2020 (12) TMI 824 - AT - Income Tax

Addition u/s.68 - assessee failed to submit names, address and PAN of the parties regarding the trade payables along with confirmation letters as instructed - HELD THAT - As noted that even before the Tribunal also, on the given dates of hearing, the assessee has evaded the process of law by non appearance. Considering the fact that Income Tax Legislations are within the purview of welfare legislations and the tax payer‟s interest should be protected, therefore, we are of the considered view, one final opportunity should be provided to the assessee. In view thereof, we set aside the order of the Ld. CIT(Appeals) on this issue and restore the matter back to his file for re-adjudication while complying with the principles of natural justice. At the same time, we direct the assessee to furnish relevant details/evidences in order to substantiate their case on merits. Thus, Ground No.1 raised in appeal by the assessee is allowed for statistical purposes. Additions made on account of statutory payment in respect of service tax etc. payable - HELD THAT - As our observations with regard to Ground No.1 in the aforesaid Paragraph (Para No.6) and the same findings shall be applicable for this ground also since the Ld. CIT(Appeals) has upheld the disallowance for absence of evidences which the assessee was supposed to file before him. Thus, Ground No.2 raised in appeal by the assessee is allowed for statistical purposes. Disallowance on certain expenses on account of rent, advertisement and legal professional fees - HELD THAT - We set aside the order of the Ld. CIT(Appeals) on this issue and restore the same to his file for re-adjudication and our findings given in respect of other two grounds.

Summary

Issues Involved:
1. Addition made under section 68 of the Income Tax Act, 1961.
2. Additions related to statutory payments such as service tax.
3. Disallowance of expenses like rent, advertisement, and legal & professional fees.
4. Liability to pay interest under sections 234B and 234C of the IT Act.

Analysis:

Issue 1: Addition under Section 68 of the IT Act
The appellant challenged the addition made under section 68 of the IT Act, contending it was arbitrary and based on assumptions. The appellant failed to provide necessary evidence to support their case before the Assessing Officer and the CIT(A). Despite multiple opportunities, the appellant did not furnish relevant documents. The Tribunal acknowledged the importance of natural justice and granted one final opportunity to the appellant to substantiate their case. The Tribunal set aside the CIT(A)'s order and directed the appellant to provide the required details for re-adjudication.

Issue 2: Additions related to Statutory Payments
The Assessing Officer noted discrepancies in the appellant's payment of VAT, TDS, and Service Tax, which were outstanding for over six months. The appellant failed to provide evidence to support their claim that certain amounts pertained to earlier years. Both the Assessing Officer and the CIT(A) disallowed the claimed amounts due to lack of evidence. The Tribunal, considering the previous issue, allowed this ground for statistical purposes and directed the appellant to provide necessary evidence for re-evaluation.

Issue 3: Disallowance of Expenses
Expenses related to rent, advertisement, and legal & professional fees were disallowed by the Revenue Authorities due to insufficient evidence provided by the appellant. The onus to substantiate these expenses rested on the appellant, which they failed to do. The Tribunal set aside the CIT(A)'s decision on this issue, similar to the previous grounds, and instructed the appellant to furnish the required details for re-examination.

Issue 4: Liability for Interest under Sections 234B and 234C
The liability for interest under sections 234B and 234C was consequential to the additions made by the Assessing Officer and upheld by the CIT(A). As the other grounds were remitted back to the CIT(A) for re-evaluation, the Tribunal allowed this ground for statistical purposes and directed a re-adjudication on the interest liability issue in compliance with natural justice principles.

In conclusion, the Tribunal allowed the appeal of the appellant for statistical purposes, emphasizing the importance of providing necessary evidence and complying with the principles of natural justice in tax matters.