INCOME TAX OFFICER, JAGDALPUR vs. DURGA SAW MILL, DANTEWADA

In this Revenue’s appeal in Ground of appeal No.3, they have assailed that the Ld.CIT(Appeals)/NFAC had provided relief to the assessee without adhering to Rule 46A(3) of the I.T Rules, 1962 while admitting certain additional evidences at the time of appeal proceedings. In this regard, relevant findings of the Ld.CIT(Appeals)/NFAC are extracted as follows: “6.2 During the appellate proceedings, the appellant submitted that the amount represented genuine sales proceeds for teak wood sold to M/s. Ankit Trading Co. against "C" Forms and received via banking channels. The appellant contended that the A.O failed to disprove the genuineness of the sales or the existence of stock and erred by making an addition under Section 68 without rejecting books of account. 6.3 I have considered the assessment order, the appellant's submissions, and the material placed on record, including the bank statements, "C" Forms, audited financials. The core issue is the applicability of Section 68 when the appellant claims the credit entry is a sales receipt recorded in regular books of account. The appellant has maintained a consistent stand that it did not had any purchase transaction with M/s. Ankit Trading Co., but rather sold goods to them and received payment.

At the time of hearing, the Ld. Counsel for the assessee submitted that it is only “C” Forms which is an additional evidence filed during the first appellate proceedings, and rest all other documents were furnished before the A.O. He further submitted that this “C” Forms pertains to sale transactions and corresponding payment of VAT.

Per contra, the Ld. Sr. DR referred to Paras 6.2 & 6.3 of the order of the Ld. CIT(Appeals)/NFAC and submitted that this “C” Forms is crucial in determining the genuineness of the transactions with M/s. Ankit Trading Co. and payment received by banking channels which therefore, should have been forwarded to the A.O for his response as per Rule 46A(3) of the I.T. Rules, 1962.

Having heard the submissions of the parties herein, I am of the considered view that admittedly, “C” Forms is an additional evidence that had been considered independently by the Ld. CIT(Appeals)/NFAC without confronting the A.O for his response on the same. That as submitted by the Ld. Counsel for the assessee such document provides transactions details and payments of VAT. It has also been submitted by the Ld. Sr. DR simultaneously that such “C” Forms is important to understand the genuineness of sale transactions with M/s. Ankit Trading Co. It is also the fact that the said “C” Forms had been independently considered by the Ld. CIT(Appeals)/NFAC without providing any opportunity to the A.O for his response regarding the same. In other words, there has been no ground verification regarding correctness of such transactions as per “C” Forms which therefore, needs factual verification at the level of A.O and most importantly, Rule 46A(3) of the IT Rules, 1962 has to be complied with by the first appellate authority while admitting the addition evidences.

In view thereof, order of the Ld. CIT(Appeals)/NFAC is set aside and the matter is remanded to its file to comply with Rule 46A(3) of the IT Rules, 1962, call for remand report regarding additional evidences admitted and upon receipt of such remand report and submissions of the assessee, the said authority shall denovo adjudicate the matter as per law while complying with the principles of natural justice. The assessee shall

That as per above terms, the appeal of the Revenue is allowed for statistical purposes.