Case Number: ITA 527/DEL/2019
Appellant: Jitender Sharma, Delhi
Respondent: ACIT, Circle-41(1), New Delhi
Assessment Year: 2014-15
Result: 2014-15
Case Filed on: January 24, 2019
Order Type: Final Tribunal Order
Date of Order: March 29, 2023
Pronounced on: March 29, 2023
The case ITA 527/DEL/2019 involves Jitender Sharma, a proprietor of Sharma Chemicals & Adhesives, located in New Delhi, as the appellant, and the Assistant Commissioner of Income Tax (ACIT), Circle-41(1), New Delhi, as the respondent. This case pertains to the assessment year 2014-15 and addresses discrepancies found during a survey under section 133A of the Income Tax Act, 1961. The appeal was filed on January 24, 2019, and the final order was pronounced on March 29, 2023.
During a survey conducted on August 22, 2013, discrepancies were found between the stock records maintained by Jitender Sharma and the physical stock present at his premises. The stock summary obtained from the computers of the appellant showed a closing stock balance of Rs. 7,38,38,926/-, whereas the physical stock was valued at Rs. 12,99,56,303/-, indicating a difference of Rs. 5,61,17,377/-. Additionally, vouchers and bills amounting to Rs. 28,00,000/- related to building construction and renovation were also found.
During the survey, Jitender Sharma voluntarily admitted the discrepancies in the stock and the expenses incurred on renovation. He declared an additional income of Rs. 5,61,17,377/- for the stock difference and Rs. 28,00,000/- for the renovation expenses. This admission was recorded in his statement under section 131 of the Income Tax Act. Post-dated cheques worth Rs. 2,00,00,000/- were issued by the appellant as a guarantee for the payment of tax.
Based on the admission, the Assessing Officer (AO) made an addition of Rs. 5,89,17,377/- to the appellant’s income for the assessment year 2014-15. The AO held that the admission was a crucial piece of evidence and the appellant’s repeated confirmation of the stock difference and renovation expenses further validated the addition.
Jitender Sharma later retracted his statement made during the survey and challenged the addition before the Commissioner of Income Tax (Appeals) [CIT(A)]. Despite multiple opportunities, the appellant failed to attend the hearings, resulting in the CIT(A) deciding the appeal ex-parte based on the available records. The CIT(A) upheld the addition, noting the appellant’s negligence in contesting the findings of the AO.
The case was subsequently brought before the Income Tax Appellate Tribunal (ITAT). The Tribunal noted the appellant’s repeated admissions during the survey and the lack of substantial evidence to contest the AO’s findings. However, the Tribunal recognized the principle of natural justice and the need to provide a fair opportunity to the appellant to present his case.
The Tribunal decided to remand the case back to the CIT(A) for a fresh decision, subject to the appellant depositing a cost of Rs. 25,000/- to the National Relief Fund within 30 days of the order. The Tribunal emphasized that the appellant must appear and provide the relevant documents before the CIT(A) and that any further default would result in the CIT(A) deciding the case without leniency.
The case ITA 527/DEL/2019 highlights the importance of adhering to legal procedures and the consequences of discrepancies found during tax surveys. The Tribunal’s decision to remand the case for a fresh hearing underscores the principle of providing a fair opportunity for the appellant to present his case, while also holding him accountable for his initial negligence.
Order pronounced in the open court on March 29, 2023, by the members of the Tribunal:
[ANIL CHATURVEDI]
ACCOUNTANT MEMBER
[NARENDER KUMAR CHOUDHRY]
JUDICIAL MEMBER
Copy forwarded to:
//By Order//
Assistant Registrar, ITAT, New Delhi
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