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Income Tax Appellate Tribunal, DELHI BENCH ‘C’ NEW DLEHI
Before: SHRI C.M. GARG & SHRI PRADIP KUMAR KEDIA
PER C.M. GARG, J.M. The assessee filed an application for admission of additional ground No. 17, which reads as under : Ground No.17 “Because in any view, the Assessing Officer (ITO Ward 45(1), New Delhi) in the Reasons Recorded for initiating the Proceeding U/s 148 of the I.T. Act in Para 8 (PB Pg. 4/1) has mentioned as follows:- “8(c) Whether any voluntary return had already been filed - NO “8(d) If so, the date of filing of the said Return - NA Which is on the erroneous footing and factually incorrect. The Return of Income of A.Y. 2009-10 stands filed on 18.07.2009. (PB Pg. 18/1). Also mentioned in the impugned Assessment Order itself u/s 147/143(3) dt 10.03.2016, “Return of Income was filed by the Assesse on 18.07.2009...”.
The entire Reasoning thus proceeded on the wrong premises that the Assessee has never filed the Return of Income. The Proceeding Initiated u/sl47 are Void-ab-intio, wrong, Illegal and Bad in law. The consequential Assessment Order passed u/s 147/143(3) of the I.T. Act is liable to be annulled/quashed.”
Learned assessee’s representative, in support of the application for admission of additional ground, submitted that this ground is legal ground which goes to the root of the matter. He also submitted that since the ground was not taken before the authorities below and first time it is being taken before the Tribunal, therefore, in view of the judgment of Hon’ble Supreme Court in the case of National Thermal Power Co. Ltd. vs. CIT 229 ITR 383 (SC), the additional ground may be admitted for consideration and hearing.
In reply to the above, learned CIT/DR opposed to the admission of addition ground. However, he did not controvert that since the additional ground No. 17, sought to be admitted by the assessee at this stage, is a pure legal ground, it can be decided on the basis of material already available on record without any further exercise or want of material or evidence.
On careful consideration of rival submissions and perusal of the proposed additional ground, as reproduced hereinabove, it is clearly discernible that the assessee wants to challenge the validity of assumption of jurisdiction u/s. 148 of the Income-tax Act, 1961 (“the Act” for short) and framing reassessment order u/s. 147 of the Act by the Assessing Officer on the ground that satisfaction has been recorded by considering wrong facts and without application of mind. By taking respectful cognizance of the decision of Hon’ble Supreme Court in the case of National Thermal Power Co. Ltd. vs. CIT (Supra), we observe that since the ground sought to be agitated by the assessee before this Tribunal is legal ground, which goes to the root of the matter, challenging the assumption of jurisdiction by the Assessing Officer for issuance of notice u/s. 148 and framing re- assessment order u/s. 147 of the Act, therefore, same can be considered and admitted for hearing by this Tribunal at this belated stage. Therefore, respectfully following the judgment of Hon’ble Supreme Court in the case of National Thermal Power Co. Ltd. vs. CIT (supra), the additional ground No. 17, being legal, is admitted for consideration and hearing.
We have heard the arguments of both the sides. Learned AR of the assessee, drawing our attention towards assessee’s paper book filed on 22.12.2021, submitted that the format of reasons recorded by the Assessing Officer before issuing notice u/s. 148 as available at page 4 & 5 of assessee’s paper book, it is clear that in column No. 8, the Assessing Officer noted that the assessee has not filed any return of income for A.Y. 2009-10 and therefore, the Assessing Officer did not mention the date of filing of such return in the reasons recorded in column No. 8(d).
Further, drawing our attention towards page 18 of same paper book as well as the assessment order dated 10.03.2016 para -1 page- 1, ld. AR submitted that the assessee has filed return of income for A.Y. 2009-10 through e-process on 18.07.2009 and this fact is noted by the Assessing Officer in the first paragraph of the relevant assessment order dated 10.03.2016 u/s. 147 of the Act read with section 143(3) of the Act.
Further, drawing our attention towards various orders and judgments including the order of ITAT, Delhi ‘C’ Bench dated 16.02.2022 in the case of Hafizuddin Hazi vs. ITO in and another order of ITAT, Delhi Bench ‘D’ in the case of Karshni Metal Store vs. ITO order dated 20.03.2016 ITA No. 1365/Del/2015, submitted that in the similar facts and circumstances, it was held that the Assessing Officer has made no efforts to look into the return of assessee, which was available with him and the Assessing Officer noted that the assessee has not filed the return of income and therefore, income has escaped assessment, then it has to be held that the reassessment proceedings are not in accordance with law and thus, the same has to be quashed. Learned AR vehemently pointed out that when the assessee filed return of income, which was noted by the Assessing Officer in the reassessment order, then initiation of reassessment proceedings u/s. 147 of the Act and issuance of notice u/s. 148 of the Act has to be held as without application of mind and by considering wrong and incorrect facts and therefore, initiation of reassessment proceedings, notice u/s. 147 and reassessment order u/s. 147 read with section 143(3) of the Act has to be quashed.
