer made additions of 25% of the amounts in question due to lack of evidence.

Arguments: Assessee contended communication issues due to outdated email address of accountant. Assessee's representative produced details of expenses seeking deletion of additions. Assessee given opportunity to provide more concrete details, which were submitted including audit report, work orders, sales bills, and purchase invoices.

Judgment: Tribunal found that complete books of accounts and evidence were not provided to the Assessing Officer. Assessee submitted relevant documents during appeal. Tribunal admitted additional documents and directed Assessing Officer to consider them, allowing the appeal partly for the sake of justice. Appeal treated as allowed for statistical purposes.

Conclusion: The appeal was partly allowed by the ITAT Ahmedabad, directing the Assessing Officer to reconsider the case based on the additional documents provided by the assessee.