When AO not submitted remand report, no adverse inference can be taken against assessee. The order of CIT-A was bizarre and beyond comprehension – ITAT
ABCAUS Case Law Citation:
ABCAUS 2794 (2019) (02) ITAT
The assessee had filed the appeal against the order of the Commissioner of Income Tax (Appeals) in confirming 10% adhoc disallowance made by the Assessing Officer (AO).
The assesee was engaged in the business of freight, forwarding of ODC transportation.
During the course of assessment proceedings, the AO observed that the assessee had claimed expenditure under various heads and asked to produce documentary evidence in support of claim of expenses and also asked to produce books of accounts.
Considering the voluminous vouchers of ODC expenses the assessee took time for preparation of details. Subsequently, he submitted the details of ODC expenses and considering the voluminous vouchers (around 12 box flies) produced two box files on sample basis for verification
However, the AO based on the suo motto disallowance of certain expenses (which are identified by the appellant as not adequately supported) the AO concluded that various expenses claimed by the assessee were not supported by proper bill/vouchers and made additional ad-hoc 10% disallowance out of ODC expenses.
Before the CIT(A), the assessee submitted that the assessee had filed its return of income at a loss and also suo-moto disallowed expenditures which were not supported by corroborative vouchers as identified by the company in the audited annual accounts and verified by Statutory & Tax Auditory of the Company.
It was also submitted that since the appellant had brought forward unabsorbed business losses including depreciation, therefore, there was no reason for claiming any bogus expenditure.
The assessee also filed additional evidences under Rule 46A of the Income Tax Act.
The CIT(A) sent the additional evidences filed by the assessee for verification to the Assessing Officer (AO) which was however not responded and in spite of various reminders, the AO did not produced the remand report.
The CIT(A) proceeded to take adverse inference against the assessee and confirmed the adhoc disallowance.
The Tribunal expressed utter surprise and found that the CIT(A) had passed a bizarre order.
The Tribunal opined that when the AO had not responded to the remand, adverse inference could not be taken against the assessee and the action of the CIT(A) was beyond comprehension.
The Tribunal, in the interest of justice, remitted the issue to the file of the AO to consider it afresh in light of the additional evidence submitted by the assessee.
