ACIT Vs Pannalal Bhansali (ITAT Kolkata)
ITAT Kolkata remanded the matter back to CIT(A) as relief was granted to the assessee on the basis of various submissions which were for the first time furnished before CIT(A) and CIT(A) prior to granting relief didn’t conduct any enquiry on the same.
Facts- Assessee is a proprietor of H.P. Institute of Insurance, engaged in the business of imparting vocational training. Case of the assessee was selected for limited scrutiny. Issue relates to unsubstantiated increase in capital of the assessee, wherein, AO noted the sharp rise amounting to Rs.23,26,96,302/- out of which the assessee has shown an amount of Rs.13,42,97,642/- as capital brought in. AO noted that the assessee did not consist of any conclusive proof as regards the time of acquisition of various items of transfer entries claimed to be introduced as capital from individual Balance Sheet into proprietorship Balance Sheet and the source of funds used for the same. AO held that since the assessee has not been able to explain the credit in his books of accounts as regards this increase in capital brought in, added it to the total income as it remained unsubstantiated.
Conclusion- Held that there are discrepancies and contradictions in the submission made by the assessee which, more importantly, has been for the first time furnished before the CIT(A). Findings arrived at by CIT(A) on these submissions made by the assessee, in no way demonstrate, conduct of any enquiry either by himself or through the AO while disposing of the appeal, granting relief to the assessee.
We find it proper to set aside the impugned order of CIT(A) on this issue and remit the matter back to his file for de novo adjudication after taking into account the observations and by conducting necessary enquiries either himself or by the AO.
FULL TEXT OF THE ORDER OF ITAT KOLKATA
Appeal filed by the revenue and the Cross Objection filed by the assessee are against the order of Ld. CIT(A), Guwahati-2, Guwahati dated 31.07.2019 against the assessment order of ACIT, Circle-3, Guwahati u/s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as the “Act”), dated 31.12.2018 for AY 2016-17.
2. Brief facts as culled out from records are that assessee is a proprietor of H. P. Institute of Insurance, engaged in business of imparting vocational training. Assessee filed his return on 17.16.20 16, reporting total income at Rs.20, 17,360/- . Case of the assessee was selected for limited scrutiny for the following three reasons:
(a) Substantial increase in capital (Reason Code BL0 1.02),
(b) Large value sale of futures (derivatives) in recognized stock exchange reported in Securities Transaction Tax Return STT code 06 (Reason Code TX08.02),
(c) Low capital gains with respect to sales consideration, i.e. whether capital gain or loss is genuine and has been correctly shown in the return of income (Reason Code CG0 1.05).
2.1. Ld. AO issued statutory notices u/s. 143(2) and 142(1) of the Act, which were served on the assessee. Ld. AO observed that there has been persistent, continuous, systematic and calculated non-compliance or belated compliance by which assessee had dragged the proceedings to the fag-end of the assessment year, such that requisite enquiry/investigation into the affairs of the assessee on the above three noted issues would be either delayed or scuttled. Ld. AO had made additions to the tune of Rs.16,21,89,184/- on account of the following:
