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2025 (5) TMI 1493 - AT - Income TaxNon-consideration of the figures given in revised returns by the Ld.AO - appellant has submitted that the Ld.AO took the income figures of the first revised return as against the figure filed in the second revised return - HELD THAT - As noted that a case of reverification of records and taking a decision in accordance with law at the level of AO has arisen. This issue was not raised by the assessee before the first appellate authority. The tribunal rules however mandate admission of a new ground even if the same was not contested before lower authority - thus set aside the order of Ld. AO and direct him to verify the figures from original records and take a decision in accordance with law. The ground of appeal raised by the assessee is there for allowed for statistical purposes. Addition u/s 68 - assessee has not provided any break up of liabilities - Counsel submitted that the impugned current liabilities have been erroneously treated as unexplained cash credits u/s 68 - HELD THAT - CIT(A) has merely stated that no report including an adverse report has been received from the assessing officer. It is not a case where the assessing officer has submitted a remand report accepting averments made by the assessee in remand proceedings. It is a case where actually no report has been submitted by the assessing officer even though it was requested by the lower appellate authority. Non-submission of remand report by the assessing officer cannot be construed as submission of an no adverse report . We find sufficient force in the argument of the assessee regarding the disclosure of certain items in the balance sheet in compliance to accounting standards. We are the considered view that the matter deserves to be remitted back to AO. Disallowance of certain expenses - CIT(A) provided part relief to the assessee by holding that as against 30% a disallowance of 5% would be reasonable in this case - HELD THAT - Production of all evidences in respect of claims of an expenditure is Primary responsibility of every taxpayer and the same cannot be loosely brushed the site. We are convinced that non-production of requisite details and supporting evidences Qua Impugned expenses lies at the core of the controversy. Both the lower authorities have clearly observed that the assessee has not provided requested details. The assessee has not been able to provide during the present proceedings also any details qua justification of impugned expenses. Consequently the estimation of 5% allowance made by the Ld.CIT(A) has been found to be reasonable and in order.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Tribunal in this appeal are:
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Consideration of Written Submissions by the CIT(A) Relevant Legal Framework and Precedents: The appellate authority is mandated to consider all submissions made by the appellant before passing an order. Failure to do so can vitiate the order. Court's Interpretation and Reasoning: The Tribunal observed that the CIT(A) had explicitly perused and considered the written submissions filed by the appellant, as evident from paragraph 4.1 of the CIT(A) order. Key Evidence and Findings: The record showed no omission or failure on the part of the CIT(A) to consider the appellant's submissions. Application of Law to Facts: Since the CIT(A) had considered the submissions, the ground alleging non-consideration was dismissed. Treatment of Competing Arguments: The appellant contended non-consideration, but the Tribunal did not find any factual basis supporting this allegation. Conclusion: Ground of appeal No.1 was dismissed. Issue 2: Non-Consideration of Figures in Second Revised Return and Need for Reverification Relevant Legal Framework and Precedents: The Assessing Officer is required to verify income figures from original records and consider revised returns. The Tribunal's procedural rules allow admission of new grounds even if not raised before lower authorities. Court's Interpretation and Reasoning: The appellant had filed two revised returns with differing income figures. The AO considered the first revised return figures but not the second. The Revenue conceded that the issue could be addressed by AO through verification. Key Evidence and Findings: The appellant submitted a paper book evidencing the second revised return figures. The issue was not raised before the CIT(A) but was admitted by the Tribunal in the interest of justice. Application of Law to Facts: The Tribunal set aside the AO's order and directed reverification from original records with due opportunity to the assessee. Treatment of Competing Arguments: The Revenue did not oppose the reverification and accepted the procedural course. Conclusion: Ground of appeal No.2 was allowed for statistical purposes, and the matter remitted to AO for fresh decision. Issue 3: Addition under Section 68 on Account of Unexplained Cash Credits Relevant Legal Framework and Precedents: Section 68 of the Income Tax Act permits addition of unexplained cash credits if the assessee fails to satisfactorily explain the nature and source of such credits. The AO and CIT(A) must pass speaking orders with reasoned findings. Court's Interpretation and Reasoning: The AO made the addition without a speaking order, merely noting lack of breakup of liabilities. The CIT(A) confirmed the addition without providing reasoned findings. The appellant contended that certain liabilities were reclassified as current borrowings complying with accounting standards and that no fresh loans were availed to justify the addition. Key Evidence and Findings: The CIT(A) had sought a remand report from the AO, but no report was submitted. The CIT(A) proceeded on the basis that no adverse report was received, which the Tribunal found to be a misinterpretation; non-submission of a report cannot be equated with a "no adverse report." Application of Law to Facts: The Tribunal emphasized the necessity of a speaking order and proper examination of explanations provided by the assessee. The absence of a remand report and lack of reasoned findings warranted remand of the issue to AO for fresh consideration with due opportunity. Treatment of Competing Arguments: The Revenue supported the addition, but the Tribunal found merit in the appellant's argument regarding procedural lapses and accounting compliance. Conclusion: Ground of appeal No.3 was allowed for statistical purposes, and the matter was remitted to AO for reconsideration with a speaking order. Issue 4: Disallowance of Expenses Due to Non-Production of Supporting Documents Relevant Legal Framework and Precedents: The burden lies on the taxpayer to produce evidence supporting claimed expenses. Failure to do so justifies disallowance under the Income Tax Act. Court's Interpretation and Reasoning: The AO disallowed 30% of the expenses due to non-production of ledger, bills, vouchers, etc. The CIT(A) reduced the disallowance to 5%, providing partial relief. The assessee failed to produce any supporting documents even during the appeal before the Tribunal. Key Evidence and Findings: Both authorities recorded non-submission of requested details. The Tribunal noted that the assessee reiterated previous arguments but failed to provide any fresh evidence. Application of Law to Facts: The Tribunal held that production of evidence is a primary responsibility and non-compliance justifies disallowance. The 5% disallowance by CIT(A) was reasonable and warranted. Treatment of Competing Arguments: The Revenue's position was supported by the record of non-production of evidence. The appellant's arguments were found unsubstantiated. Conclusion: Ground of appeal No.4 was dismissed, confirming the order of the CIT(A). 3. SIGNIFICANT HOLDINGS "Non-submission of remand report by the assessing officer cannot be construed as submission of an 'no adverse report'." This principle underscores that silence or absence of report is not acceptance of the assessee's contentions and that proper communication and reasoned findings are essential. "Production of all evidences in respect of claims of an expenditure is Primary responsibility of every taxpayer and the same cannot be loosely brushed aside." This establishes the fundamental obligation of the assessee to substantiate claims with documentary evidence, failure of which justifies disallowance. The Tribunal established the principle that even if a ground of appeal was not raised before the lower authority, it may be admitted in the interest of justice and remanded for verification. Final determinations:
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