ACIT Vs Chitavalasah Jute Mills Ltd (ITAT Agra)
Assessee’s return for AY 2012-13 was assessed ex-parte u/s 144 r.w.s.143(3) with large ad-hoc additions-40% disallowance of sundry creditors Rs.11,90,27,242, disallowance of interest Rs.99,69,661, depreciation Rs.67,84,622 & other expenses Rs.12,76,916.
In the first round Tribunal remanded matter to CIT(A) to examine additional evidence. In the second round Assessee furnished complete ledgers, schedules & explanations; AO, during remand, merely objected to admission of evidence without making any enquiry though notices were issued on 28.03.2024 & reply was filed on 02.04.2024 .
CIT(A) noted from financials that sundry creditors were largely opening balances & AO neither invoked s.68 nor s.41 nor made any enquiry ; therefore entire ad-hoc 40% disallowance was deleted. Interest disallowance was analysed item-wise: interest on cash-credit Rs.85,79,376 hit by s.43B & upheld; interest on public fixed deposits Rs.13,90,285 allowed as s.43B did not apply. Depreciation addition of Rs.67,84,622 deleted since Assessee had already disallowed the same in computation. Under “other expenses”, CIT(A) sustained Rs.12,76,916 only because legal expenses lacked supporting particulars such as forum, counsel details etc.
Before Tribunal, Revenue sought remand claiming AO had no opportunity to verify evidence, but Tribunal held AO himself chose not to examine evidence during remand & CIT(A) had already conducted detailed verification. Since Revenue could not controvert CIT(A)’s factual findings, Tribunal upheld CIT(A)’s relief & dismissed Revenue’s appeal.
