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2025 (4) TMI 783 - AT - Income TaxDisallowance of inter branch purchase as bogus purchase - as contended that there was separate VAT/GST number for the main office and the branch office - as contended that out of the total branch transfer amount Partly as related to pre-GST period i.e. from 01.04.2017 to 30.06.2017 and the balance pertained to GST period - HELD THAT - A bare perusal of the impugned order shows that the CIT(A) has accepted the Remand Report and has deleted the disallowances made on account of bogus purchases; both inter-branch and other parties and unexplained expenditure added under Section 69C. Once the AO has accepted the claim of the assessee after due verification of the documents produced it is difficult to see as to how the Revenue can challenge the same on the spacious ground that the learned CIT(A) was in error in accepting and placing reliance on the Remand Report. The issue is no longer res integra. In Jivatlal Purtapshi 1967 (2) TMI 8 - BOMBAY HIGH COURT before the Bombay High Court the ITO had made addition to the returned income of the assessee as part of branch profits arising from its branch. While the appeal against the addition was pending the ITO considered and agreed to delete the said addition. On the basis of the said concession the AAC (the appellate authority) deleted the addition which was challenged before the Tribunal. The High Court inter alia held that in the circumstances the Department could not be treated as being aggrieved by that part of the order which was based on concession. CIT(A) rightly allowed the grounds deleting the disallowance/additions made placing reliance on the Remand Report. Thus the appeal is without any merit. Admissibility of Cross Objection - Cross Objection is not expected to be filed only to support the order or to contend that the appeal is not maintainable. Such a plea about non-maintainability can be a part of the submissions/arguments opposing the appeal. Filing of the Cross Objection presupposes that the respondent/cross objector is aggrieved by a part of the order passed by the CIT(A) which is subject matter of challenge in the appeal which is not the case in this appeal. In this case there was no occasion for the respondent-assessee to file a Cross Objection.
ISSUES PRESENTED and CONSIDERED
The primary issues considered in this judgment are: 1. Whether the order of the CIT(A) in deleting the additions made by the Assessing Officer on account of bogus purchases and unexplained expenditure was justified. 2. Whether the appeal filed by the Revenue is maintainable in light of the Assessing Officer's acceptance of the assessee's claims in the Remand Report. 3. The relevance and validity of the Cross Objection filed by the respondent-assessee. ISSUE-WISE DETAILED ANALYSIS 1. Justification of CIT(A)'s Order in Deleting Additions - Relevant Legal Framework and Precedents: The assessment involved Section 143(3) r.w.s. 144B of the Income Tax Act, 1961, concerning bogus purchases and unexplained expenditure under Section 69C. Precedents such as Jivatlal Purtapshi vs CIT and others were referenced to establish the legal framework. - Court's Interpretation and Reasoning: The Tribunal emphasized that once the Assessing Officer accepted the assessee's claims after due verification, the CIT(A) was justified in relying on the Remand Report. The Tribunal found no error in the CIT(A)'s decision to delete the additions based on the verified Remand Report. - Key Evidence and Findings: The Remand Report submitted by the Assessing Officer, which accepted the claims of the assessee after verification of documents, was pivotal. The CIT(A) relied on this report to delete the disallowances made by the Assessing Officer. - Application of Law to Facts: The Tribunal applied the principles from prior cases, notably Jivatlal Purtapshi, to affirm that the CIT(A) acted correctly in accepting the Remand Report and deleting the disallowances. - Treatment of Competing Arguments: The Revenue's contention that the CIT(A) erred by relying on the Remand Report was dismissed, as the Tribunal found the CIT(A)'s reliance on the verified Remand Report to be justified. - Conclusions: The Tribunal concluded that the CIT(A) correctly deleted the additions, as the Assessing Officer's acceptance of the claims in the Remand Report left no room for the Revenue to challenge the deletions. 2. Maintainability of the Revenue's Appeal - Relevant Legal Framework and Precedents: The principle that an appeal is not maintainable if the Assessing Officer has accepted the claims in a Remand Report was supported by precedents such as Ajay Ramchandra Chande and others. - Court's Interpretation and Reasoning: The Tribunal reasoned that the Revenue's appeal lacked merit once the Assessing Officer accepted the claims in the Remand Report. The Tribunal referred to previous decisions where similar conclusions were reached. - Key Evidence and Findings: The acceptance of the assessee's claims by the Assessing Officer in the Remand Report was central to the Tribunal's decision on the appeal's maintainability. - Application of Law to Facts: The Tribunal applied the legal principle that no appeal should be filed if the Assessing Officer has already accepted the claims, rendering the Revenue's appeal untenable. - Treatment of Competing Arguments: The Tribunal dismissed the Revenue's argument that the CIT(A) erred in relying on the Remand Report, as the acceptance by the Assessing Officer was deemed conclusive. - Conclusions: The Tribunal concluded that the Revenue's appeal was not maintainable due to the acceptance of the claims by the Assessing Officer in the Remand Report. 3. Validity of the Cross Objection - Relevant Legal Framework and Precedents: The Tribunal referred to procedural norms regarding the filing of Cross Objections. - Court's Interpretation and Reasoning: The Tribunal noted that a Cross Objection should not be filed merely to support an order or claim non-maintainability of an appeal. It should be filed if the respondent is aggrieved by a part of the order. - Key Evidence and Findings: The Tribunal found no grounds for the Cross Objection as the respondent-assessee was not aggrieved by any part of the CIT(A)'s order. - Application of Law to Facts: The Tribunal applied procedural norms to determine that the Cross Objection was unnecessary and should not have been filed. - Treatment of Competing Arguments: The Tribunal clarified that the Cross Objection was not warranted in this context, as the respondent-assessee was not challenging any part of the CIT(A)'s order. - Conclusions: The Tribunal disposed of the Cross Objection as infructuous, noting it was unnecessary given the circumstances. SIGNIFICANT HOLDINGS - The Tribunal held that the CIT(A)'s reliance on the Remand Report was justified, as the Assessing Officer had accepted the claims of the assessee after due verification. - The Tribunal established the principle that an appeal is not maintainable if the Assessing Officer has accepted the claims in a Remand Report, rendering the Revenue's appeal without merit. - The Tribunal clarified procedural norms regarding Cross Objections, emphasizing that they should not be filed merely to support an order or claim non-maintainability of an appeal. - "Once the Assessing Officer has accepted the claim of the assessee after due verification of the documents produced, it is difficult to see as to how the Revenue can challenge the same on the spacious ground that the learned CIT(A) was in error in accepting and placing reliance on the Remand Report." - The Tribunal dismissed the Revenue's appeal and disposed of the Cross Objection as infructuous.
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