2024 (7) TMI 1373 - AT - Income Tax

Addition u/s 68 - assessee could not furnish supporting documents to prove the sources that recovery has been made from debtors besides not substantiating the cash withdrawals from bank with supporting evidence - HELD THAT - The assessment order as well as impugned order that against the notice issued by the AO assessee furnished the details of cash deposits in various bank accounts, recovery from debtors, cash book, etc. and no further notice has been issued by the AO seeking further details. Since the AR prayed to afford an opportunity to furnish complete details as may be required by the AO to prosecute his case, we deem it proper in the interest of justice to remand the matter back to the file of the AO for his consideration afresh. Assessee is at liberty to file evidence in support of his claim and the AO shall conduct the assessment proceedings de novo. Thus, grounds raised by the assessee are allowed for statistical purposes.

Summary

Issues:
1. Appeal against quantum addition under section 68 of the Income Tax Act, 1961.
2. Appeal against rectification order under section 154 of the Act.

Issue 1: Appeal against Quantum Addition under Section 68 of the Income Tax Act:

The judgment pertains to two appeals filed by the assessee against orders passed by the Commissioner of Income Tax (Appeals) for the assessment year 2013-14 regarding quantum addition under section 68 of the Income Tax Act. The primary issue considered was whether the ld. CIT(A) was justified in confirming the addition of a specific amount under section 68 of the Act. The assessment was completed by disallowing a percentage of total cash deposits, and the ld. CIT(A) upheld the Assessing Officer's decision. The appellant argued that the Assessing Officer did not verify the evidence provided by the assessee and requested a remand to furnish additional details. The Tribunal noted that the assessee had submitted relevant details but the Assessing Officer did not seek further information. Consequently, the matter was remanded back to the Assessing Officer for a fresh assessment, allowing the grounds raised by the assessee for statistical purposes.

Issue 2: Appeal against Rectification Order under Section 154 of the Act:

The second issue involved an appeal against a rectification order passed under section 154 of the Act, where the Assessing Officer rectified the tax computation resulting in a fresh demand notice being issued to the assessee. The ld. CIT(A) confirmed this rectification order. However, since the Tribunal had already remitted the quantum addition issue back to the Assessing Officer for reconsideration, the appeal against the rectification order was deemed academic and dismissed as infructuous. Consequently, the appeal filed by the assessee against the rectification order was dismissed, while the appeal against the quantum addition was allowed for statistical purposes.

In conclusion, the Tribunal allowed the appeal against quantum addition for statistical purposes and dismissed the appeal against the rectification order. The judgment emphasized the importance of proper verification of evidence by the Assessing Officer and the need for a fresh assessment in cases where additional details could impact the outcome.