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Income Tax Appellate Tribunal, “A” BENCH : BANGALORE
Before: SHRI GEORGE GEORGE K. & SHRI LAXMI PRASAD SAHU
Per Laxmi Prasad Sahu, Accountant Member
This appeal is by the assessee against the order of the CIT(Appeals), National Faceless Assessment Centre, Delhi [NFAC], Delhi, DIN & Order No.ITBA/NFAC/S/250/2022-23/1051485267(1) dated 28.3.2023 for the AY 2011-12 on the following grounds of appeal:-
“1. General ground:
1.1. The learned Commissioner of Income Tax (Appeals), Income Tax Department (hereinafter referred to as CET (A) for short) has erred in passing the assessment order under section 144 r.w.s. 147 in the manner passed by him. The order so passed is bad in law and liable to be quashed.
2. Ground relating to ex-parte assessment order and CIT(A) order passed are bad in law: 2.1 The learned AO erred in passing the assessment order without providing any opportunity of hearing and the learned CIT(A) erred in dismissing the appeal as unadmitted. On facts and circumstances of the case and law applicable, the assessment order and the CIT(A) order passed in violation of principles of natural justice are liable to be set aside.
3. Ground relating to basis of re-assessment proceedings: 3.1. The learned CIT(A) has erred in not appreciating the fact that the AO erred in initiating the proceedings under section 147 without any 'reason to believe' and without any 'tangible material'. 3.2. The learned CIT(A) has erred in not appreciating the fact that notice under section 148 of the Act was issued without application of mind. 3.3. The learned CIT(A) has erred in not appreciating the fact that the AO was duty bound to cancel the surrendered PAN. 3.4. Without prejudice to the above, on the basis of the facts and circumstances of the case. the reassessment proceedings were initiated on a mechanical sanction by the Principal Commissioner of Income Tax under section 151 of the Act. The same is bad in law. 3.5. On facts and circumstances of the case and law applicable. the assessment order passed by the learned AO under section 144 r.w.s. 147 is invalid, bad in law and liable to be quashed.
4. Ground relating to change in jurisdiction without opportunity of hearing: 4.1. The learned CIT(A) has erred in not appreciating the fact that the case of the appellant was transferred from [TO Ward 1(2), Salem to [TO Ward 5(2)(5), Bangalore without any communication to the appellant. 4.2. The assessment order passed under section 144 r.w.s. 147 by the ITO Ward 5(2)(5), Bangalore was made without providing any reasonable opportunity to the appellant regarding the transfer of jurisdiction is bad in law and liable to be deleted.
5. Ground relating to addition of Rs. 1,09,31,606: 5.1. The learned CIT(A)' has erred in not appreciating the fact that the appellant had filed its return of income vide PAN AKEPV1591K and surrendered the PAN ADDPV6173D in which the assessment order is passed. 5.2. The learned CIT(A) has erred in not appreciating the fact that the appellant cannot be assessed with two PAN's. 5.3. The learned CIT(A) has erred in not appreciating the fact that the total sales for the year under consideration was Rs. 55,21,114. The sales figure of Rs. 1,09,31,606 provided in the assessment order arrived is based on mere surmises and conjectures. 5.4. Based on the facts and circumstances of the case involved, the addition of Rs. 1,09,31,606 is bad in law and liable to be deleted. 6. Ground relating to making addition to the extent of net profit percentage of total turnover: 6.1. Without prejudice to the above grounds, the learned CIT(A) has erred in making an addition of Rs. 1,09,31,606 relating to alleged turnover.
6.2. Assuming without admitting, if any addition is to be made, is to be restricted to net profits embedded in sales, and not the wholesale proceeds itself.
7. Ground relating to interest under section 234A, 234B and 234C: 7.1. The learned C[T(A) has erred in levying interest of Rs. 2,25,925 and Rs. 30,01,575 under section 234A and B. Based on the facts and circumstances of the case and law applicable, the appellant denies its liability to pay interest under section 234A and 234B.
Prayer: 8.1. Based ,on the above grounds and other grounds adduced at the time of hearing, the appellant prays that the assessment order passed under section 144 r.w.s. 147 be quashed or in alternative the above grounds and relief prayed thereof be allowed. The appellant prays accordingly.”
The brief facts of the case are that as per the database it was noticed that the assessee has not filed return of income u/s. 139(1) of the Income-tax Act, 1961 [the Act] and therefore notice u/s. 148 was issued to the assessee on 25.3.2018 after recording reasons and obtaining approval from the competent authority which was duly served on the assessee on 26.3.2018 on the email id of the assessee and physical copy was also served to the assessee on 25.3.2018 (acknowledgement placed on record). However, there was no response from the assessee’s side. The AO issued other notices and reminder letters for which also there was no response from the assessee’s side. Before invoking section 144 of the Act, the AO also gave opportunity to the assessee, but the assessee did not respond. Therefore the AO completed the assessment by adding the amount of Rs.1,09,31,606.
On appeal, the CIT(Appeals) also issued various notices of hearing on different dates, but the assessee did not respond. Therefore, the CIT(Appeals) dismissed the appeal of the assessee for non- prosecution as unadmitted. Aggrieved, the assessee filed the appeal before the Tribunal. The notices issued by the ld. CIT(A) was never served to the assessee.
The ld. AR submitted that the notice u/s. 148 was issued by the ITO, Ward 1(2), Salem on the Old PAN ADDPV 6173D (pg. 52 of PB) which was surrendered to the department vide assessee’s letter dated 22.6.2010, copy of which is placed at page 50-51 of PB. It was submitted that the assessee obtained new PAN AKEPV 1591K and filed his return of income on 1.10.2011 which is placed at pages 24 to 47 of PB. He submitted that various notices issued by the CIT(A) was not served on the assessee. Therefore he requested that the matter may be sent to the AO.
On the other hand, the ld. DR relied on the orders of lower authorities and submitted that notice was duly served on the assessee inspite of which the assessee did not appear and did not object to issuance of notice u/s. 148.
After hearing both the sides, perusing the entire material on record and the orders of the lower authorities, we note that notice u/s. 148 of the Act was issued on the old PAN as noted above which was duly served on the assessee. The AO issued notices on different dates and opportunity was given to the assessee, but the assessee did not appear. Accordingly, the AO completed the assessment u/s. 144 of the Act adding the entire amount as noted in the reasons recorded. Before the CIT(Appeals) also, the assessee did not appear and the CIT(Appeals) dismissed the appeal. In the interest of justice, we think it fit to remit the matter to the AO for fresh consideration. Accordingly the AO is directed to decide the issue afresh in accordance with law after giving reasonable opportunity of being heard. The assessee is given liberty to file the documents for substantiating its case and further directed not to seek unnecessary adjournment.
In the result, the appeal is allowed for statistical purposes.