2014 (7) TMI 836 - AT - Income Tax

Rejection of books of accounts - Principles of natural justice Held that - The matter should go back to the file of the AO to pass a fresh order, for rejecting the books of account, the AO has not given any valid reasons as no specific defect has been pointed out in. the books of account, the AO should go through the books for determining the income on the basis of books accounts AO has to bring on record specific evidence or defect to prove falsity of books of account as no falsity has been proved in the assessment order passed by the AO revenue has to provide all the details and material on which basis the addition have been made earlier - the AO is directed to provide the copies of all information on which basis, the AO wanted to made additions in the hands of the assessee and the matter is remitted back to the AO for fresh adjudication Decided in favour of Assessee.

Summary

Issues:
1. Rejection of books of accounts by the Assessing Officer without specific defects pointed out.
2. Additions made by the Assessing Officer based on material from various sources.
3. Opportunity to be heard and provision of material for additions.
4. Setting aside the order and remanding the matter back to the Assessing Officer for a fresh assessment.

Analysis:

1. The appellant filed an appeal against the order of the Ld. CIT(A) for the assessment year 1992-93, challenging the rejection of books of accounts by the Assessing Officer. The appellant contended that the Assessing Officer did not comply with the principles of natural justice and failed to point out specific defects in the books of account. The Ld. CIT(A) partially allowed the appeal, leading to the current appeal before the tribunal. The tribunal observed that the Assessing Officer must provide specific evidence to prove the falsity of the books of account before rejecting them. The tribunal directed the Assessing Officer to determine the income based on the books of accounts and provide all details and material on which the additions were made.

2. The Assessing Officer made various additions based on information from different sources without providing copies of the material to the assessee. The tribunal emphasized that the correctness of such material must be examined as per the law. The tribunal rejected the argument that the assessee could obtain the copies from the sources and directed the Assessing Officer to provide all information used for making additions. Failure to provide the material would render the additions invalid. The tribunal set aside the orders of the lower authorities and restored the issues to the Assessing Officer for a fresh assessment.

3. The tribunal highlighted the importance of affording the assessee a reasonable opportunity to be heard and to provide material for any additions made. It emphasized that natural justice must be upheld, and the Assessing Officer must supply all relevant information to the assessee. The tribunal's decision aimed to ensure a fair assessment process and adherence to procedural justice.

4. Ultimately, the tribunal allowed the appeal for statistical purposes, indicating that the matter was remanded back to the Assessing Officer for a fresh assessment. The tribunal's decision sought to rectify the procedural lapses and ensure that the assessment was conducted in accordance with the principles of natural justice and procedural fairness. The order was pronounced in open court on a specified date, concluding the judicial process in this case.