2022 (1) TMI 88 - AT - Income Tax

Addition u/s 68 read with Section 115BBE - HELD THAT - Opening balance was not confirmed from any closing balance of the earlier period by the assessee before the Revenue Authorities. It is an admitted fact that the assessee has not filed return of income for Assessment Years 2013-14 and 2014-15 and there was no Balance Sheet Profit Loss Account before the AO who verified the opening balance for the present Assessment Year. From the perusal of the records before us, the Ld. AR submitted that the same can be demonstrated before the Assessing Officer by the assessee. Therefore, we are remanding back this issue to the file of the Assessing Officer for adjudicating the issue afresh. Needless to say the assessee be given opportunity of hearing by following principles of natural justice. Ground no. 2 is partly allowed for statistical purposes. Addition of cash sales - Assessee has also not fully established as to how the cash sales are genuine as the records produced before us which were already produced before the AO has not been taken into consideration properly by the AO - It will be appropriate to remand back this issue to the file of the AO for fresh adjudication after verifying the evidences produced before the AO. Needless to say, the assessee be given opportunity of hearing by following principles of natural justice. Ground no. 3 is partly allowed for statistical purposes.

Summary

Issues:
1. Conversion of limited scrutiny for AY 2017-18 into complete scrutiny for AY 2015-16.
2. Addition of opening cash balance under Section 68 read with Section 115BBE.
3. Addition of cash sales as bogus under Section 68 read with Section 115BBE.
4. Failure to consider submissions and explanations by lower authorities.
5. Levying of interest under Section 234A/B/C of the Act.
6. Initiating penalty under Section 271(1)(c) of the Act.

Issue 1 - Conversion of Scrutiny:
The appellant challenged the conversion of limited scrutiny for AY 2017-18 into complete scrutiny for AY 2015-16, arguing that it lacked jurisdiction and was impermissible. However, the appellant did not press this ground during the appeal.

Issue 2 - Addition of Opening Cash Balance:
The Assessing Officer added an amount under Section 68 read with Section 115BBE related to the opening cash balance, which the CIT(A) confirmed. The appellant contended that adding the opening balance was not permissible under Section 68. Citing a precedent, the appellant argued for the deletion of this addition. The Tribunal noted that the opening balance was not reconciled with earlier periods and remanded the issue back to the Assessing Officer for fresh consideration.

Issue 3 - Addition of Bogus Cash Sales:
The Assessing Officer added an amount under Section 68 read with Section 115BBE related to cash sales, which the appellant argued would lead to double taxation. The appellant provided various documents to support their claim that the sales were genuine and profit had already been taxed. The Tribunal found discrepancies in the assessment order and directed a fresh adjudication by the Assessing Officer, emphasizing the need to consider all evidence and provide the appellant with a fair hearing.

Issue 4 - Failure to Consider Submissions:
The appellant contended that the lower authorities failed to appreciate the facts, ignored submissions, and breached the Principles of Natural Justice. However, this issue was not specifically addressed in the Tribunal's decision.

Issue 5 - Levying of Interest:
The appellant challenged the levying of interest under Section 234A/B/C of the Act, but this issue was not discussed in detail in the Tribunal's decision.

Issue 6 - Initiating Penalty:
The appellant disputed the initiation of penalty under Section 271(1)(c) of the Act, but this issue was not elaborated upon in the Tribunal's decision.

In conclusion, the Tribunal partially allowed the appeal for statistical purposes, remanding the issues of the opening cash balance and cash sales back to the Assessing Officer for fresh adjudication. The Tribunal emphasized the importance of considering all evidence and providing the appellant with a fair hearing in line with the Principles of Natural Justice.