ITAT directs Readjudication in respect of deletion of Addition by CIT(A) made towards High Sea sales without giving proper Reasons [Read Order]

The Income Tax Appellate Tribunal (ITAT ) Mumbai bench directed readjudication in respect of deletion of addition made towards the High Sea sales by the CIT(A) without giving proper reason.

Assessee, Villa Mode Exports (India) Pvt.Ltd filed return of income by declaring total loss of Rs. 1,94,60,215/-. Thereafter the case was selected for scrutiny.

The AO issued various notices to assessee for explanation regarding the entries of purchase and sales foreign currency. fluctuation loss, evidence in support of expenses etc. However, the  assessee did not respond to explanation or query raised by the Assessing Officer on the various issues.Without getting proper explanation on the side of assessee the AO concluded the assessment and made addition under Section 68 of the Income Tax Act towards the High sales on sea.

Aggrieved against the  order, the assessee filed an appeal before the CIT(A) , who deleted the addition made by the AO. Thereafter the revenue filed appeal before the tribunal.

During the proceedings before the bench Ujjawal Kumar Chavan, counsel for revenue submitted that  CIT(A) did not follow the procedure provided under Rule 46A of the Income-tax Rules, 1962 while deleting the addition toward the High sales on sea and did not sent the matter to the Assessing Officer. Thus without giving proper reason CIT(A) deleted the addition.

M Subramnian, Counsel for the assessee submitted that the CIT(A) after consideration of the submission and explanation of the assessee has deleted the addition made by the Assessing Officer which were unjustified and excessive without taking into account pragmatic approach. Moreover in past assessment years no addition has been made by the Assessing Office.

It was observed by the tribunal that the Assessing officer has allowed ample opportunities to the assessee for furnishing explanation of the queries raised by him. However, the assessee did not file any information before the Assessing Officer except providing basic information containing profit and loss account and balance sheet etc.

Therefore, the tribunal observed that the CIT(A) has considered the information or evidence filed by the assessee before him in violation of the Rule 46A of the Income Tax Rules without providing any opportunity to the Assessing Officer for his comments.

After considering  the facts submitted by both parties, the two member bench of Om Prakash Kant (Accountant Member) and Kavitha Rajagopal (Judicial Member) directed readjudication in respect of deletion of addition made towards the High Sea sales by the CIT(A) without giving proper reason.

To Read the full text of the Order CLICK HERE

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