Personal hearing is mandatory though not requested by assessee if books of account to be examined: HC
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- Last Updated on 5 July, 2022
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Case Details: Vamsha Retail Ventures (P.) Ltd. v. ACIT - [2022] 139 taxmann.com 336 (Madras)
Judiciary and Counsel Details
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- C. Saravanan, J.
- R. Sivaraman for the Petitioner.
- N. Dilipkumar, Sr. Standing Counsel for the Respondent.
Facts of the Case
A survey was conducted at the premises of the assessee during which a hard disk of the computer containing tally software details was found and seized. Under tally software, the assessee had declared a gross profit of Rs. 5.65 crores approx. However, it filed its regular return of income and declared the net profit as Rs. 3.32 crores (approx.)
The Assessing Officer (AO) held that the difference between the net profit was reported for the assessment year to the tune of Rs. 2.33 crores [Rs. 5.65 crores – Rs. 3.32 crores] should be treated as undisclosed business income of the assessee and made addition accordingly.
The assessee contended that the accounts in the Tally software were a draft and unaudited balance sheet, wherein the profit declared in ITR was refined and audited. AO rejected the assessee’s contention and passed the order. The assessee filed writ petition before the Madras High Court.
High Court Held
The High Court held that the undisclosed business profit had been arrived from the net profit in the books of account as on the date of the survey and the amounts declared in the income tax. This would have definitely required a proper assessment by calling the petitioner for a personal hearing.
Though the assessee had not specifically requested for a personal hearing, the fact remains that where the books of account have to be examined for arriving at a proper conclusion, a personal hearing is mandatory.
Therefore, there was a procedural infraction in the assessment order passed by AO. The matter was remitted back to AO to pass an appropriate order preferably within a period of three months from the date of receipt of the copy of this order.
List of Cases Referred to
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- EShakti.com (P.) Ltd. v. Asstt. CIT [W.P. Nos. 1260 and 1264 of 2020, dated 17-6-2021] (para 8).
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