INCOME TAX OFFICER, WARD-1, AMALAPURAM, AMALAPURAM vs. DURGA FINANCE CORPORATION, KOTHAPETA

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ITA 255/VIZ/2025Status: DisposedITAT Visakhapatnam10 June 2025AY 2015-165 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the appeal of the Revenue is dismissed. The Tribunal noted that it is an admitted fact that the Ld. CIT(A) remitted the matter back to the file of the Ld. AO, directing him to verify and examine the documents submitted by the assessee. The AO had also passed a giving effect order based on these directions. The Tribunal found that the arguments of the Ld. DR could not be accepted because Section 251(1) of the Act, as amended, empowers the Ld. CIT(A) to remit the matter back to the AO. Alternatively, the Ld. CIT(A) can call for a remand report as prescribed under Section 46A of the IT Rules. The Tribunal concluded that the Ld. CIT(A) exercised his discretionary powers by remitting the matter back to the AO, which is valid in law. Therefore, the grounds raised by the Revenue were dismissed.

What were the facts?

The Revenue filed an appeal against the order of the Ld. Commissioner of Income Tax (Appeals) for Assessment Year 2015-16. The assessee, Durga Finance Corporation, did not file a return of income. The Assessing Officer (AO) reopened the case under Section 147, noting interest income and cash deposits of Rs. 1,76,32,030/-. The AO added Rs. 2,07,04,859/- as unexplained money under Section 69A and Rs. 2,21,593/- as interest income. The assessee appealed to the Ld. CIT(A), reiterating submissions that no business activities were carried on. The Ld. CIT(A) remitted the matter back to the AO, directing relief based on certificates produced to the AO's satisfaction. The Revenue is aggrieved by this direction.

What were the issues?

1. Whether the Ld. CIT(A) erred in remitting the matter back to the file of the Ld. AO instead of calling for a remand report as prescribed under Rule 46A(3) of the IT Rules, thereby passing an order not in accordance with law? (Question of law and fact, concerning Section 251(1) and Rule 46A(3) of IT Rules). Assessee's Contentions: - The Ld. CIT(A) is empowered to remit the matter back to the AO under Section 251(1) of the Act. - The Ld. CIT(A) directed the AO to grant relief after examination, not granted relief directly. - Even if a remand report were called for, the documents would still need to be presented before the AO for examination. - The appeal of the revenue is not maintainable and should be dismissed. Revenue's Contentions: - The Ld. CIT(A) erred in remitting the matter back to the AO instead of calling for a remand report as prescribed under Rule 46A(3) of the IT Rules. - The Ld. CIT(A) erred in giving directions to the AO to grant relief based on certificates produced by the assessee, which is not in accordance with law. - The Ld. CIT(A) ought to have passed its order without giving any direction to the AO, especially after sustaining part of the addition. - Certificates produced before the AO, if not produced before the AO during original assessment, are additional evidence that can only be adjudicated by the Ld. CIT(A) after obtaining a remand report as per Rule 46A(3).

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 69A,Section 251(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, VISAKHAPATNAM “DIVISION” BENCH, VISAKHAPATNAM

Before: SHRI VEERAVALLI DURGA RAO, HON’BLE

For Appellant: Shri GVN Hari, Advocate

आदेश /O R D E R

PER SHRI S BALAKRISHNAN, ACCOUNTANT MEMBER:

1.

This appeal filed by the Revenue is directed against order of Ld.Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [hereinafter in short “Ld. CIT(A)”] vide DIN & Order No.

I.T.A.No.255/VIZ/2025 Durga Finance Corporation ITBA/NFAC/S/250/2024-25/1073528797(1) dated 20.02.2025 for the A.Y.2015-16 arising out of the order passed under section 147 r.w.s 144 of Income Tax Act, 1961 [hereinafter in short “the Act”] dated 21.02.2024.

2.

Briefly stated facts of the case are, assessee did not file return of income for the A.Y. 2015-16. It was found that assessee has earned interest income and has made cash deposits of Rs. 1,76,32,030/- in Union Bank of India. The case was reopened under section 148 of the Act and several notices issued from January, 2023 to February, 2024. In response, assessee submitted that no business activities are carried on by the assessee. Subsequently show-cause notice dated 12.02.2024 was issued and served on the assessee. In response assessee reiterated the same submissions. After carefully considering the submissions of the assessee, Ld. Assessing officer (hereinafter in short “Ld.AO”) added an amount of Rs. 2,07,04,859/- as unexplained money under section 69A of the Act and Rs. 2,21,593/- as interest income appearing in Form 26AS for the A.Y. 2015-16.

3.

On being aggrieved by the order of the Ld. AO, assessee filed an appeal before Ld. CIT(A). Before Ld. CIT(A), the assessee reiterated submissions made before Ld. AO. Ld. CIT(A) after considering the submissions made by the assessee remitted the matter back to the file of Ld. AO directing him to give relief on the basis of certificates produced by the assessee to the satisfaction of the Ld. AO.

