Rina Egg Centre Vs ITO (ITAT Kolkata)
Conclusion: Since the matter was affected by lack of proper persuasion before the lower authorities and Tribunal was unable to examine detailed account matching, turnover from bank accounts, or vouchers for expenses, therefore, the matter need to be sent back to AO to give assessee an opportunity to prove the authenticity of their income claim.
Held: During scrutiny assessment of assessee, AO made several additions for cash deposited in the bank account, for differences in accounts with Dhanlaksmi Poultries for difference in turnover disclosed and gross receipts evidenced from the bank account, difference in the accounts of assessee and one M/s. G Traders and M/s. M Poultries, disallwances from various expenses claimed and disallowed u/s 40(a)(ia). Aggrieved by the additions made by AO, assessee filed an appeal before CIT(A), who upheld the findings of AO. Assessew filed a further appeal before the Tribunal, raising grounds that the order of the CIT(A) was bad in law and in fact. Assessee argued that CIT(A) had made an incorrect and unfair decision by agreeing with AO, who added ₹11,20,000 under Section 69A. The addition was made without considering that assessee deposited this cash during the demonetization period as per the Reserve Bank of India (RBI) instructions. Further CIT(A) erred in confirming AO’s decision to add ₹2,68,165 as profit from undisclosed business, based on incorrect calculations, ignoring inter-bank transactions and inter-branch transfers. Additionally, CIT(A) wrongly upheld an addition of ₹16,67,83,605 for unexplained investment in undisclosed stocks, based on a reply to a notice, without allowing assessee to justify the claim or considering that no transactions occurred in the relevant financial year. Both additions were unjustified and should be removed. Also, CIT(A) wrongly confirmed AO’s decision to disallow ₹11,51,363 (5% of ₹2,80,18,601) for transport charges, despite ledger accounts being submitted. It was held that this case suffered on account of lack of proper persuasion before the authorities below. It was felt that the minute details of matching of accounts, working out the exact quantum of turnover from the bank accounts and matching of vouchers with expenses claimed could not be done by this Bench of ITAT. However, it was clear that this matter need to be remanded back to AO to enable assessee a chance to prove the bona fides of the claim of income before AO. It was felt that it would be in the interest of assessee to present all necessary documents and evidences before AO to enable a correct and fair assessment of income. With these remarks, the matter was remanded to the file of AO for a fresh adjudication after giving an opportunity of being heard to assessee.
