ITO Vs AL Safa Foods (ITAT Visakhapatnam)
The Revenue appealed against the order of the Commissioner of Income Tax (Appeals) [CIT(A)], who had set aside an assessment framed under Sections 147 read with 144B of the Income-tax Act, 1961, and remanded the matter to the Assessing Officer (AO) for a fresh assessment. The assessee also filed a cross-objection supporting the CIT(A)’s order.
The reassessment proceedings were initiated after the AO received information that the assessee had undertaken substantial cash deposits of ₹22.65 lakh and cash withdrawals of ₹1,708.26 lakh without filing a return of income. After issuance of notice under Section 148, the assessee filed its return declaring a loss of ₹1,80,270. During reassessment, the AO found that the assessee had made cash purchases aggregating to ₹5,51,62,151, which, according to the AO, violated Section 40A(3). Accordingly, the AO disallowed the entire amount and completed the assessment under Sections 147 read with 144B by determining the income at ₹5,49,81,881.
Before the CIT(A), the assessee contended that its written submissions filed during assessment were not received in a legible format on the income-tax portal, that the cash purchases in its buffalo meat business were below ₹20,000 on each occasion and therefore not hit by Section 40A(3) read with Rule 6DD(e)(ii), and that additional evidence comprising a cash book was produced to substantiate these claims. The CIT(A) observed that these issues had not been examined by the AO, accepted the additional evidence, and set aside the assessment with a direction to the AO to make a fresh assessment after granting reasonable opportunity to the assessee.
