Cygnus Infrabuild Private Limited Vs ITO (ITAT Delhi)
Inspector’s Report Cannot Be Used Behind Assessee’s Back: ITAT Delhi Remands Section 68 and 26AS Mismatch Additions
The Delhi Bench of the ITAT allowed the assessee’s appeal for AY 2011-12 for statistical purposes and remanded the matter to the Assessing Officer, holding that additions were made in violation of principles of natural justice.
On the Section 68 issue, the Tribunal observed that the assessee had furnished confirmations, bank statements, ITRs and other documents in support of share capital and share premium of ₹73.50 lakh. However, the CIT(A) upheld the addition by relying on an Inspector’s report which was never confronted to the assessee. The ITAT held that reliance on such un-supplied material is impermissible and contrary to natural justice, warranting a fresh examination after furnishing the report and granting opportunity to rebut.
On the alleged undisclosed receipts based on Form 26AS, the Tribunal noted that the CIT(A) enhanced income by treating the entire difference as undisclosed income, despite the assessee’s plea that receipts were recorded in books and contracts were fully subcontracted, and that only a profit element could be taxed. Given the procedural infirmity and lack of proper confrontation, this issue too was remitted for de novo adjudication.
Accordingly, the ITAT set aside the impugned order and restored all issues to the file of the AO for fresh consideration after supplying the Inspector’s report and granting adequate opportunity of hearing, directing the assessee to fully cooperate. The appeal was allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT DELHI
