ACIT Vs Satilila Charitable Society (ITAT Delhi)
Ex-parte Assessment & Rule 46A Violation – ITAT Delhi Remands Charitable Society Case Back to AO
The Society, registered u/s 12A, faced an ex-parte assessment u/s 144 as it failed to respond to statutory notices. AO, without rejecting books, made an ad-hoc disallowance of 50% of revenue expenditure.
Before CIT(A), Assessee furnished additional evidences such as financial statements & bank ledgers. CIT(A), without forwarding these documents to AO, proceeded to delete the additions & granted full relief to Assessee.
Department argued that Assessee deliberately did not cooperate during assessment though aware of notices. CIT(A) erred in admitting additional evidences in violation of Rule 46A, as AO was never given a chance to examine them. The letter filed by assessee after passing of assessment order showed clear knowledge of proceedings & intentional non-participation.
Assessee contended that AO made arbitrary disallowance without rejecting books of account. It was submitted that once a remand report was sought, AO should not be given repeated chances. Reliance was placed on Delhi HC ruling in PCIT v. Forum Sales P. Ltd. (ITA No.862/2019, decided on 01.03.2024).
ITAT noted that Assessment was indeed completed u/s 144. In appellate stage, assessee filed additional evidences but CIT(A) failed to forward the same to AO while seeking remand report. AO’s remand report dated 30.10.2023 categorically recorded that since financials & ledgers were not shared, he could not comment on them. Hence, there was a clear breach of Rule 46A procedure. The case law relied upon by assessee was distinguishable on facts.
