INCOME TAX OFFICER, W-2(1), GVMC (PART), VISAKHAPATNAM vs. SATHISH KUMAR ATTADA, GVMC (PART), VISAKHAPATNAM

Page. No 2

I.T.A.No.422/VIZ/2024 Sathish Kumar Attada was issued during the COVID-19 period and hence could not respond during the assessment proceedings. He submitted additional evidences in the form of the paper book contained statements from his broker BMA Wealth Creators Limited. The said additional evidences were forwarded to Ld. AO to submit the Remand Report on 21.02.2023. Subsequently, three reminders were sent to the Ld. AO requiring him to furnish the Remand Report. Ld. AO has not submitted any Remand Report till 10.04.2024. The Ld. AO vide letter dated 10.04.2024 only reiterated the facts which lead to passing of the best judgment assessment under section 144 of the Act. Therefore, the Ld. CIT(A) concluded that Ld. AO has nothing to say in his Remand Report with respect to additional evidences and Ld.CIT(A) thereafter admitted the additional evidences under Rule 46A of the I.T. Rules, and allowed the appeal of the assessee by relying on the additional evidences submitted by the assessee.

1. The Order of the Ld.CIT(A), National Faceless Appeal Centre (NFAC), Delhi iserroneous in law and to the facts of the case.

2. The Ld.CIT(A) erred in deciding the appeal in favour of the assessee without waiting for remand report called for from the Assessing Officer on the additional evidence submitted by the assessee during the course of appeal proceedings, which is in violation of Rule 46A (3) of Income-tax Rules, 1962.

3. The Ld.CIT(A) erred in deciding the appeal in favour of the assessee merely taking into consideration the assessee's submissions and merely stating that no defect has been pointed out by the Assessing Officer in the said books of account of the assessee. In the event of Assessing Officer failing to discharge his functions properly, obligation to conduct

Page. No 3

I.T.A.No.422/VIZ/2024 Sathish Kumar Attada proper inquiry shifts to Commissioner (Appeals) and CIT(A) cannot simply delete addition made by the Assessing Officer on ground of lack of inquiry by the Assessing Officer or on the ground that no defect has been pointed out in the books of account of the assessee by the Assessing Officer. The Ld.CIT(A) has plenary powers of Assessing Officer and should have himself worked out the profit margin and arrived at taxable income of the assessee after conducting proper enquiry instead of accepting the profit margin admitted by the assessee. 4 The appellant craves leave to add or delete or amend or substitute any ground ofappeal before and/or at the time of hearing of appeal. 5 For these and other grounds that may be urged at the time of appeal hearing, it isprayed that the above addition be restored.”

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I.T.A.No.422/VIZ/2024 Sathish Kumar Attada evidences have been submitted to the Ld. CIT(A). The Ld. CIT(A) has called for the Remand Report vide first letter dated 21.02.2023. He also submitted that the Ld. CIT(A) almost waited for more than one year for the Remand Report for which the Ld. AO has not responded. After examining the additional evidences, Ld. AO without going into the merits of the additional evidences, has reiterated the facts which lead to the best judgement assessment under section 144 of the Act. Ld.AR therefore submitted that the Ld. CIT(A) is right in concluding that Ld. AO does not have any objection to the admission of additional evidences and therefore Ld. CIT(A) by relying on the additional evidences after examining the same allowed the appeal of the assessee. He therefore pleaded that the order of the Ld. CIT(A) be upheld.

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I.T.A.No.422/VIZ/2024 Sathish Kumar Attada on the strength of the additional evidences submitted by the assessee. The Ld.CIT(A) found that books of accounts of the assessee are duly audited and no defect has been pointed out by the Ld. AO in the said books of accounts. Further the Tax Audit Report in Form 3CD for the impugned assessment year also clearly declares the loss at Rs.19,50,263/-. Since the transactions are duly recorded in the books of accounts of the assessee and audited by the statutory tax auditor, the Ld. CIT(A) concluded that section 69 of the Act had no application in these circumstances. The Ld. CIT(A) also observed that with respect to derivative transactions the real turnover should be the margin of these transactions and not the total value of transactions. Ld. CIT(A) has therefore held as follows:

“5.2.5 In view of the above, I am inclined to hold that since derivative transactions have been entered by the appellant are duly recorded in his books of account, no defect in the said books of account has been pointed by the AO, the AO has failed to reply to the call of this authority to submit remand report on the additional evidences filed by the appellant during the course of current appellate proceedings, ground of appeal raised by the appellant is allowed and the addition made by the AO is deleted.”

11. We find in the instant case, the Ld. AO has not pointed out any defects in the books of accounts and hence the provisions of section 69 of the Act cannot be applied. The Ld.AO also erred in examining the additional evidences while furnishing the remand report. Therefore, the Ld. CIT(A) has rightly considered the additional evidences while adjudicating the appeal in favour of the assessee on this issue. We therefore find no infirmity in the order of the Ld. CIT(A) and Page. No 6

I.T.A.No.422/VIZ/2024 Sathish Kumar Attada hence did not wish to interfere in the decision of the Ld. CIT(A) on this issue. Accordingly, this ground raised by the revenue is dismissed.

Order pronounced in the open court 24th on September2025.