SOVNA CHANDAK,ROURKELA vs. WARD-2, ROURKELA, ROURKELA

Shri M.R.Sahu, CA appeared for the Shri M.R.Sahu, CA appeared for the assessee and Shri Charan Dass, assessee and Shri Charan Dass, ld Sr DR appeared for the revenue. ld Sr DR appeared for the revenue.

It was submitted by ld AR that the return of income was filed by the It was submitted by ld AR that the return of income was filed by the It was submitted by ld AR that the return of income was filed by the assessee with ITO, Ward assessee with ITO, Ward-2(4), Cuttack. Ld AR drew my attention to the 2(4), Cuttack. Ld AR drew my attention to the copy of the return, which is also shown at page copy of the return, which is also shown at page 1 of the paper book and 1 of the paper book and extracted below: extracted below:

It was the submission that notice u/s.143(2) of the Act was issued by the ITO, Ward -2(4), Cuttack on 28.7.016. It was the submission that after the said notice was issued, the file of the assessee was shifted to ITO, Ward-2, Rourkela. It was the submission that no notice u/s.127 nor order u/s.127 had been issued to the assessee and no objection of the assessee had been called for. Ld AR has filed a letter today dated 17.10.2023 mentioning that the ITO, Ward -2(4), Cuttack is the Assessing Officer of the assessee for the assessment year 2015-16 as follows:

“As required by the Hon’ble Member, I am confirming that the AO is ITO, Ward 2(4), Cuttack for the assessee as mentioned in the assessment order dated 29.11.2017.” It was the submission that as the assessee had not been served with the order nor notice u/s.127, the assessment order as passed by the AO being ITO, Ward-2, Rourkela is an nvalid order. It was the further submission that the assessment has been done by bringing to tax the capital gains claimed as exempt by the assessee u/s.10(38) of the Act in respect of the transaction relating to alleged penny stock being Jackson Investments Limited. It was the submission that neither the statement of the person who alleged the Jackson Investments Ltd., as penny stock has been put to the assessee nor has opportunity been granted to the assessee nor has any evidence as relied upon by the AO been put to the assessee. It was the submission that the assessment order is liable to be annulled on P a g e 3 | 8 Assessment Year : 2015-16 account of violation of principles of natural justice as also on account of jurisdiction.

In reply, ld Sr DR vehemently supported the order of the AO and ld CIT(A). Ld Sr DR submitted that the assessee has cooperated in the assessment and, therefore, as per provisions of section 292BB, the assessment order is to be upheld. It was the further submission that the file had been transferred to ITO, Ward (2),Rourkela on account of residential address of the assessee being at Rourkela. It was the submission that the order of the ld CIT(A) is liable to be upheld. It was the submission that the assessee has not been able to prove the genuineness of investment in Jackson Investments Ltd., by the assessee.

I have considered the rival submissions. A perusal of the facts of the present case clearly shows that the assessee has made offline purchase of the scrip of Jackson Investments Ltd., from Saikat Tradelink Private Limited. A perusal of the assessment order at page 6 shows the name of various persons whose statements have been recorded in regard to Jackson Investments Ltd. None of these statements were put to the assessee nor produced before the Tribunal. The assessment order is nothing but a thesis on how penny stock transactions are done. No reference of the statement where the assessee’s name is referred to has been produced. The assessee’s transactions have not been specifically pointed out by the alleged entry operators. It is also an admitted fact that P a g e 4 | 8 Assessment Year : 2015-16 other than producing the ledger account of the share transactions, the purchase bill of Saikat Tradelink Private Limited and the statement showing the payment and receipt of the consideration and demat account has also been produced and nothing else In the said demat account, the demat request is on 7.12.2013 and the demat acceptance is on 19.12.2013. The demat account further shows the sale is from 3.11.2014 to 2.2.2015. It is also noticed from the assessment order that notice u/s.143(2) has been issued by the Assessing Officer being ITO, Ward 2(4), Cuttack. The assessment order does not talk of any order having been passed u/s.127 of the Act. In such situation, how the Assessing Officer being ITO, Ward-2, Rourkela could have passed an assessment u/s.143(3) on the said return in respect of the notice u/s.143(2) issued by the ITO, Ward 2(4),Cuttack and the same is valid is not evident. This being so, I have no alternate option but to set aside the assessment order as passed irregularly by the ITO, Ward-2, Rourkela dated 29.11.2017 for the assessment order 2015-16 in the case of the assessee. However, in view of the decision of the Hon’ble Jurisdictional High Court in the cases of CIT vs. Shivkumar Agarwal, 186 ITR 734 (Orissa), as it is evident that notice u/s.143(2) has been issued by the ITO, Ward 2(4), Cuttack and ld AR of the assessee has also admitted that the jurisdiction in respect of the assessee lies with the AO being ITO, Ward 2(4), Cuttack for the assessment year 2015-16, as the irregularity has taken place at the point of the proceedings of the assessment after the P a g e 5 | 8 Assessment Year : 2015-16 issue of notice 143(2), by the ITO, Ward 2(4), Cuttack, the issues in this appeal would stand restored to the file of the ITO, Ward 2(4), Cuttack for proceedings from the point of issuance of notice u/s.143(2) of the Act. This is in view of the decision of the Hon’ble Jurisdictional High Court in the case of Shivkumar Agrawal (supra), which has also been followed by the coordinate Bench of this Tribunal in the case of Ekalavya Career Academy Trust in order dated 31.5.022, wherein, on identical facts, it has been held as under:

Under such circumstances, the assessment order passed by the ITO, Ward-2, Rourkela in the case of the assessee for the A.Y.2010- 2011 is set aside. Consequently, the order of the ld. CIT(A), who was adjudicated the appeal against the said assessment order passed by the ITO Ward-2, Rourkela, is also set aside. As the proceedings have been validly initiated by the ACIT, Rourkela Circle, Rourkela in the P a g e 6 | 8 Assessment Year : 2015-16 case of the assessee for the assessment year 2010-20 11, the issues in the present appeal are restored to the file of ACIT, Rour kela Circle, Rourkela for de novo assessment in accordance with law.”

In the set aside proceedings, if the AO proposes to use any evidence against the assessee, the same shall be provided to the assessee for his rebuttal. The assessee shall also produce all such evidences as are required by the AO to substantiate his claim u/s.10(38) of the Act. It is also noticed that the ITO, Ward 2, Rourkela when passing the assessment order has not given any evidence but has simply relied upon statements recorded from various persons for disallowing the claim of the assessee. Such statement cannot be relied upon unless the same are put to the assessee for rebuttal.

In the result, appeal of the assessee stands partly allowed for statistical purposes.