2021 (1) TMI 950 - AT - Income Tax

Rejection of books of accounts - NP determination - adoption of N.P. at 8% by the Assessing Officer - HELD THAT - CIT(A) has reproduced the submissions of the assessee in Para 3 of the impugned however, the contentions as raised by the assessee in the written submission regarding the rejection of books of account, adoption of N.P. at 8% by the AO, without considering the past history of the assessee own case as well as comparable cases and the additions made on account of loan and advances and cash in hand have not been properly analyzed and discussed by the ld. CIT(A). Accordingly, in the facts and circumstances of the case, the impugned order of ld. CIT(A) is set aside and the matter is remanded to the record of the ld. CIT(A) for deciding the same afresh after giving one more opportunity of hearing to the assessee as well as to produce the books of account and other supporting evidence. Appeal of the assessee is allowed for statistical purposes.

Summary

Issues Involved:
1. Assessment validity under Section 143(3) of the IT Act
2. Ex-parte order by CIT(A) without providing reasonable opportunity
3. Addition of extra profit based on net profit rate
4. Addition on account of sundry debtors
5. Addition under the head cash in hand
6. Rejection of books of accounts under Section 145(3) by Assessing Officer
7. Interest charged under sections 234A, 234B, and 234C of the Income Tax Act

Analysis:
1. The appeal challenged the assessment made on the income of ?22,69,600 under Section 143(3) of the IT Act for the A.Y. 2012-13, claiming it was invalid both factually and legally. The appellant argued that the CIT(A) decided the appeal ex-parte without giving a reasonable opportunity, violating principles of natural justice. The Tribunal noted the lack of proper analysis by the CIT(A) regarding the rejection of books of account and other issues raised by the appellant. The matter was remanded back to the CIT(A) for a fresh decision after providing the appellant with another opportunity to present evidence.

2. The Assessing Officer had made additions based on net profit rate and rejected the books of accounts under Section 145(3). The appellant contended that the actions of the lower authorities were unjustified, as the books were audited and no comparable cases were cited for applying an 8% net profit rate. The Tribunal found the additions to be highly unjustified and ordered a re-adjudication at the Assessing Officer stage.

3. The addition of ?6,80,778 on account of sundry debtors was deemed highly unjustified by the appellant, arguing that trade debtors cannot be termed as income arbitrarily. The Tribunal agreed with the appellant's contention and set aside the addition.

4. Similarly, the addition of ?8,07,394 under the head cash in hand was disputed by the appellant, claiming it was not income but disclosed cash from regular books and audited balance sheets. The Tribunal found the Assessing Officer's action incorrect and unjustified, ruling in favor of the appellant.

5. The appellant also challenged the interest charged under sections 234A, 234B, and 234C of the Income Tax Act as highly unjustified. The Tribunal did not provide specific details on this issue but allowed the appeal for statistical purposes, indicating a favorable decision for the appellant on this matter.