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Facts
The assessee, engaged in construction, declared a total income of Rs. 53,36,260/-. The AO made an addition of Rs. 6,68,26,970/- towards purchases and labour charges. The CIT(A) allowed the assessee's appeal.
Held
The Tribunal observed that the assessee failed to provide complete documentary evidence to substantiate the nature of purchases and labour charges. The CIT(A) also did not provide a detailed finding on the merits of the case. Consequently, the issues were remanded back to the AO.
Key Issues
Whether the CIT(A) erred in allowing the appeal without proper verification of evidence by the AO, and whether the assessee discharged its onus of proof regarding the genuineness of expenditure.
Sections Cited
250, 143(1), 143(2), 142(1), 143(3), 69C
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: SHRI VIKRAM SINGH YADAV, AM
O R D E R Per Kavitha Rajagopal, J M:
This appeal has been filed by the Revenue, challenging the impugned order of the Learned Commissioner of Income Tax (Appeals) [‘Ld. CIT(A)’ for short], passed u/s.250 of the Income Tax Act, 1961 (“the Act” for short), pertaining to the Assessment Year (‘AY’ for short) 2013-14.
The Revenue has raised the following grounds of appeal:
1. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in allowing the appeal of the assessee by failing to note that the remand report submitted by the AO was without conducting proper enquiries.
M/s. Meghdoot Enterprises 2. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in allowing the appeal of the assessee on the basis of the remand report which was based on erroneous, improper and irrelevant facts.
On the facts and in the circumstances of the case, the Ld. CIT(A) being the first fact finding authority has erred in not using his co-terminus powers u/s 250(4), equivalent to that of the Assessing Officer to arrive at the correct facts.
The appellant craves leaves to add amend or alter any ground/grounds, which may be necessary.”
As there was no representation by the assessee on several hearings, we hereby proceed to decide this appeal by hearing the Learned Departmental Representative (“Ld.
DR” for short) for the Revenue and on perusal of the materials available on record.
Brief facts of the case are that the assessee is engaged in the business of construction of commercial and industrial godowns and had filed its return of income for the year under consideration dated 01.10.2013 declaring total income at Rs.53,36,260/- derived from business income and income from house property and the same was processed u/s 143(1)
of the Act. The assessee’s case was selected for scrutiny and notices u/s 143(2) and 142(1) of the Act were duly issued and served upon the assessee. The Learned Assessing Officer (“the Ld. AO” for short) observed that the assessee has debited an amount of Rs.3,37,89,095/- in its Profit & Loss account towards purchases and Rs.9,79,89,372/- towards labour contract charges which details were sought for by the Ld. AO. After duly considering the assessee’s submission the Ld. AO passed the assessment order dated 19.02.2016 u/s 143(3) of the Act determining the total income at Rs.7,21,29,010/- after making addition/disallowance u/s 69C of the Act amounting to Rs.6,68,26,970/- towards the purchases and labour contract charges.
M/s. Meghdoot Enterprises 5. Aggrieved, the assessee was in appeal before the first appellate authority who vide order dated 24.12.2024 had allowed the appeal filed by the assessee on the ground that the assessee has substantiated the transactions by documentary evidences during the remand proceedings which according to the Ld. CIT(A) the Ld. AO has not controverted with.
Aggrieved, the Revenue is in appeal before us challenging the order of the first appellate authority on the abovementioned grounds.
We have heard the Ld. DR and perused the materials available on record.
The Ld. DR for the Revenue contended that the Ld. CIT(A) erred in deleting the disallowance made by the Ld. AO towards purchases and labour charges, in the absence of complete details being furnished by the assessee. The Ld. DR further argued that the assessee has failed to provide all the details along with supporting documents such as bank statement, transaction ledger, TIN & PAN, ITR, books of accounts along with other relevant documents to substantiate that the impugned transactions were not bogus entries.
The Ld. DR further reiterated that the Ld. CIT(A) has also not passed a speaking order except by stating that the Ld. AO has not made any adverse remarks during the remand proceedings, which cannot be the sole reason for deleting the disallowance made by the Ld. AO. The Ld. DR relied extensively on the order of the Ld. AO.
On the above factual matrix of the case, it is evident that the assessee has failed to furnish all documentary evidences in support of its claim thereby failing to discharge its initial onus of proof casted upon the assessee by the provisions of the Act, neither before M/s. Meghdoot Enterprises the lower authorities nor before us. Pertinently, except on two hearings neither the assessee nor its authorized representative had complied before us inspite of the fact that the assessee was extended with several opportunities. Further, on perusal of the order of the Ld.
CIT(A), it is evident that there is no finding given by the Ld. CIT(A) on the merits of the case and also no discussion on the documentary evidences alleged to be furnished by the assessee inspite of having co-terminus power as that of the Ld. AO. Thus, it can be undoubtedly inferred that the assessee has not filed complete details to prove that the expenditures in the nature of purchases and labour charges claimed by the assessee are genuine in nature. We find justification in the arguments of the Ld. DR seeking for remanding these issues back to the Ld. AO for verifying the documentary evidences, if any, filed by the assessee, to substantiate its claim. For the aforementioned reasons, we hereby remand this issue back to the Ld. AO extending the assessee with one more opportunity to substantiate its claim by supporting documentary evidences, basis which the Ld. AO is directed to assess denovo on the merits and in accordance with law. The assessee is directed to strictly comply with the proceedings before the Ld. AO without any undue delay from its side.
In the result, the appeal filed by the Revenue is hereby allowed for statistical purposes.
Order pronounced in the open court on 27.01.2026
Sd/- Sd/- (VIKRAM SINGH YADAV) (KAVITHA RAJAGOPAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated: 27.01.2026 *Kishore, Sr. PS
The Appellant 2. The Respondent 3. CIT- concerned 4. DR, ITAT, Mumbai 5. Guard File BY ORDER,
(Dy./Asstt.Registrar) ITAT, Mumbai