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I.T.A.No.255/VIZ/2025 Durga Finance Corporation 4. On being aggrieved by the directions of the Ld. CIT(A), revenue is in appeal before us by raising following grounds in its appeal: -

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

2. The Ld CIT(A), NAC in his order has sustained the addition made by the Assessing Officer to the extent of R$.2,03,72.939/. However, the Ld.CIT(A) erred in giving direction to the Assessing Officer to give relief on the basis of certificates produced by the assessee before him to the satisfaction of AO, which is not in accordance with law.

3. The Ld.CIT(A), NFAC ought to have passed its order without giving any direction to the Assessing Officer once the Ld.CIT(A) has sustained the addition of Rs.2,03,72,939/- for not furnishing the documentary evidence before him by the assessee.

4.

The Ld CIT(A), NFAC has already sustained the-addition of Rs.2,03,72,939/- for not furnishing the documentary evidence before him by the assessee. Therefore, the Ld.CIT(A) erred in passing the order giving liberty to the assessee to file certificates before the AO and directing the AO to give relief on the basis of certificates produced by the assessee before him to the satisfaction of AO.

5.

The Ld.CIT(A), NFAC ought to have noticed that the certificates, if any, produced by the assessee before the Assessing Officer which were not produced before the AO at the time of original assessment proceedings become additional evidences and therefore it can be only the Ld.CIT(A) who can adjudicate on the additional evidences, only after obtaining remand report from the Assessing Officer as per Rule 46A(3) of IT. Rules: Hence, the order of Ld.CIT(A) giving liberty to the assessee to file certificates before the AO and the directing the AO to give relief on the basis of certificates produced by the assessee before him to the satisfaction of A0, is not in accordance with law.

6.

The appellant craves leave to add or delete or amend or substitute any ground of appeal

before and /or at the time of hearing of appeal.

7. For these and other grounds that may be urged at the time of appeal hearing, it is prayed that all these above additions be restored.”

5. At the outset, Ld. Departmental Representative (hereinafter in short “Ld.DR”) submitted that the Ld. CIT(A) erred in remitting the matter back to Page No. 3

I.T.A.No.255/VIZ/2025 Durga Finance Corporation the file of Ld. AO instead of calling for remand report as prescribed under Rule 46A(3) of the I.T. Rules. She therefore pleaded that order of the Ld. CIT(A) is erroneous and prayed to set-aside the order Ld. CIT(A).

6. On the other hand, Ld. Authorized Representative (hereinafter in short “Ld.AR”) submitted that as per the provisions of Section 251(1) of the Act the Ld. CIT(A) is empowered to remit the matter back to the file of Ld. AO. He further submitted that the Ld. CIT(A) has not granted relief but has directed the Ld. AO to grant relief after examining, in accordance with the submissions made by the assessee. He further submitted that even if the Ld. CIT(A) has called for the remand report the same documents has to be presented before the Ld. AO for examination. He produced before us the giving effect order of the Ld. AO based on the directions of the Ld. CIT(A). He therefore pleaded that the appeal of the revenue is not maintainable and shall be dismissed.

7.

We have heard both the sides and perused the material available on record. It is an admitted fact that the Ld. CIT(A) while adjudicating the appeal has remitted the matter back to the file of Ld. AO directing him to verify and examine the documents submitted by the assessee with respect to the claim made by the assessee. Accordingly, Ld. AO has also passed giving effect order to the Ld. CIT(A) after examining the evidences produced by the assessee. The arguments of the Ld. DR could not be accepted due to the fact that in view of the amendment to section 251(1) of the Act empowering the Ld. CIT(A) to Page No. 4

I.T.A.No.255/VIZ/2025 Durga Finance Corporation remit the matter back to the file of Ld. AO. Alternatively, the Ld. CIT(A) can also call for remand report as prescribed under section 46A of the I.T. Rules. Ld. CIT(A) has used his discretionary powers by remitting the matter back to the file of the Ld. AO which is valid in law and therefore we are inclined to dismiss the grounds raised by the revenue.

8.

In the result, appeal of the revenue is dismissed.

Order pronounced in the open court on 10th June,2025.

Sd/- Sd/- (िीरिल्ली दुर्ााराि) (एस बालाकृष्णन) (VEERAVALLI DURGA RAO) (S. BALAKRISHNAN) न्याधयक सदस्य/JUDICIAL MEMBER लेखा सदस्य/ACCOUNTANT MEMBER Dated: 10.06.2025 Giridhar, Sr.PS आदेशकीप्रनतनलनपअग्रेनर्त/ Copy of the order forwarded to :- 1. निर्धाररती/ The Assessee : Income Tax Officer – Ward -1 Aayakar Bhawan College Road, Konkapalli Amalapuram – 533201 Andhra Pradesh 2. रधजस्व/ The Revenue : Durga Finance Corporation 3-76-2, Near Maruthi Talkies Kothapeta East Godavari District – 533223 Andhra Pradesh 3. The Principal Commissioner of Income Tax 4. नवभधगीयप्रनतनिनर्, आयकरअपीलीयअनर्करण, नवशधखधपटणम /DR,ITAT, Visakhapatnam 5. The Commissioner of Income Tax 6. गधर्ाफ़धईल / Guard file आदेशधिुसधर / BY ORDER Sr. Private Secretary ITAT, Visakhapatnam

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