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Income Tax Appellate Tribunal, KOLKATA BENCH “B” KOLKATA
Before: SHRI RAJESH KUMAR, HON’BLE & SHRI SONJOY SARMA, HON’BLE
O R D E R
PER SONJOY SARMA, JM:
The present appeal has been preferred by the assessee against the order dated 27.06.2019 passed by the Ld. Commissioner of Income Tax (Appeals) -10, Kolkata [hereinafter referred to as the CIT(A)] relevant to AY 2013-14.
The issue raised in ground no. 1 is against the order of ld. CIT(A) upholding the reopening of assessment proceeding and the consequent assessment framed u/s 143(3) r.w.s. 147 of the Act which is otherwise invalid, illegal and void ab initio.
The facts in brief are that the assessee filed his return of income on 29.09.2013 declaring total income at Rs. 36,31,870/- which was processed u/s 143(1) of the Act. The assessment was reopened u/s 147 of the Act after obtaining approval u/s 151 of the Act from the Joint Commissioner of Income Tax, Range-36, Kolkata vide F. No. JCIT/R-36/Kol/2016-17/1266 dated 16.02.2017. The assessment was reopened on the ground that assessee has earned Long Term Capital Gain on sale of shares of M/s. Tuni Textiles to Shri Sanjay Mehta A.Y. 2013-14 the tune of Rs. 18,51387/- which according to the AO is fictitious and dubious transactions and therefore, the income to this effect has escaped assessment. The notice u/s 148 of the Act was complied with by the assessee by filing a return of income on 16.05.2017 and the AO was requested to supply the reasons recorded for reopening the assessment u/s 147 of the Act which was provided vide letter dated 07.04.2017. The assessee has filed objections to the issuance of notice u/s 148 of the Act on 24.04.2017 and 11.09.2017 raising objecting to the reopening on the ground that there was no tangible material and also that notice u/s 143(2) was not issued. The ld. AO has not stated anything in the assessment framed as to the disposal of the objections, however a letter was placed before us dated 01.12.2017 disposing of the objections raised by the assessee. However, in the said letter, the AO has only stated about the issuance of notice u/s 143(2) of the Act and not mentioned anything about the existence of substantive material as to the escapement of income. Finally the assessment was framed by the AO u/s 147 r.w.s. 143(3) vide order dated 27.12.2017 after taking into the contentions and submissions of the assessee.
The ld. AR challenged the appellate order on legal grounds /issue as well as merits of the case, however, the ld. CIT(A), after taking into consideration the submissions of the assesse, dismissed the appeal on both the issues.
After hearing rival contentions of the parties and perusing the material available on record, we observe that undisputedly the case of the assessee was reopened on the ground the long term capital gain to the tune of Rs. 18,51,387/- has escaped assessment. We note that the assessee has objected to the initiation of reassessment
Shri Sanjay Mehta A.Y. 2013-14 proceeding by filing two letters dated 24.04.2017 and 11.09.2017 which were disposed of by the AO on 01.12.2017. A perusal of the said letter reveals that the AO has not properly disposed of/ dealt with objections raised by the assessee. We note that the objection as to non-existence of substantive material remained undisposed of. So on this count, the reopening of assessment and the assessment order framed by the AO cannot be sustained. Secondly, we also note that there are several infirmities in the process of obtaining approval from the ld. Joint Commissioner of Income Tax which was obtained vide F.No. JCIT/R-36/Kol/2016-17/1266 dated 16.02.2017 whereas as per the copy of the said sanction placed at page no. 18 of the Paper Book, the approval was dated 03.02.2017 which shows total non-application mind at the end of ld. AO. Considering these infirmities and non-disposal of objections by the AO, we are of the considered view that assessment proceedings as well as reassessment order have been framed in mechanical manner and without application of mind and therefore reopening of assessment cannot be allowed in a casual manner. Considering these facts and circumstances of the case, we are inclined to quash the reopening of assessment as well as the order framed u/s 143(3) r.w.s. 147 of the Act. Since we have allowed the appeal on legal issue, ground raised on merits are not being adjudicated at this stage and are being left open to be decided later if the need arise for the same.