Careless Attitude Of AO: Kolkata ITAT Deletes Addition Made Without Examining Nature Of Expenditure
Pankaj Bajpai
6 Feb 2024 8:53 AM GMT
On finding that expenses were incurred for the business purposes during the course of business, for which assessee has submitted all basic details which was not cross verified by the AO, the Kolkata ITAT deleted the addition made by AO.The Member of the ITAT comprising Rajpal Yadav (Vice-President) and Girish Agrawal (Accountant Member) observed that “the inquiry at the end of the...
On finding that expenses were incurred for the business purposes during the course of business, for which assessee has submitted all basic details which was not cross verified by the AO, the Kolkata ITAT deleted the addition made by AO.
The Member of the ITAT comprising Rajpal Yadav (Vice-President) and Girish Agrawal (Accountant Member) observed that “the inquiry at the end of the Assessing Officer is a flawed one. Apart from this observation, we find that he has nowhere examined how this expenditure was not necessary for the business. What are the products obtained by the assessee as a commission agent and how these were sold with the help of different parties across India. The assessee has not shown losses rather it has shown profit. Instead of approaching the controversy with that approach, Assessing Officer all of a sudden took help of jurisprudence which deals with unexplained share application money from paper companies. This shows the careless attitude at the end of the Assessing Officer while framing the assessment order”. (Para 6)
As per the brief facts of the case, the Assessee's return was selected for scrutiny, wherein AO has alleged that he has issued notices u/s 133(6) to all the recipients to whom commission was paid by the assessee. Three recipients of commission did not respond to him and their notices were returned to the Office of AO by the Postal Authority. The AO all of a sudden invoked the provision of section 68 of Income tax Act, which when challenged before the CIT(A), was dismissed for want of prosecution.
The Coram noted that the assessee had made most of the payments through RTGS or Account Payee Cheque.
Finding that it is not ascertainable whether the summons have ever served upon or not on the creditors, the Coram pointed that the inquiry at the end of the AO is a flawed one.
The Bench further observed that AO has nowhere examined how the impugned expenditure was not necessary for the business.
The Coram noted that had the assessment machinery remained in motion after selection of the case for scrutiny assessment, probably Assessing Officer could take help of the Officers where these assessees are situated.
But instead of adopting that course, he first kept the proceeding dormant and then all of a sudden completed in a hurried manner, added the Coram.
The Coram also mentioned that CIT(A) has totally ignored all the submissions, which are available on the Portal but dismissed the appeals for want of prosecution.
Therefore, on finding negligence at AO's end, the ITAT allowed the assessee's appeal.
Counsel for Appellant/ Taxpayer: Anil Kochar
Counsel for Respondent/ Department: Prabhakar Prakash Ranjan
Case Title: Ankit Impex Marketing Services Pvt. Ltd verses Income Tax Officer
Case Number: I.T.A. Nos. 619 & 620/KOL/2023
