ITO Vs Adhithi Infra Projects Private Limited (ITAT Hyderabad)
Rule 46A procedure can’t be short-circuited: ITAT sets aside relief granted without awaiting remand report
Hyderabad ITAT allowed Revenue’s appeal for statistical purposes & set aside the order of CIT(A) on the issue of addition u/s 68. Tribunal noted that AO had completed assessment u/s 144 by estimating income at 8% of gross contractual receipts of ₹6.78 crore & by treating borrowings aggregating to ₹4.35 crore as unexplained cash credits due to total non-compliance by Assessee.
Before CIT(A), Assessee filed additional evidence under Rule 46A. Though CIT(A) called for a remand report, Assessee again failed to respond to remand notices, & even before completion of the second remand exercise, CIT(A) proceeded to drastically reduce the addition from ₹4.35 crore to ₹6.20 lakh. ITAT held that once additional evidence is admitted & remand is called for, AO must be given a complete & effective opportunity to examine the evidence & furnish a report. Deciding the appeal without awaiting the remand report amounts to denial of AO’s statutory right & violates principles of natural justice, especially when Assessee was persistently non-compliant. Accordingly, ITAT restored the matter to the file of CIT(A) with directions to obtain a proper remand report & adjudicate the issue afresh in accordance with law. Revenue appeal was allowed for statistical purposes.
