2025 (2) TMI 581 - AT - Income Tax

Addition made due to the difference in receipts as per 26AS and ITR - HELD THAT - The assessee has failed to properly explain the impugned amount as mobilization advance or other advance or for the work to be carried-out or for other materials. Before CIT(A) the assessee has furnished the details for the purpose of reconciliation of the above contradictions which were not confronted to the Assessing Officer by the learned CIT(A). We therefore remit the matter in issue back to the file of learned jurisdictional Assessing Officer with a direction to re-decide the issue de novo after affording reasonable opportunity of being heard to the assessee. Rejection of trading results - As argued books of accounts of the assessee company were duly audited u/sec.44A - AO disbelieved the contentions of the assessee-company and noted that the assessee was failed to substantiate it s claim of mismatch in inventories with supporting documentary evidence - HELD THAT - CIT(A) has passed a cryptic non-speaking order and has accepted the contention of the assessee without giving any cogent reasons. We therefore remand the matter in issue back to the file of jurisdictional AO with a direction that the assessee-company shall furnish documentary evidence to prove it s case of difference in GP ratio. We remit the matter in issue back to the file of learned jurisdictional Assessing Officer to examine the gross profit of the assessee company. It is the risk and responsibility of the assessee to plead and prove it s case in consequential proceedings. If the assessee did not respond to the notice(s) issued by the learned jurisdictional Assessing Officer or taking adjournments under any pretext or failed to furnish requisite documents as called for AO is at liberty to decide the matter in issue as per fact and law. Grounds raised by the Revenue are allowed for statistical purposes.

ISSUES PRESENTED and CONSIDERED

The core legal questions considered in the judgment include:

1. Whether the CIT(A) was justified in deleting the addition of Rs. 13,00,11,072/- made by the Assessing Officer due to the difference in receipts as per 26AS and ITR for the assessment year 2021-2022.

2. Whether the CIT(A) was justified in deleting the addition of Rs. 8,65,59,856/- made by the Assessing Officer based on the estimated business income for the assessment year 2022-2023.

ISSUE-WISE DETAILED ANALYSIS

Issue 1: Difference in Receipts as per 26AS and ITR (Assessment Year 2021-2022)

Relevant Legal Framework and Precedents: The assessment was made under Section 143(3) of the Income Tax Act, 1961. The issue revolved around the difference in receipts reported in the Income Tax Return (ITR) and Form 26AS.

Court's Interpretation and Reasoning: The Tribunal noted that the assessee had taken inconsistent positions regarding the nature of the advances received. The CIT(A) had deleted the addition based on the audited balance sheet without verifying the bills/vouchers and TDS for the differential amounts.

Key Evidence and Findings: The Tribunal found that the CIT(A) did not confront the Assessing Officer with the reconciliation details provided by the assessee, leading to a lack of thorough examination.

Application of Law to Facts: The Tribunal decided that the matter should be remitted back to the Assessing Officer for a de novo examination to ensure all discrepancies and explanations are adequately addressed.

Treatment of Competing Arguments: The Revenue argued that the CIT(A) failed to verify the evidence properly, while the assessee maintained that the CIT(A) had acted in accordance with the law. The Tribunal sided with the Revenue, emphasizing the need for a comprehensive review.

Conclusions: The Tribunal remanded the issue back to the Assessing Officer for re-evaluation, allowing the Revenue's appeal for statistical purposes.

Issue 2: Estimated Business Income (Assessment Year 2022-2023)

Relevant Legal Framework and Precedents: The assessment was conducted under Section 143(3) read with Section 144B of the Income Tax Act, 1961. The dispute centered on the estimation of gross profit by the Assessing Officer.

Court's Interpretation and Reasoning: The Tribunal observed that the CIT(A) accepted the assessee's explanations without providing substantial reasoning or evidence, leading to a non-speaking order.

Key Evidence and Findings: The Tribunal noted discrepancies in the gross profit ratio and the lack of documentary evidence to support the assessee's claims regarding the impact of the Covid pandemic.

Application of Law to Facts: The Tribunal determined that the matter required further examination by the Assessing Officer, particularly regarding the documentary evidence supporting the assessee's claims.

Treatment of Competing Arguments: The Revenue contended that the CIT(A) failed to appreciate the discrepancies in the books of accounts, while the assessee argued that the CIT(A) correctly considered the audited accounts. The Tribunal found merit in the Revenue's position.

Conclusions: The Tribunal remanded the issue back to the Assessing Officer for further scrutiny, allowing the Revenue's appeal for statistical purposes.

SIGNIFICANT HOLDINGS

Core Principles Established: The Tribunal emphasized the importance of thorough verification and examination of evidence by the lower authorities, particularly when discrepancies are noted.

Final Determinations on Each Issue: Both issues were remanded back to the Assessing Officer for re-evaluation, with instructions to provide the assessee an opportunity to present evidence and explanations.

Verbatim Quotes of Crucial Legal Reasoning: The Tribunal stated, "We, therefore, remit the matter in issue back to the file of learned jurisdictional Assessing Officer with a direction to re-decide the issue de novo, after affording reasonable opportunity of being heard to the assessee."

In conclusion, the Tribunal allowed the Revenue's appeals for statistical purposes, directing a re-evaluation of both issues by the Assessing Officer to ensure a comprehensive and fair assessment process.

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