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Income Tax Appellate Tribunal, “B” BENCH, KOLKATA
Before: Shri Rajesh Kumar & Shri Sonjoy Sarma]
ORDER Per Rajesh Kumar, AM:
This appeal preferred by the assessee against the order of Ld.CIT(A), National Faceless Appeal Centre (NFAC), Delhi dated 08.02.2023 for AY 2011-12.
The assessee has raised the following grounds of appeal: “1(a) For that the ex parte order passed by the Ld. CIT(A) is in gross violation of the principles of natural justice and, as such, is not sustainable in law. (b) For that the assessee was prevented by a reasonable cause and, as such, failed to comply with the notices of hearing issued by the Ld. CIT(A).
2. For that on the facts and in the circumstances of the case, the Ld. CIT(A) grossly erred in confirming the addition of Rs.81,11,000/- made by the AO on account of alleged cash deposits during the relevant assessment year 2011-12.
3. For that on the facts and in the circumstances of the case, the Ld. CIT(A) grossly erred in confirming the addition of Rs.15,590/- being the interest on bank account.”
Assessee also raised the following additional grounds of appeal: Nabadwip Chandra Saha, AY 2011-12 “(i) For that the re-assessment order dated 27.12.2016 framed u/s, 144/147 is void and nullity before the eyes of law as there are no recorded reasons to believe that the income chargeable to tax has escaped assessment. (ii) For that without prejudice to ground no. 1 as stated above, the recorded reasons are invalid and improper and as such, the reassessment framed vide order dated 27.12.2016 is bad in the eyes of law. (iii) For that the entire reopening assessment proceeding is vitiated in law due to non issue of notice u/s 143(2). (iv) For that the reassessment proceedings is vitiated in law due to non approval/ improper approval by the specified authority as regards the issue of notice u/s. 148.”
The assessee has challenged the appellate order passed by the Ld. CIT(A) on merit as stated in the grounds of appeal. Besides, the assessee has challenged the order appellate order by raising additional ground before us challenging the reassessment framed vide order dated 27.12.2016 passed u/s. 144 read with 147 of the Act as being void ab initio and nullity in the eyes of law as there were no proper reasons recorded to believe that income chargeable had escaped assessment. The Ld. AR argued before the Bench that the issue raised in the additional ground of appeal are purely legal in nature and does not require any further verification of facts. Therefore, the Ld. AR submitted that the additional grounds filed by the assessee challenging the order passed u/s. 144 read with 147 of the Act may kindly be admitted as being legal in nature and the assessee is well within his rights to raise this ground before any appellate authority. In defense, Ld. AR relied on the decision of Hon’ble Supreme Court in the case of National Thermal Power Corporation Ltd. Vs CIT 229 ITR 383 (SC).
On the other hand, Ld. Sr. DR submitted that assessee has not raised this issue before the lower authorities and, therefore, it should not be allowed to raise at this stage. Alternatively, issue may be restored to the file of the AO so that the mistakes as appearing in the reasons recorded may be rectified.
After hearing the rival contentions and perusing the material available on record, we find that the issue raised in the additional ground nos. 1 and 2 is purely legal in nature and does not require any verification of facts either at the end of the AO or the Ld. CIT(A). Besides the assessee is supported in its claim by the decision of Hon’ble Apex Court in the case of National Thermal Power Corporation Ltd. Vs CIT (supra), wherein it has been held Nabadwip Chandra Saha, AY 2011-12 that the assessee can raise any issue which has not been raised before the lower authorities provided the same does not warrant further verification of facts. Therefore, considering the facts of the case and the ratios laid down in National Thermal Power Corporation Ltd. (supra), we are inclined to admit the additional ground nos. 1 and 2 for adjudication.
