Sadanand Bhavan Vs ITO (ITAT Panaji)
The appeal before the Income Tax Appellate Tribunal arose from an order passed by the Commissioner of Income Tax (Appeals)-2, Panaji, sustaining additions made by the Assessing Officer under Sections 143(3), 263, and 250 of the Income Tax Act. The assessee, a partnership firm engaged in manufacturing and sale of sweets, had filed its return of income for Assessment Year 2013–14 declaring total income of Rs. 14,64,500. The case was selected for scrutiny, and during prior survey proceedings under Section 133A, excess cash, excess stock, and expenditure on renovation and interior decoration were identified, leading to declarations of additional income aggregating to Rs. 1,00,50,279.
The Assessing Officer originally accepted the return and treated the additional income as business income, allowing partner remuneration and assessing total income at Rs. 49,64,500. Subsequently, the Principal Commissioner of Income Tax invoked Section 263, holding that the assessment order was erroneous and prejudicial to the interests of revenue. It was observed that the assessee had declared income during survey but offered a lower amount in return and had not satisfactorily explained the sources of investments and income. The Principal Commissioner directed re-examination of excess stock and excess cash and suggested applicability of Sections 69, 69A, and 115BBE.
