The Income Tax Appellate Tribunal (ITAT) Mumbai Bench directed readjudication for retaining disallowance without following directions of the Dispute Resolution Panel.
Assessee, Parle Biscuits Private Limited is a subsidiary of Parle Products Pvt Ltd. The assessee manufactures a wide range of biscuits, confectionery, snacks and bakery products.
After filing the return of the income, the Assessing Officer (AO) while considering the international transactions of the assessee company a reference was made to the TPO to compute the arm’s length price in relation to the said international transaction.
After making the certain adjustments by TPO, the AO made drafts assessment order along with made an addition of Rs.3,26,32,245/- being the amount which the assessee had declared as any other addition under Section 28 to 44DA Income Tax Act, 1961 in the tax audit report, failed to add the same in the income tax return filed.
Aggrieved by the order, the assessee filed an appeal before the Dispute Resolution Panel (DRP) who confirmed the TP addition and gave certain directions with regard to the other additions made by the Assessing Officer. Thereafter, the assesee filed a second appeal before the tribunal.
During the proceedings Ketan Ved counsel for the assessee submitted that the Assessing Officer did not consider the directions of the DRP and has retained the same income as in the draft assessment order.
Samuel Pitta, Counsel for Revenue, supported the decision of the Assessing Officer.
The tribunal after reviewing the facts and submissions of the both parties, the two-member bench of Kuldip Singh, (Judicial Member) and Padmavathy S. (Accountant Member) observed that asessee has submitted additional evidence before the DRP and the DRP after perusing the details submitted, has given a clear direction to the AO to verify and allow the expenditure in accordance with law. AO in the final assessment order did not consider the said directions of the DRP.
Therefore, the bench remitted the issue back to the AO with a direction to consider the evidence submitted and allow the claim of the assessee in accordance with law after giving a reasonable opportunity of being heard to the assessee.
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