Where Assessing Officer submitted remand report after a gap of more than six months and said report did not deal with merits submitted by assessee, addition was not to be allowed

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Where Assessing Officer submitted remand report after a gap of more than six months and said report did not deal with merits submitted by assessee, addition was not to be allowed

Where Assessing Officer submitted remand report after a gap of more than six months and said report did not deal with merits submitted by assessee, addition was not to be allowed
[2014] 52 taxmann.com 28 (Delhi)
Commissioner of Income-tax-I v. Bhagat Steel & Forging (P.) Ltd.* SANJIV KHANNA AND V. KAMESWAR RAO, JJ.
IT APPEAL NO. 510 OF 2012 ,SEPTEMBER  16, 2014
When the matter had come up for hearing it had been asked the revenue to state and consider whether the Commissioner (Appeals) had called for remand report on the contention raised by the assessee that investment of Rs. 90 lakhs was made from the advance received of Rs. 2 crores from ‘A’.
As noticed above, the original file has been produced. It is stated by the revenue that the agreement between the assessee and ‘A’ is not on record.
What is available on record is letter written by the Commissioner (Appeals) to the ITO. The said letter refers to the manner in which the service was effected without ascertaining the proper address of the assessee.
 The Assessing Officer was required to submit a remand report verifying the authenticity of facts on merits stated by the assessee.
The Assessing Officer was required to verify the books of account as is done in scrutiny cases.
 In case any irregularity in the books of account was noticed, remedial action it was stated would be taken at the first appellate stage. [Para 6]
The remand report it appears was submitted after a gap of more than six months.
The said remand report refers to the issue with regard to address and service of notice. It does not deal with the contention of the assessee on merits.
It is silent on the said aspect. [Para 7]
The revenue was the appellant before the Tribunal and in case there was any error or mistake as relevant papers had not been forwarded to the Assessing Officer for remand, this factum should have been highlighted.
 It was not stand and highlighted before the Tribunal why the remand report did not deal with the merits.
The Tribunal in view of the factual finding recorded by the Commissioner (Appeals) and as the revenue was not able to controvert and deny the said finding, had no option but to dismiss the appeal. [Para 8]
In view of the aforesaid factual position, there is no reason to interfere with the order of the Tribunal.
 This case again reveals that the record maintenance by the revenue is not of a desired and acceptable level.
The file in question produced is page numbered, but it is apparent that several papers and documents are missing.
The revenue cannot claim that they had not received letters and the application under rule 46A as these are specifically mentioned by the Assessing Officer himself in his letter.
The first letter asking for remand report took the Assessing Officer more than six months to respond to the said letter, but the response was not complete.It did not refer to the merits and only dealt with the question of change of address.In view of the aforesaid factual position, the appeal is dismissed. [Para 9]

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