ITAT Raipur Sets Aside Deletion Of Bogus Purchase Addition For Want of Remand Report From AO

The Raipur bench of the Income Tax Appellate Tribunal (ITAT) has remanded a tax appeal after holding that the Commissioner of Income Tax (Appeals) could not delete an addition based on fresh evidence without first seeking a remand report from the Assessing Officer.

A coram of Judicial Member Partha Sarathi Chaudhury and Accountant Member Arun Khodpia held that the Commissioner of Income Tax (Appeals), NFAC, could not have decided the case on merits after admitting additional evidence without first obtaining a remand report from the Assessing Officer.

"It is clearly evident that no remand report has been called for and even if the A.O was directed to submit remand report the A.O had not submitted the same....The Ld. CIT(Appeals)/NFAC had considered all additional evidences without any remand report from the A.O nor he had provided any evidence on record to suggest that what was the communication between the first appellate authority and the A.O and that in spite of the direction of the Ld. CIT(Appeals)/NFAC to the A.O to file a remand report, why the A.O had not filed the same before the said authority.", the bench observed

It added, "Be that as it may, facts are clear that additional evidence has been considered in violation to Rule 46A(3) of the Act while giving relief to the assessee"

The case involved Goenka Rockwool India Private Limited. The company had originally declared an income of about Rs 30.53 lakh, which was assessed at Rs 41.22 lakh. The assessment was later reopened after the Commercial Tax Department flagged alleged purchases from non-genuine proprietorship concerns said to be involved in bogus billing. In the reassessment, the Assessing Officer added Rs 1.77 crore as unexplained purchases, taking the total income to around Rs 1.81 crore.

On appeal, the CIT(A) admitted fresh documents produced by the assessee, including ledger accounts, bills, and proof of payments, and deleted the entire addition. The Revenue challenged this before the tribunal. According to it, although the CIT(A) recorded that the material was forwarded to the Assessing Officer, no remand report was actually received, and the deletion was granted by assuming the AO had no objections.

Agreeing with the Revenue, the tribunal noted that this approach was not in line with the duties cast on the appellate authority under Sections 250(4) and 250(6) of the Act.

Without examining the merits, the tribunal set aside the appellate order and remanded the matter for fresh consideration after obtaining a remand report.