2021 (5) TMI 421 - AT - Income Tax

Best judgement assessment u/s 144 - assessee not responded to notices issued under sections 143(2), 142(1)(b), 271(1)(b) - Addition u/s 68 - HELD THAT - Since the assessee has not responded to notices issued under sections 143(2), 142(1)(b), 271(1)(b) of the Act and despite levying penalty due to non-compliances of the above notices, the Assessing Officer has rightly proceeded to conclude best judgement assessment under section 144 . During the course of appellate proceedings, the ld. CIT(A) posted the appeal for hearing on 19.06.2017, 19.07.2017, 20.09.2017 and final opportunity was given on 13.10.2017 to the assessee to submit all details such as when the advances were given, amount of fresh advance during the year, nature of advances, purpose of advances, details of payment, etc. However, the assessee has not furnished any of the above details called for. CIT(A) concluded the appellate order by confirming the additions made by the Assessing Officer. Since the ld. Counsel for the assessee has prayed for one more opportunity of being heard to the assessee, we direct the Assessing Officer to give one more final opportunity of being heard to the assessee for filing complete details - Appeal filed by the assessee is allowed for statistical purposes.

Summary

Issues:
Challenge of addition under section 68 of the Income Tax Act, 1961 for assessment year 2013-14, Delay in filing appeal, Best judgement assessment under section 144 of the Act, Disallowance of interest payment as revenue expenditure.

Analysis:
1. Challenge of addition under section 68: The assessee challenged the addition of &8377;29,68,60,543 made under section 68 of the Income Tax Act, 1961. The Assessing Officer observed that the assessee, a builder, only dealt with purchase and sale of stock-in-trade. The assessee had shown advances from customers under other current liabilities, including new advances during the year. Despite notices and opportunities, the assessee did not respond, leading to best judgement assessment under section 144, where the entire advance was brought to tax due to lack of evidence.

2. Delay in filing appeal: The appeal was delayed by 29 days, and the assessee filed a petition for condonation of delay, which was granted as the delay was due to sufficient cause. The appeal was admitted for adjudication.

3. Best judgement assessment under section 144: The Assessing Officer proceeded with best judgement assessment under section 144 due to non-compliance by the assessee in responding to various notices issued under sections 143(2), 142(1)(b), and 271(1)(b) of the Act. The ld. CIT(A) confirmed the additions as the assessee failed to provide necessary details despite multiple opportunities.

4. Disallowance of interest payment: The assessee debited interest paid as &8377;6,46,390 claiming it as revenue expenditure. However, since the advances were shown as current liabilities without proper evidence, the expenditure was considered capital in nature and brought to tax.

5. Appellate Tribunal's decision: The Tribunal directed the Assessing Officer to give the assessee one final opportunity to submit complete details regarding the advances. If the assessee fails to provide the required information, the assessment under section 144 confirmed by the ld. CIT(A) would stand. The appeal was allowed for statistical purposes.

In conclusion, the judgment addressed the challenge of addition under section 68, delay in filing the appeal, best judgement assessment under section 144, and disallowance of interest payment as revenue expenditure. The Tribunal granted the assessee one final opportunity to provide necessary details before confirming the assessment.