Kolkata ITAT eliminates additions made without scrutinizing the expenditure nature of fetching that the expenses were made for the business purposes at the time of operation of a business, towards which the taxpayer has provided all the basic information which was not reviewed via AO, the addition made by AO is been deleted by the Kolkata ITAT. The members of the ITAT, Rajpal Yadav (Vice-President) and Girish Agrawal (Accountant Member) followed that “the inquiry at the end.
On finding that expenses were made towards the businesses at the time of business, for which taxpayers have furnished basic information that was not cross-confirmed via the AO, the Kolkata ITAT deleted the addition that the AO made.
The Members of the ITAT including Rajpal Yadav (Vice-President) and Girish Agrawal (Accountant Member) noted that “the inquiry at the end of the Assessing Officer is a flawed one. Apart from this observation, we find that he has not 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, the Assessing Officer suddenly took the 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)
According to the brief facts of the case, the taxpayer’s return was set for scrutiny, in which AO has alleged that he has issued notices under section 133(6) to all the recipients to whom the commission was paid by the assessee. Three recipients of the commission did not answer 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 the Income tax Act, which when challenged before the CIT(A), was dismissed for want of prosecution. The taxpayer has made majority payments via RTGS or account payee cheque, the coram observed.
The coram while seeing that it is not determinable if the summons have ever been served on or not on the creditors, stated that the inquiry at the AO’s end is flawed. The Bench followed that AO has not studied how the impugned expenditure was not required for the business.
The Coram remarked that had the assessment machinery remained in motion post-selection of the case for scrutiny assessment, probably the Assessing Officer would have had assistance from the Officers where these taxpayers are situated.
But rather than choosing that course, he initially maintained the proceeding dormant and then all of a sudden completed it hurriedly, the Coram expressed.
The Coram stated that the Commissioner of Income Tax(CIT(A)) has skipped all the submissions, which are available on the Portal but ignored the plea for want of prosecution.
Hence, on finding failure at AO’s end, the ITAT authorized the appeal of the taxpayer.
| Case Title | Ankit Impex Marketing Services Pvt. Ltd Vs Income Tax Officer |
| Citation | I.T.A. Nos. 619 & 620/KOL/2023 |
| Date | 17.01.2024 |
| Assessee By | Anil Kochar |
| Revenue By | Prabhakar Prakash Ranjan |
| Kolkata ITAT | Read Order |