DCIT Vs Yantrik Engineering Pvt. Ltd (ITAT Pune)
The appeal before the Income Tax Appellate Tribunal, Pune Bench, arose from Assessment Year 2020–21 and was filed by the Revenue against the order dated 26 September 2023 passed by the National Faceless Appeal Centre (NFAC), Delhi. The NFAC order had emanated from an assessment framed on 29 September 2022 under section 143(3) read with section 144B of the Income Tax Act, 1961.
The assessee, a private limited company, had filed its return of income for A.Y. 2020–21 on 31 March 2021 declaring total income of ₹15,91,33,440. The case was selected for scrutiny, statutory notices under sections 143(2) and 142(1) were issued, and replies were furnished on multiple dates. Upon completion of assessment proceedings, the Assessing Officer (AO) assessed the total income at ₹32,52,61,258 after making aggregate additions of ₹16,61,07,818. These additions included a major addition of ₹13,88,04,279 on account of alleged inflation of cost of property resulting in low capital gains, disallowance of brokerage expenditure of ₹40 lakh, addition towards undisclosed contract receipts, disallowance of various expenses under sections 37, 36(1)(va) read with section 2(24)(x), and section 43B.
The assessee carried the matter in appeal before the CIT(A). After considering the submissions, the CIT(A) deleted all additions except the disallowance under section 36(1)(va), which was sustained as being covered against the assessee by the judgment of the Supreme Court in Checkmate Services Pvt. Ltd.. Aggrieved by the relief granted, the Revenue preferred an appeal before the Tribunal.
Before the Tribunal, no one appeared on behalf of the assessee, though detailed written submissions were filed along with a voluminous paper book containing documents, some of which were admittedly filed for the first time before the CIT(A), and others even before the Tribunal as additional evidence. The Departmental Representative strongly opposed the order of the CIT(A), contending that substantial relief was granted based on assumptions, without proper verification, and by admitting additional evidence in violation of Rule 46A of the Income-tax Rules, 1962, without calling for a remand report from the AO.
On examination of the record, the Tribunal noted that the major additions related to capital gains, particularly payments aggregating ₹13,55,81,655 claimed as cost of improvement, allegedly made to three parties under unregistered and notarised agreements. Other significant additions related to undisclosed contract receipts and disallowance of expenses. The Tribunal also took note of the assessee’s own admission that several documents had been filed for the first time before the CIT(A), and additional documents were placed before the Tribunal as fresh evidence.
The Tribunal observed that the Revenue’s grievance regarding violation of Rule 46A was substantiated, as the CIT(A) had considered additional evidence without calling for a remand report from the AO. Since these additional documents had a direct bearing on most of the additions deleted by the CIT(A), the Tribunal held that the issues could not be adjudicated conclusively without proper verification at the first appellate stage.
Accordingly, the Tribunal deemed it appropriate to set aside the impugned order and restore the matter to the file of the CIT(A) for fresh adjudication on merits. The CIT(A) was directed to examine all additional evidence filed, including those produced before the Tribunal, after calling for a remand report from the jurisdictional Assessing Officer. The Tribunal further directed that adequate opportunity of rebuttal be given to the assessee and reasonable opportunity of hearing be afforded before passing a fresh speaking order.
In view of the above, the appeal of the Revenue was allowed for statistical purposes, and all issues were remanded for reconsideration in accordance with law.
FULL TEXT OF THE ORDER OF ITAT PUNE
