INCOME TAX OFFICER, WARD-1, NANDYAL vs. SRI VIJAYALAKSHMI TRADING COMPANY, ALLAGADDA

The grounds raised by the Revenue reads as under :

Brief facts of the case are that, Sri Vijaylakshmi Trading Company (‘the assessee’) is a partnership firm, engaged in retail trade of Fertilizers and pesticides, filed its return of income on 29-10-2017 electronically, admitting an income of Rs.4,67,820/-. The return of income was processed u/s 143(1) of the Income Tax Act,1961 (‘the Act’) and subsequently a notice u/s 148 of the Act was issued by the Assessment Unit, Income Tax Department (“learned AO”) on 31-03-2021. The assessment of the assessee was completed by the learned AO u/s 143(3) r.w.s.144B of the Act on 29/03/2022 by making an addition of Rs.1,32,32,223/-. Out of the said total addition of Rs.1,32,32,223/-, the Revenue is in appeal before us for an addition of Rs.89,22,246/- made by the learned AO u/s 68 of the Act, which were deleted by the ld. CIT(A). The learned AO had made the said addition of Rs.89,22,246/- u/s 68 of the I.T. Act by observing as under:

Feeling aggrieved by the order passed by the learned AO, assessee filed an appeal before the Ld. CIT(A), who allowed the appeal of assessee by holding as under :

Feeling aggrieved with the order of ld.CIT(A), the Revenue is now in appeal before us, contending that before the learned AO the assessee has not explained the nature and source towards the said addition. The learned DR further submitted that on appeal, the ld. CIT(A), without calling for a remand report from the learned AO, arbitrarily deleted the additions made by the learned AO. Therefore, the learned DR pleaded that the matter may be sent back to ld. CIT(A), who should decide the matter as per law after calling a remand report from the learned AO.

Per contra, the Ld. AR submitted that all the explanations were submitted before the learned AO during the assessment proceeding. Further, the Ld. AR placed heavy reliance on the orders of the Ld. CIT(A).

We have heard both the sides and perused the material available on record as well as the orders of the Ld. Revenue Authorities. On perusal of the order of the Ld. CIT(A), we are of the considered opinion that the Ld. CIT(A) ought to have called for a remand report from the learned AO when the learned AO has stated that the assessee has not explained the nature and source of the money during the assessment proceedings. We have also noted from the orders of the learned AO that the assessee has failed to explain the nature and source before the learned AO. However, the assessee has filed various submissions before the Ld. CIT(A). Hence under such circumstance, the Ld. CIT(A) is duty bound to call for a remand report from the learned AO on the submissions made by the assessee. In our considered opinion the Ld. CIT(A) has grossly erred in not calling for the remand report from the learned AO by following the Rule prescribed under Rule-46A of the Income Tax Rules, 1962 and also not following the procedure laid down U/s. 250 of the Act while disposing of the appeals. Under these circumstances, we deem it fit to remit the matter back to the file of the Ld. CIT(A) with a direction to call for a remand report from the learned AO on the explanations submitted by the assessee and decide the issue in accordance with law. Needless to mention that the assessee may be provided one more opportunity of being heard as per the principles of natural justice. Grounds of appeal are answered accordingly.