2018 (10) TMI 1405 - AT - Income Tax

Assessment u/s 153A - undisclosed income as advances received - identity of the creditor was not proved and the addition was property made by the AO - Held that - AO in his remand report has stated that he has verified all the documents and evidences furnished by the assessee in support of its claims. No adverse observations were made by the AO in the remand report. The claim of the assessee was accepted as correct. Under the circumstances the ld. CIT(A) based on this remand report by the A.O granted relief in this case. From the report it is also clear that the balance of advance existed at the end of the financial year was sufficient to acquire assets existing in the right side of the balance sheet in each case and in each assessment year. Keeping in view the categorical findings given by the AO after due verification of papers and details filed and after proper investigation and report by the inspector attached to the AO in the remand proceedings the issue involved in this case has been adequately discussed and elaborated by the AO. - Decided in favour of assessee.

Summary

Issues:
- Admission of additional evidence in violation of Rule 46A of the I.T. Act, 1961
- Deletion of undisclosed income based on the assessee's submission
- Restoration of the Assessing Officer's order
- Appeal by the Revenue against the relief granted by the CIT(A)
- Validity of the AO filing an appeal against his own remand report

Analysis:

1. The appeals were filed by the Revenue against orders of the Commissioner of Income Tax-(A)-20, Kolkata. The appeals were heard together due to common issues. The Assessee, a company in the investment business, was part of a group where a search and seizure operation was conducted. The Assessing Officer completed the assessment under section 153A r.w.s.143(3) of the Act. The First Appellate Authority called for a remand report, which indicated efforts to verify the existence and creditworthiness of source companies.

2. The CIT(A) granted relief to the assessee after considering the remand report, where the AO accepted the genuineness of the claim. The Revenue raised grounds of appeal challenging the admission of additional evidence, deletion of undisclosed income, and sought restoration of the AO's order. The Departmental Representative argued for restoration to verify the existence of the companies, while the assessee's counsel defended the relief granted by the CIT(A) based on the remand report.

3. The Tribunal considered the factual findings in the remand report where the AO verified the documents and accepted the assessee's claims. The CIT(A) based relief on this report, noting the AO's acceptance of the existence and creditworthiness of the companies. The Tribunal held that the AO's appeal against his own factual findings in the remand report was not maintainable, citing relevant case laws.

4. The Tribunal dismissed the Revenue's appeals, emphasizing that the AO's factual findings in the remand report were not contradicted. The decision was in line with legal precedents that prevent the AO from appealing against their own findings. Thus, the appeals were deemed to lack merit, leading to their dismissal.

5. The judgment highlighted the importance of factual findings in the remand report and established the principle that the AO cannot appeal against their own verified findings. The decision was based on legal precedents and upheld the relief granted to the assessee by the CIT(A) after due consideration of the remand report.