Hotel New Niyaz Vs ACIT (ITAT Panaji)
Panaji ITAT Restores ₹6.82 Crore Additions for Fresh Adjudication: Crucial Evidence Cannot Be Ignored Merely Because It Was Not Filed Before Lower Authorities
The Panaji ITAT in M/s Hotel New Niyaz v. ACIT dealt with additions arising from a survey under section 133A. The assessee, a partnership firm engaged in the restaurant business under the brand “Niyaz”, had returned income of ₹40.06 lakh for AY 2016-17. Following survey proceedings, the AO made additions of ₹5.48 crore towards alleged suppression of sales and ₹1.33 crore towards unexplained unsecured loans under section 68, assessing total income at ₹7.21 crore. The CIT(A) sustained the additions.
Before the ITAT, the assessee contended that the alleged suppression of sales was not supported by adequate evidence and that its explanations regarding unsecured loans had not been properly considered. More importantly, it sought admission under Rule 29 of the ITAT Rules of substantial additional evidence comprising consumption details, purchase ledgers, sample purchase invoices, wages ledger and wages register, running from pages 3 to 494 of its paper book.
The Tribunal emphasised that such evidence “play[s] a very important role in decision making” and held that the assessee should not suffer merely because material information had not been filed before the lower authorities. Considering the nature and relevance of the additional evidence, the ITAT set aside the CIT(A)’s order and restored the disputed issues to the CIT(A) for fresh adjudication on merits.
The CIT(A) was directed to verify the additional evidence, call for a remand report and provide adequate opportunity of hearing to the assessee before deciding the matter afresh. Thus, the ₹5.48 crore suppression-of-sales addition and ₹1.33 crore section 68 addition were not deleted on merits but remanded for reconsideration. The appeal was partly allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT PANAJI
The assessee has filed the appeal against the order of the CIT(A)-2, Panaji passed u/sec 143(3) and u/sec250 of the Income Tax Act. The assessee has raised the fallowing grounds of appeal as under:
1. The learned AO and the learned CIT(A) have erred, in law and in facts, by incorrectly holding that there has been a suppression of sales to the tune of Rs. 5,48,28,180/- and thereby making an addition in this regard.
2. The learned CIT(A) has erred, in law and in facts, by completely ignoring most of the explanations given by the appellant with respect to unsecured loans and holding them as unexplained to the tune of Rs. 1,33,45,285/and thereby making an addition in this regard which is completely bad in law
3. The orders of the learned AO and learned CIT(A) are based on incorrect application/interpretation of law and therefore are bad in law
4. The learned AO and the learned CIT(A) have erred, in law and in facts, by solely relying on the report of the survey team and not carrying out any independent analysis whatsoever in deciding the case
5. The learned AO and the learned CIT(A) have erred, in law and in facts, by upholding suppression of sales for the year under question based on an analysis of data for a past financial year, which is devoid of any logic and is completely bad in law.
6. The learned CIT(A) has erred in law and in facts, by hastily concluding the appeal proceedings thereby denying the appellant an opportunity making additional submissions or providing information, resulting disregard of the principles of natural justice in the process.
The assessee has raised additional ground of appeal as under:-
1. On the facts and in the circumstances of the case as well as in law the Ld.AO has erred in converting the limited scrutiny to completed scrutiny in violation of the CBDT circular No. 225/402/2018/ITA 11, therefore, assessment order passed u/sec 143(3) r.w.s 144A of the Income Tax Act, 1961 in invalid and void ab initio.
2. At the time of hearing, the Ld.AR has not pressed the additional ground of appeal. And this ground of appeal is withdrawn and is dismissed.
