DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE- 6(1)(1), BANGALORE vs. M/S. GARUDA BUILDERS, BENGALURU

In C.O., the assessee has raised the following grounds :

The learned Departmental Representative submitted that the CIT (Appeals) ought not have accepted the plea of the assessee that relevant documents were C.O. No.19/Bang/2020 impounded during the survey on assessee's sister concern without proof of support of claim and he has deleted the addition without giving an opportunity of hearing to the Assessing Officer. The learned Departmental Representative sought for an opportunity to Assessing Officer to consider the plea of the assessee that the addition is wrong as the assessee has not responded to the notice of the Assessing Officer for the assessment year under consideration. On the other hand, the learned Authorised Representative for the assessee submitted that there was a survey in the case of assessee's sister concern, the SLV Developers Pvt. Ltd. The Department authorities impounded all the books of accounts of SLV Developers Pvt. Ltd. and other sister concern, the assessee is also one among them. Such is the fact to provide the information sought by the Assessing Officer u/s. 142(1) or show cause, the assessee requested the Assessing Officer to get Xerox copies of impounded documents. The Assessing Officer failed to provide the same and also after the survey was conducted, books of accounts were impounded, The impounding order u/s. 133A(3) of the Act has not been served on the assessee till date. The Assessing Officer also has acted against the assessee in a non-co- operative or a rude manner for the reason that even up to the date of passing of order, the Assessing Officer has not provided any Xerox copies of impounded material to the assessee to represent its case. The ld. AR submitted that such being the fact, the Assessing Officer’s statement that the assessee has not responded during the course of assessment is completely false. Further it was submitted that C.O. No.19/Bang/2020 the addition made towards unexplained work in progress is nothing but closing stock. Such closing stock should be treated as opening stock for the next assessment year. The ld. AR argued that this being a tax neutral and such addition made by the Assessing Officer cannot be sustained.

We have heard both the parties and perused the material on record. It is an admitted fact that in this case the assessment order was passed exparte u/s. 144 of the Act. Before the CIT (Appeals), the assessee furnished certain financial statements and the CIT (Appeals) without calling Remand Report/comments from the Assessing Officer passed the appellate order which is improper. In our opinion, when the assessment order is passed exparte without any response from the assessee to the notice issued by the Assessing Officer, the CIT (Appeals) shall call for Remand Report before deciding the issue on merit. Since the CIT (Appeals) failed to do so, in our opinion, it is appropriate to remit the entire dispute to the file of Assessing Officer for fresh consideration. The Assessing Officer shall provide all material impounded to the assessee before deciding the issue on merit. The appeal of Revenue is partly allowed for statistical purposes.

In the first ground of C.O., the assessee alleges that the assessment order ws passed by ACIT, Circle 6(3)(1), Bangalore. However, the appeal was filed by DCIT Circle 6(1)(1), Bangalore. As such, the appeal is not maintainable.

Ground Nos.2 & 3 of C.O. are only to support the order of CIT (Appeals) stating that the addition was rightly deleted. Since the issue on merit we have remitted to the file of Assessing Officer in Revenue’s appeal, the ground Nos.2 & 3 of C.O. have become infructuous and dismissed accordingly.

In the result, the Revenue’s appeal is partly allowed for statistical purposes and C.O. by assessee is dismissed. Pronounced in the open court on the date mentioned on the caption page.