DCIT Vs Villa Mode Exports (India) Pvt Ltd (ITAT Mumbai)
ITAT Mumbai held that CIT(A) deleted the additions/ disallowances on the basis of information/ evidences filed before him without providing any opportunity to AO is in violation of rule 46A of the Income Tax Rules. Accordingly, matter restored back to CIT(A).
Facts- The case of the assessee was selected for scrutiny and statutory notice under the Income Tax Act were issued. However, the assessee didn’t respond to explanation or query raised by AO. In absence of response, AO made addition u/s 68 and other disallowances.
CIT(A) deleted the addition/ disallowances. Being aggrieved, the present appeal is filed by revenue.
Conclusion- Held that the order of the Ld. CIT(A) need to be set aside on two grounds. Firstly, the Ld. CIT(A) has considered the information or evidences filed by the assessee before him in violation of the Rule 46A of the Rules without providing any opportunity to the Assessing Officer for his comments. Secondly, the Ld. CIT(A) has not given proper reasoning for deleting the additions. Accordingly, we set aside the order of the Ld. CIT(A) and restore the matter back for deciding afresh after following due procedure of law. The ground No. iv of the Revenue is allowed . Since we have restored the appeal back to ld CIT(A), the other grounds of the appeal are rendered academic and not required to be adjudicated on merit.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This appeal by the Revenue is directed against order dated 27.02.2023 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2016-17, raising following grounds:
i. “Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) is right in deleting addition amounting to Rs. 1,63,64,050/- made u/s 68 of the Act neglecting the fact that the assessee has not furnished complete details during the assessment proceedings regarding High Sea sales amounting to Rs. 1,63,64,050/- and thus assessee had failed to establish genuineness of these credit entries in books of account”
ii. “Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) is right in deleting disallowance amounting to 50% of the employee benefit expenses on ad hoc basis, neglecting the fact recorded by Assessing officer that no details/ bifurcation were submitted by the assessee regarding employee benefit expenses and summarily allowing the appeal of assessee”
iii. “Whether on the facts and in the circumstances of the case and in law, the Id. CIT(A) is right in deleting disallowance of purchases of Rs.50,00,000 neglecting the fact recorded by Assessing officer that necessary details were not provided and summarily allowing the appeal of assessee”
iv. “Whether on the facts and in the circumstances of the case and in law, the Id. CIT(A) is right in deleting addition/ disallowances made by the A.O. without remanding the matter to the file of A.O. in case new details were filed by the assessee which were never filed before the A. O.
2. Briefly stated, facts of the case are that the assessee filed its return of income on 30.11.2016 declaring loss of Rs. 1,94,60,215/-. The return of income filed by the assessee was selected for scrutiny and statutory notices under the Income-tax Act, 1961 (in short ‘the Act’) were issued from time to time. The Assessing Officer in the assessment order passed u/s 144 of the Act on 12.012.2018 has noted that initially on the first date, the assessee had filed manual submission on 27.02.2018 . Since, the case was under scrutiny through electronic mode ,therefore, the Assessing Officer subsequently issued notices through the Income-tax Department Portal (ITBP) calling for various information and explanation regarding the entries of purchase and sales, foreign currency fluctuation loss, evidence in support of expenses etc. However, the assessee did not respond to explanation or query raised by the Assessing Officer on the various issues. The Assessing Officer after taking prior approval from higher authority issued notice in physical format also. But the relevant information sought by the Assessing Officer was not filed by the assessee. The Assessing Officer also issued a final show cause notice asking the assessee as why the assessment should not be completed as an ex -parte within the section 144 of the Act. In absence of relevant submissions or explanation on the part of the assessee, the Assessing Officer made disallowance/addition as follows :
