2019 (12) TMI 507 - HC - Income Tax

Addition u/s 40A(3) - chargeability of transactions to tax by way of TCS forms in accordance with Section 206CA r.w. Rule 114A substantiating the purchases made and the genuineness thereof - Tribunal remanded the case back to the Assessing Officer - HELD THAT - We are in agreement with learned counsel for the Revenue. In view of the shifting stand taken by the appellant no illegality can be found with the order of the Tribunal which it must be remembered has not restored the order of the Assessing Officer but has asked both the parties to lead evidence in support of their claims and by source no prejudice can be caused to the appellant. Appeal dismissed.

Issues:
1. Interpretation of Section 40A(3) of the Income Tax Act 1961.
2. Validity of the order of the Income Tax Appellate Tribunal.
3. Assessment of income in a retail liquor business.
4. Consideration of evidence in tax assessments.
5. Justification for remanding the case back to the Assessing Officer.
6. Shifting stand of the appellant in the case.

Interpretation of Section 40A(3) of the Income Tax Act 1961:
The appellant challenged the disallowance made under Section 40A(3) without considering the chargeability of transactions to tax through TCS forms under Section 206CA. The appellant questioned the genuineness of purchases made and the applicability of Section 40A(3) in the given circumstances.

Validity of the order of the Income Tax Appellate Tribunal:
The Tribunal set aside the CIT's order and remanded the assessment case back to the Assessing Officer for a fresh decision after considering the evidence on record. The appellant approached the High Court against the Tribunal's decision, raising substantial questions of law regarding the interpretation of tax provisions.

Assessment of income in a retail liquor business:
The appellant, engaged in retail liquor sales, faced scrutiny due to discrepancies in income reporting. Despite producing a complaint about lost books of accounts, the Assessing Officer added a substantial amount to the appellant's income based on supplier disclosures and cash payments.

Consideration of evidence in tax assessments:
The appellant later presented bank statements showing TCS collections on purchases, leading the appellate authority to allow expenses based on bank forms 26AS. However, the Tribunal remanded the case, emphasizing the need for both parties to substantiate their claims with evidence.

Justification for remanding the case back to the Assessing Officer:
The appellant argued that the remand order by the Tribunal was unjustified, citing the majority of purchases having TCS collected and the nature of the liquor retail business as cash-based. The Revenue contended that the Tribunal's decision to remand was fair, allowing both parties to support their claims with evidence.

Shifting stand of the appellant in the case:
The appellant's changing positions regarding dealings with a specific individual raised concerns about consistency and credibility. The shifting stand of the appellant was highlighted by the Revenue, leading to the Tribunal's decision to remand the case for further evidence.

In conclusion, the High Court dismissed the appeal, upholding the Tribunal's decision to remand the case for additional evidence to be presented by both parties. The shifting stand of the appellant and the need for substantiating claims with evidence were crucial factors in the judgment.

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