The Tax Publishers2020 TaxPub(DT) 4056 (Del-Trib) : (2020) 208 TTJ 0129

INCOME TAX ACT, 1961

Section 250

Since audited financial statements and audited report could not be filed during the course of assessment proceedings due to factors entirely beyond the control of assessee, in the interest of substantial justice same filed as additional evidence before CIT(A) was admitted and AO was directed to make de novo assessment after duly considering audited financial statements and audit report of assessee and after giving proper opportunity to the assessee to present its case.

Appeal [CIT(A)] - Additional evidence - Admissibility - Non-filing of evidence before AO due to factors beyond control of assessee

AO required assessee-company to provide audited accounts and details of expenses incurred during the year. However, due to lack of available data, assessee was unable to provide said details. AO assessed income at an ad hoc 12% mark-up on total cost of providing services by the company to its parent company. Before CIT(A) assessee filed application under rule 46A for furnishing additional evidences, i.e., audited financial statemens, tax audit report, Form 3CEB, transfer pricing documentation, computation of income basis audited financial statements. CIT(A) rejected assessee's application. Before Tribunal, assessee contended that audit of financial statements could be completed only by the time assessment proceedings were already concluded. Further, assessee also filed application with CLB requesting compounding of offences under Companies Act, 1956 for not filing audited annual account wherein it was submitted that reasons for delay were beyond the control of company as there was change in management structure from time to time and there was an absence of persons responsible for compliances and CLB compounded the offences. Held: Assessee could not file audited financial statements along with audit report either at the time of filing of return or during the course of assessment proceedings. Also, there is no prohibition for admitting additional evidence at appellate stage, though, same may pertain to a period after completion of the assessment proceedings. Since audited financial statements and audited report could not be filed during the course of assessment proceedings due to factors entirely beyond the control of assessee, in the interest of substantial justice, AO should de novo make assessment after duly considering audited financial statements and audit report of assessee and after giving proper opportunity to the assessee to present its case.

Relied:CIT v. Gani Bhai Wahab Bhai (1998) 232 ITR 900 (MP) : 1998 TaxPub(DT0 817 (MP-HC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2004-05



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