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2021 (5) TMI 752 - AT - Income Tax


Issues:
1. Delay in filing the appeal before the Tribunal and prayer for condonation.
2. Disallowance of expenses by the Assessing Officer and confirmation by the CIT(A).
3. Rejection of books of account under section 145(3) of the Income Tax Act.
4. Justification of the adhoc disallowance of expenditure.
5. Validity of the assessment order and jurisdiction assumed.
6. Request for modification, addition, amendment, or deletion of grounds of appeal.

Issue 1: Delay in Filing Appeal

The appellant sought condonation for a 45-day delay in filing the appeal due to a change in the partnership firm and a subsequent notice received under section 221 of the Income Tax Act. The Tribunal, considering substantial justice, condoned the delay and admitted the appeal for hearing.

Issue 2: Disallowance of Expenses

The Assessing Officer disallowed 25% of total expenses due to lack of supporting documents, resulting in an adhoc disallowance. The CIT(A) upheld this decision, prompting the appellant to challenge it before the Tribunal, citing violations of natural justice and lack of adequate opportunity for submission. The Tribunal reviewed the submissions and directed the Assessing Officer to re-compute the net profit at 4% of sales, allowing deductions for depreciation and partner remuneration.

Issue 3: Rejection of Books of Account

The Assessing Officer rejected the books of account under section 145(3) as the appellant failed to produce relevant vouchers and bills for expenses. The Tribunal agreed with this decision, noting that the onus was on the appellant to prove the genuineness of income and expenditure. However, the Tribunal directed a re-computation of income based on a percentage of sales to address possible discrepancies.

Issue 4: Adhoc Disallowance Justification

The appellant argued against the adhoc disallowance, emphasizing the books were audited and challenging the Assessing Officer's basis for the disallowance. The Tribunal acknowledged the lack of supporting documents but opted to re-compute the income based on a percentage of sales to ensure fairness and safeguard revenue interests.

Issue 5: Validity of Assessment Order

The appellant questioned the validity of the assessment order, alleging jurisdictional issues. The Tribunal did not find merit in restoring the matter to the Assessing Officer due to partner disputes and changes in firm composition, opting instead to provide specific directions for income re-computation.

Issue 6: Grounds of Appeal

The appellant reserved the right to modify, add, amend, or delete grounds of appeal during the hearing, indicating flexibility in presenting arguments based on the proceedings. The Tribunal partially allowed the appeal, providing specific directives to the Assessing Officer for income re-calculation.

This detailed analysis of the judgment covers all the issues involved and the Tribunal's decisions on each aspect of the case.

 

 

 

 

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