ITO Vs Smt. Manisha Dixit (ITAT Hyderabad)
Rule 46A Evidence Needs Proper Scrutiny- One-Party Verification Not Enough: ITAT Sends Rs.7 Crore Purchase Case Back to AO
Assessee, proprietor of Sri Mallikarjuna Steels, declared income of Rs.15,02,320. AO treated purchases of Rs.7,00,52,477 from thirteen parties as unexplained expenditure u/s 69C on the ground that Assessee did not furnish bills, transportation memos, ledger accounts & payment proofs despite specific requisition. Assessment was completed u/s 143(3) r.w.s.144B.
Before CIT(A), Assessee submitted large volume of additional evidence under Rule 46A. CIT(A) admitted it but verified only documents relating to one party, Peermohd Farheen Anjum, found them satisfactory & presumed documents of remaining twelve parties to be similarly in order, thereby deleting entire addition. Revenue appealed.
Tribunal held that AO had no opportunity to verify crucial primary evidence & CIT(A)’s presumption based on checking only one party cannot substitute actual verification for all thirteen parties. Failure of AO to furnish remand report did not cure the evidentiary gaps. Tribunal also found the decision relied on by Assessee to be factually distinguishable. In the interest of justice, matter was restored to AO for de-novo verification of all purchase bills, ledger accounts, transportation memos & payment proofs. CIT(A)’s order set aside; Revenue’s appeal allowed for statistical purposes.