Replying to the above, ld. CIT/DR strongly supported the action of the Assessing Officer as well as first appellate order and submitted that merely because some incorrect facts have been incorporated in the format of reasons recorded for initiation of reassessment proceedings, the entire proceedings and reassessment order cannot be held as bad in law and cannot be quashed on this technical ground.
The assessee placing rejoinder to the above submissions of the ld. CIT/DR, submitted that it is not a case of typographical mistake, but before initiation of re-assessment proceedings and issuance of notice u/s. 148 of the Act, the Assessing Officer has to apply his mind to the correct facts pertaining to the assessment year 2009-10, but instead of taking into consideration correct and relevant facts, the Assessing Officer has proceeded to initiate reassessment proceedings on the premise that the assessee has not filed return of income for the assessment year 2009-10. Learned CIT(A) has not disputed this fact that the Assessing Officer in the reasons recorded on 25.03.2015 colum No. 8 noted that the assessee has not filed any return of income for the relevant assessment year and therefore, the date of filing of such return was also not mentioned. As we have noted above, the first para of assessment order also makes it clear that the Assessing Officer has taken cognizance of the fact that the assessee has filed return of income for relevant assessment year on 18.07.2009 through electronic mode. Therefore, in our considered opinion, the initiation of re-assessment proceeding u/s. 147 and notice u/s. 148 of the Act has to be held as bad in law and not sustainable, as the Assessing Officer has taken into consideration incorrect and irrelevant facts at the time of taking action u/s. 147 and 148 of the Act and thus, we safely presume that the Assessing Officer has not applied his mind to the assessment file of the assessee before initiating reassessment proceedings.
In the similar set of facts and circumstances, ITAT Delhi ‘C’ Bench in the case of Hafizuddin Hazi vs. ITO (supra) quashed the initiation of reassessment proceedings u/s. 147 and notice u/s. 148 of the Act. Relevant part of the said order of ITAT Delhi reads as follows :
“19. We have heard the rival arguments made by both the sides, perused the orders of the AO and the CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions relied by ld. Counsel for the assessee. We find, the assessee, in the instant case, had filed the original return of income on 31.10.2006 declaring the total income at Rs.10,87,058/- which was processed accordingly. We find, the AO reopened the assessment on the ground that the assessee has purchased residential property amounting to Rs.31,50,000/- and the same is not verifiable from the return of income filed for the AY 2006-07 and the assessee has not furnished the return of income. The reasons of such reopening has already been reproduced in the preceding paragraph. From the above, it is clear that the reopening was made on the ground that the assessee has not filed the return of income and, therefore, the income to the extent of Rs.31,50,000/- has escaped assessment. Since the assessee has already filed the return of income, a fact brought on record by the AO himself in the body of the assessment order itself, therefore, the very reason for which the case of the assessee was reopened is factually incorrect.
It has been held in various decisions that when the AO reopened the case of the assessee on the premise that the return was not filed as per the database of the Department although it was already filed, then, such reassessment proceedings are not in accordance with the law and has to be quashed. For this proposition, we rely on the decision of the Hon’ble Delhi High Court in the case of PCIT vs. RMG Polyvinyal (I) Ltd. (supra), and the decision of the Hon’ble Gujarat High Court in the case of Vijay Haishchandra Patel vs. ITO (supra) relied on by the ld. Counsel for the assessee. The various other decisions relied on by the ld. Counsel on this issue also support his case to the proposition that when reopening was based on the premise that the assessee has not filed his return of income as per database of the Department, but, the assessee has actually filed the return of income, then, such reopening is not in accordance with the law and has to be quashed since such reopening was based on wrong facts. We, therefore, quash the reassessment proceedings initiated by the AO and subsequent proceedings are accordingly quashed. Since the assessee succeeds on this legal ground, the various other grounds challenging the reopening of the assessment as well as addition on merit become academic in nature and, therefore, are not being adjudicated.”
The facts and circumstances of the present case are quite similar to the facts and circumstances of the case of Hafizuddin Hazi vs. ITO(supra). Therefore, respectfully following the same, we hold that in the present case, the assessee has actually filed the return of income and the Assessing Officer in the satisfaction note noted that the assessee has not filed return of income. Thus, we safely presume that the Assessing Officer has initiated reassessment proceedings by mentioning wrong and incorrect facts of the case and on the sole premise that the assessee has not filed return of income for the A.Y. 2009-10. Therefore, we safely presume that the Assessing Officer has initiated the reassessment proceedings and passed reassessment order on the basis of incorrect facts and without application of mind. Therefore, we are compelled to hold that the action of the Assessing Officer and impugned reassessment order are bad in law and unsustainable. Consequently, action of the Assessing Officer in initiating reassessment proceedings and the impugned reassessment order dated 10.03.2016 are hereby quashed.
Since, in the earlier part of this order, we have quashed initiation of reassessment proceedings and reassessment order u/s. 147 r.w.s. 143(3) of the Act, therefore, other grounds of assessee on merits have become infructuous and we are not adjudicating the same.