2015 (8) TMI 873 - AT - Income Tax

Tribunal remands case due to procedural errors, stresses importance of fair opportunity for Assessing Officer

The Tribunal remanded the case to the CIT(A) for reassessment as it found that additional evidence was accepted without the Assessing Officer's comments, ... Disallowance u/s 40(a)ia) - non deduction of tds - CIT(A) deleted addition accepting additional evidence - Held that:- CIT(Appeals) ’s order, there is no mention of remand report, though in the order sheet there is speci fic mention of the same. Therefore, in any view of the matter, ld. CIT(Appeals) has considered the additional evidence without considering Assessing Officer’s comments. Under such circumstances, we are of the opinion that the matter should be restored back to the file of CIT(Appeal s) for giving opportunity to Assessing Officer to offer his comments on the submissions made by the assessee. - Decided in favour of Revenue for statistical purposes Issues Involved:1. Deletion of addition under Section 40(a)(ia) for failure to deduct TDS.2. Deletion of addition for provision of legal and professional fees and freight inward.3. Deletion of addition for prior period expenses related to legal & professional fees and freight outward.4. Deletion of addition for prior period expenses under the head general charges.5. Deletion of addition under the head Sundry Balance Written Off.6. Deletion of addition for delayed deposit of employees' contribution to ESI and PF.7. Granting leave to add, alter, or modify grounds during appellate proceedings.Detailed Analysis:1. Deletion of Addition under Section 40(a)(ia) for Failure to Deduct TDS:The Revenue challenged the deletion of Rs. 44,15,806/- by the CIT(A) on the grounds that the assessee failed to prove deduction of TDS on the payments during the assessment proceedings. The CIT(A) accepted fresh evidence at the appellate stage, allegedly violating Rule 46A of the I.T. Rules, 1962. The Tribunal noted that the CIT(A) had called for a remand report from the Assessing Officer, who did not respond within the stipulated time. The Tribunal referenced the Delhi High Court's decision in CIT vs. Manish Buildwell Pvt. Limited, emphasizing the importance of following Rule 46A procedures strictly. The Tribunal concluded that CIT(A) had considered additional evidence without the Assessing Officer's comments, necessitating a remand for proper consideration.2. Deletion of Addition for Provision of Legal and Professional Fees and Freight Inward:The Revenue contested the deletion of Rs. 22,14,559/- for provision of legal and professional fees and freight inward, arguing that these were not ascertained liabilities. The Tribunal did not provide specific details on this issue but implied that the CIT(A) accepted additional evidence without proper procedure, necessitating a remand for reassessment.3. Deletion of Addition for Prior Period Expenses Related to Legal & Professional Fees and Freight Outward:The Revenue disputed the deletion of Rs. 6,55,295/- and Rs. 65,79,170/- for prior period expenses related to legal & professional fees and freight outward, respectively. The Tribunal noted that the CIT(A) accepted additional evidence without the Assessing Officer's comments, violating Rule 46A. The Tribunal remanded the case to the CIT(A) for reassessment with proper procedural compliance.4. Deletion of Addition for Prior Period Expenses Under the Head General Charges:The Revenue argued against the deletion of Rs. 16,85,845/- under general charges for prior period expenses. The Tribunal observed that the CIT(A) had not considered the Assessing Officer's comments on the additional evidence. The case was remanded for reassessment with adherence to Rule 46A.5. Deletion of Addition Under the Head Sundry Balance Written Off:The Revenue challenged the deletion of Rs. 2,81,370/- under Sundry Balance Written Off, claiming that the CIT(A) accepted fresh evidence without following Rule 46A. The Tribunal found that the CIT(A) did not provide the Assessing Officer an opportunity to comment on the additional evidence. The case was remanded for reassessment.6. Deletion of Addition for Delayed Deposit of Employees' Contribution to ESI and PF:The Revenue disputed the deletion of Rs. 21,607/- for delayed deposit of employees' contribution to ESI and PF, as per Section 36(1)(va) read with Section 2(24)(x) of the Act. The Tribunal did not provide specific details but implied that the CIT(A) accepted additional evidence without proper procedure, necessitating a remand.7. Granting Leave to Add, Alter, or Modify Grounds During Appellate Proceedings:The Tribunal allowed the Revenue to add, alter, or modify grounds during the appellate proceedings, indicating procedural flexibility.Conclusion:The Tribunal found that the CIT(A) had accepted additional evidence without giving the Assessing Officer a reasonable opportunity to examine and comment on it, violating Rule 46A. Consequently, the Tribunal remanded the case to the CIT(A) for reassessment, ensuring compliance with procedural requirements. The appeal filed by the Revenue was allowed for statistical purposes.