The Ld. AR, at the outset, submitted that the reasons recorded by the AO u/s. 148(2) of the Act, a copy of which is placed at page 7 of the paper book filed, state that the same has been framed in a very casual manner. The Ld. AR pointed out that in para (a) of the reason recorded it has been stated that “the assessee has deposited huge cash in his bank account maintained in Allahabad Bank, Habra branch during the FY 2011-12, which is apparently wrong as the instant year under consideration is FY 2010-11 relevant to AY 2011-12).” Then the Ld. AR pointed out that in the concluding para also the AO has stated that assessee has failed to disclose fully and truly all material facts necessary for assessment of correct income and it was found that the said amount was not disclosed by the assessee in his return of income for AY 2012-13 which is again wrong and which should have been AY 2011-12. The Ld. AR submitted that the reasons have been recorded in a perfunctory and casual manner without any application of mind. The Ld. AR also referred the approval granted by the Ld. JCIT u/s. 151 of the Act which is the competent authority for granting approval to re-open the assessment. The ld. AR stated that the competent authority has also accorded the approval in a mechanical manner as he has failed to notice the mistakes committed by the AO while recording the reasons u/s 148(2) of the Act. The Ld. AR, therefore, submitted that even the Ld. JCIT has accorded mechanical approval which is wrong and against the provisions of the Act and also against the ratios laid down in various decision by various judicial forums. In defense of his the arguments, Ld. AR relied on the decision of Coordinate Bench of Delhi in the case of M/s. Ganesh Ganga Vs. ITO, AY 2010-11 dated 07.11.2019 wherein the ld counsel submitted that the Coordinate Bench has decided the issue in favour of the assessee. The Ld. AR, therefore, prayed that the appeal of the assessee may be allowed by quashing the reopening of reassessment on the ground of recording of reasons u/s. 148(2) without application of mind and according of approval in a mechanical manner by the competent authority as envisaged u/s. 151 of the Act. Nabadwip Chandra Saha, AY 2011-12 7. After hearing the rival contentions and perusing the material available on record, we find from the reasons recorded u/s. 148(2) of the Act by the AO has wrongly mentioned the Financial Year and Assessment Year at two places. The reasons are extracted below for the sake of ready reference: Nabadwip Chandra Saha, AY 2011-12
It is quite apparent from the perusal of reasons recorded that there has been no application of mind by the AO while recording the reasons as the assessment year and financial year have been mentioned wrongly in para (a) of the reasons recorded. The Ld. AO has stated the financial year as 2011-12 whereas the correct financial year should have been 2010-11. Similarly in the concluding para, Ld. AO has stated that Assessment year involved was 2012-13 instead of 2011-12. In our considered opinion the said mistakes on the part of the AO while recording reasons are fatal and cannot be allowed to be cured even by setting aside the assessment. We also note that even the competent authority u/s. 151 of the Act which is in the present case has accorded the approval in a mechanical manner ashe has failed to notice these mistakes while granting approval. In our opinion, the said casual reopening of assessement can not be allowed as by resorting to the reopening of assessment the revenue unsettles the already settled assessment. The case of the assessee finds support from the decision namely M/s. Ganesh Ganga Vs. ITO, AY 2010- 11 dated 07.11.2019. The said decision has been passed by the coordinate bench by following decision of Delhi High court in the case of United Electricals Co. Pvt Ltd. Vs Commissioner of Income Tax 258 ITR 317(Del). In the said decision the hon’ble Delhi has held that approval granted by the additional commissioner u/s 151 of the Act by stating “Yes I am satisfied that it is a fit case issue of notice u/s 148 of the Act” is without application of mind by the additional commissioner of income tax . Similarly in the case of Commissioner of Income Tax Jabalpur Vs S Goyanka Lime & Chemical Ltd (2015) 56 taxmann.com 390(M.P.) , the Hon’ble Apex court has dismissed the SLP of the revenue on the same reason because the Joint Commissioner of Income Tax recorded satisfaction in mechanical manner and without application of mind. In view of the facts and circumstances as stated above and the ratio laid down in the various decision as discussed above, we are inclined to quash the reassessment proceedings. Accordingly, ground nos. 1 and 2 of the additional grounds raised
by the assessee are allowed. Nabadwip Chandra Saha, AY 2011-12
9. Since, we have allowed the additional grounds of appeal which are legal in nature the other grounds raised by the assessee require no adjudication.