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Income Tax Appellate Tribunal, “F” BENCH, MUMBAI
Before: SHRI JASON P. BOAZ, AM & SHRI SANDEEP GOSAIN, JM
PER SANDEEP GOSAIN,JUDICIAL MEMBER:
The present appeal has been filed by the Revenue against the order of the learned CIT (A)-18, Mumbai dated 23-08-2012 passed in appeal No.CIT (A) -18/ACIT-S(3)/IT-247/09-10 for assessment year 2006- 07 on the following grounds:-
(i) “On the facts and in the circumstances of the case and in law, the CIT (A) erred in deleting the disallowance of Rs.61,99,005 of ‘Trading Purchases/Sales return’ without appreciating the findings of the Assessing Officer.”
(ii) “On the facts and in the circumstances of the case and in law, the CIT (A) erred in deleting the disallowance of Rs.61,99,005 of ‘Trading Purchases/Sales return’ by erroneously observing that ‘the AO in the remand report has accepted the verification of sales return’ whereas in the remand report the Assessing Officer has held the claim of the assessee to be untenable, particularly since the assessee had failed to substantiate the correctness, genuineness and veracity of the so-called sales return.”
ACIT vs. M/s. Yuva Textile Industries Ltd.
(iii) “The appellant prays that the order of the CIT (A) on the above ground be set aside and that of the ITO/AC/DCIT be restored.”
(iv) “The appellant craves leave to amend or alter any grounds or add a new ground which may be necessary.”
At the time of hearing, when the case was called for, neither any one appeared nor was any adjournment application filed on behalf of the assessee. On the previous occasions also there was no response on the part of the assessee on the date of hearing. The learned DR representing the Revenue was present and ready for arguments. Therefore, we proceed to dispose of the appeal ex-parte in the absence of the respondent assessee after hearing the learned DR and considering the materials on record.
The brief facts of the case are that the assessee company being in textile business filed the return of income on 28.11.2006 declaring total loss at Rs.59,31,273/-. Subsequently, the case was selected for scrutiny and after issuing statutory notices and seeking reply from the assessee, the AO disallowed the sum of Rs.61,99,005/- in the profit and loss account and added the same to the total income of the assessee.
Aggrieved by the order of the AO, the assessee carried the matter in appeal before the learned CIT (A) and the learned CIT (A) after hearing both the parties and perusal of the record, had partly allowed the appeal of the assessee. Being aggrieved by this order of the assessee, the Revenue is now in appeal before us on the aforementioned grounds.
ACIT vs. M/s. Yuva Textile Industries Ltd.
The sole ground raised by revenue before us is that the CIT(A) erred in deleting the disallowance of Rs.61,99,005/- of ‘Trading Purchases/ Sales Return’ without appreciating the findings of the AO. In this respect, ld. DR representing the revenue submitted that the CIT(A) erred in deleting the disallowance of Rs.61,99,005/- of ‘Trading Purchases/ Sales return’ by erroneously observing that ‘the AO in the remand report has accepted the verification of sales return’ whereas in the remand report the AO has held the claim of the assessee to be untenable, particularly since the assesse had failed to substantiate the correctness, genuineness and veracity of the so-called sales return.
We have analyzed the order of CIT (A) while dealing with the said issue and the operative portion of his order is reproduced herein below for reference:-
“1.3 I have considered the submissions of the Ld. Counsel, the remand report of the AO and the reply of the appellant to the remand report of the AO and since the AO in the remand report has accepted the verification of sales returns the addition/disallowance of Rs.61,99,005/- is hereby deleted and this ground of appeal is allowed. As regards objection of AO to the submission of additional evidence Rule 46A of I.T. Rules, 1962 the following decisions permit the admission of such evidence which is necessary and relevant for deciding the appeal:- (a) CIT vs. Smt. Prabhavati Shah 231 ITR
1. (Bom) (b) CIT vs. Suretech Hospital & Research Centre Ltd (2007) 293 ITR
53. (Bom) Hence, the objection of the A.O. is overruled.”
From careful reading of the above paragraph we have noticed that the CIT (A) has deleted the additions of Rs. 61,99,005/- solely on the ACIT vs. M/s. Yuva Textile Industries Ltd. ground that since the AO in the remand report has accepted the verification of sales return. Therefore, while keeping in mind the said proposition, CIT(A) deleted the addition/disallowance of Rs.61,99,005/-.
In this context para number 1.2 of CIT(A) order is important to refer which relates to the remand report dated 17.02.2012 submitted by AO and the operative para of the same is as under:
“In this regard, it is submitted that sales made to three parties of finished goods during A.Y.2005-06 have been totally returned in the subsequent year without paying any penny almost for 6 months does not prima facie appears satisfactory. Further, no confirmations with PAN have been provided by the assessee of these parties. As a result correctness, genuineness and veracity of the so called sales return has not been subjected to scrutiny and verification. Therefore, the claim made by the assessee may not be taken at its face value.”
From the co-joint reading of para no. 1.2 i.e. remand report and para no.1.3 of CIT(A) order, we have noted that the AO in his remand report has categorically held that the correctness, genuineness and veracity of the so-called sales return has not been subjected to scrutiny and verification and therefore the claim made by the assesse may not be taken at its face value. Whereas on the contrary, ld. CIT(A) has mentioned in its operative portion while deleting the additions that the AO has accepted the verification of sales return which is absolute contrary to the records which shows non application of mind on the part of the CIT(A) and therefore considering the above factual position we remand the case back to the file of CIT(A) to decide this issue afresh, after carefully perusing and considering the remand report submitted by AO. It is ACIT vs. M/s. Yuva Textile Industries Ltd.
needless to mention that afresh orders would be passed by CIT(A) after providing opportunity of hearing to the assessee. With these observations, appeal of the revenue is allowed for statistical purposes.
In the result, the appeal filed by the Revenue is allowed for statistical purposes. Order pronounced in the open court on 17-05-2016.