ITO Vs Oring Industrial Networking Pvt. Ltd. (ITAT Pune)
Rule 46A: Deletion of ₹7.05 Crore Additions Cannot Stand Without Reasons for Admitting Fresh Evidence and AO’s Remand Report
Background of the Dispute
The Revenue challenged the order dated 24 November 2025 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, deleting two additions aggregating to ₹7,04,84,263.
The additions comprised ₹6,90,30,324 under section 69C concerning a difference between import values and purchases disclosed in the return, and ₹14,53,939 under section 69A concerning bank credits exceeding the reported sales turnover.
The assessee company had filed its return on 30 October 2022, declaring income of ₹86,40,970.
Its case was selected for complete scrutiny under CASS because of large turnover without an audit under section 44AB and purchases reported in the return being lower than the invoice value of imports appearing in the Export-Import data.
The Tribunal’s decision ultimately turned on the procedure followed while accepting additional evidence, rather than the substantive correctness of the two additions.
Difference Between Import Data and Book Purchases
During assessment, the Assessing Officer compared the import values appearing in the relevant data with purchases disclosed in the return and identified a difference of ₹6,90,30,324.
The assessee did not furnish the supporting details required to reconcile the difference. These included party-wise purchases, stock movements and sales explanations linked to the purchases recorded in the books.
In the absence of a supported reconciliation, the Assessing Officer treated the difference as unexplained expenditure on purchases under section 69C.
The assessment issue therefore concerned an unreconciled variation between external import information and the purchase figures disclosed by the assessee.
Bank Credits Exceeded Reported Turnover
The Assessing Officer also compared the sales turnover disclosed in the return with credits appearing in the bank statement.
The assessee had reported turnover of ₹9,41,42,235, whereas total bank credits amounted to ₹9,55,96,174. The resulting difference was ₹14,53,939.
Since the assessee did not furnish a satisfactory explanation supported by documentary evidence, the Assessing Officer treated this difference as unexplained money under section 69A.
Both additions were challenged before the Commissioner (Appeals).
Commissioner Deleted Additions on Fresh Evidence
During the first appellate proceedings, the assessee furnished further submissions and additional evidence. The Commissioner accepted that material and deleted both additions.
However, the Tribunal found two deficiencies in the appellate process.
The Commissioner had neither called for a remand report from the Assessing Officer nor recorded reasons for admitting the additional evidence.
These omissions were material because the assessment additions had arisen from the assessee’s failure to produce the necessary reconciliations and supporting documents before the Assessing Officer.
The Commissioner’s reliance on fresh evidence therefore required compliance with Rule 46A of the Income-tax Rules, 1962.
Tribunal’s Findings on Rule 46A
The assessee did not appear before the Tribunal and had also remained unrepresented on earlier hearing dates. The Tribunal consequently proceeded on the available record after hearing the Departmental Representative.
It noted that the Assessing Officer had made the section 69C addition because the variation between CBIC data, import invoice values and purchases disclosed in the return had not been substantiated.
Similarly, the section 69A addition arose because documentary evidence explaining the excess bank credits had not been furnished.
Relief based on additional evidence could not be sustained without recording justification for its admission and obtaining the Assessing Officer’s examination through a remand report.
The Tribunal held that the Commissioner’s approach violated Rule 46A and required fresh adjudication.
Matter Restored with Specific Directions
The Tribunal restored the disputed issues to the Commissioner (Appeals), NFAC.
The Commissioner was directed to call for a remand report from the Assessing Officer and provide justification for admitting the additional evidence through a speaking order.
Thereafter, the issues must be decided on facts and law after giving the assessee a due opportunity of being heard.
The Revenue’s appeal was allowed for statistical purposes.
The Tribunal did not uphold either addition on merits. Equally, it did not approve the explanations on which the Commissioner had granted relief. Both issues remain open for examination in the restored proceedings.
Author’s Comments
The ruling underlines that additional evidence and the procedure governing its use are equally important in appellate proceedings.
Where assessment additions arise from missing reconciliations, documents subsequently furnished may materially alter the outcome. Their admission must therefore be supported by reasons, and the Assessing Officer must receive the required opportunity to examine them.
For the import difference, a proper reconciliation must explain how the external data relates to purchases recorded in the books. For excess bank credits, the evidence must identify the nature of the entries and explain their relationship with reported turnover.
