ITO Vs Durga Saw Mill (ITAT Raipur)
C-Forms as Additional Evidence Require AO Verification Under Rule 46A(3); Relief Granted on Basis of Additional Evidence Set Aside Due to Non-Compliance with Rule 46A; ITAT Says Additional Documentary Evidence Cannot Be Accepted Without Giving AO Opportunity; Bogus Entry Dispute Sent Back Because C-Forms Were Not Examined by Assessing Officer.
The Income Tax Appellate Tribunal (ITAT), Raipur Bench allowed the Revenue’s appeal for statistical purposes and remanded the matter to the CIT(A)/NFAC after holding that Rule 46A(3) of the Income Tax Rules, 1962 must be complied with when additional evidence is admitted during appellate proceedings.
The dispute arose from the order of the CIT(A)/NFAC dated 20.01.2026 for Assessment Year 2017-18. The Revenue challenged the relief granted to the assessee on the ground that the CIT(A) had considered additional evidence, particularly “C” Forms, without giving the Assessing Officer an opportunity to examine or respond to the same as required under Rule 46A(3).
Before the CIT(A), the assessee had argued that the disputed amount represented genuine sale proceeds from teak wood sold to M/s. Ankit Trading Co. against “C” Forms and that payments were received through banking channels. The assessee submitted bank statements, audited financials, sales invoices, PAN details, and “C” Forms to support the genuineness of the transactions. The CIT(A) accepted the explanation and observed that once the assessee furnished documentary evidence, the burden shifted to the Assessing Officer to prove that the transactions were non-genuine. The CIT(A) also noted that the Assessing Officer had relied only on third-party information alleging bogus entries without independently investigating the transactions concerning the assessee.