The decision establishes a procedural requirement; it does not establish that every import-data mismatch or excess bank credit automatically constitutes unexplained income.
A reasoned admission order, verification through remand proceedings and an effective hearing would enable the substantive dispute to be decided on an examined evidentiary record.
FULL TEXT OF THE ORDER OF ITAT PUNE
This appeal filed by the Revenue is directed against the order dated 24.11.2025 of the Ld. CIT(A) / NFAC, Delhi relating to assessment year 2022-23.
2. None appeared on behalf of the assessee at the time of hearing nor any application seeking adjournment of the case has been filed. A perusal of the order sheet entries shows that in previous occasions also no one was appearing before the Tribunal when the appeal was fixed for hearing. Today also when the name of the assessee was called, none appeared on behalf of the assessee. Under these circumstances, we deem it proper to decide this appeal on the basis of material available on record and after hearing the Ld. DR.
3. Although a number of grounds have been raised by the Revenue, however, these all relate to the order of the Ld. CIT(A) / NFAC in deleting addition of Rs.6,90,30,324/- made by the Assessing Officer on account of variation in respect of unexplained investment u/s 69C of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) and Rs.14,53,939/- on account of unexplained money u/s 69A of the Act.
4. Facts of the case, in brief, are that the assessee is a company and filed its return of income on 30.10.2022 declaring total income of Rs.86,40,970/-. The case was selected under CASS under complete scrutiny for the following reasons:
(i) Large Turnover but books of account not audited u/s 44AB
(ii) Purchase shown in the ITR is less than the invoice value of imports shown in the Export-Import data
5. Accordingly, statutory notices u/s 143(2) and u/s 142(1) of the Act were issued and served on the assessee in response to which the assessee filed certain details before the Assessing Officer.
6. During the course of assessment proceedings the Assessing Officer compared the shipping bills (import value) with the purchases shown in ITR and found difference of Rs.6,90,30,324/-. In absence of any explanation given by the assessee with supporting details such as party-wise purchases, stock movement / sales explaining with book purchases, etc, the Assessing Officer treated the difference as unexplained expenditure on account of purchases and made addition of Rs.6,90,30,324/- by invoking the provisions of section 69C of the Act. The Assessing Officer similarly, noted that the assessee has disclosed total sales / turnover at Rs.9,41,42,235/-. However, a perusal of credit entries in the bank statement shows that the total amount credited is Rs.9,55,96,174/-. Thus, there is a difference of Rs.14,53,939/- between the total credits in the bank account and the total sales turnover disclosed in the ITR. In absence of any satisfactory explanation furnished by the assessee on this issue, the Assessing Officer treated such difference as unexplained money and accordingly made addition of Rs.14,53,939/- u/s 69A of the Act. Thus, the Assessing Officer determined the total income of the assessee at Rs.7,91,25,233/-.
7. In appeal, the Ld. CIT(A) / NFAC, based on various submissions made by the assessee, deleted both the additions.
8. Aggrieved with such order of the Ld. CIT(A) / NFAC, the Revenue is in appeal before the Tribunal.
9. We have heard the Ld. DR and perused the record. It is an admitted fact that due to non-submission of requisite details before the Assessing Officer to substantiate the variation between CBIC data, the invoice value of import bills and the purchases as per ITR, the Assessing Officer made addition of Rs.6,90,30,324/- by invoking the provisions of section 69C of the Act. Similarly, in absence of any supporting documentary evidence to explain the excess deposit in the bank account to the tune of Rs.14,53,939/-, the Assessing Officer treated the same as income u/s 69A of the Act. We find the Ld. CIT(A) / NFAC by accepting the additional evidences filed before him deleted both the additions. He has neither called for any remand report from the Assessing Officer nor has given any reason for accepting the additional evidences in violation of Rule 46A of the IT Rules, 1962. Under these circumstances, we deem it proper to restore the issue to the file of the Ld. CIT(A) / NFAC with a direction to call for a remand report from the Assessing Officer and give his justification for admission of the additional evidences by passing a speaking order. Needless to say he shall decide the issue as per fact and law after providing due opportunity of being heard to the assessee. We hold and direct accordingly. The grounds raised by the Revenue are accordingly allowed for statistical purposes.
10. In the result, the appeal filed by the Revenue is allowed for statistical purposes.
Order pronounced in the open Court on 13th October, 2026.
