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Facts
The assessee's assessment for AY 2011-12 was reopened under Section 147 based on information regarding accommodation entries/bogus purchases from M/s. Rahul Exports. This led to an ex-parte assessment under Section 144 with an addition of INR 27,02,500 under Section 69C. The CIT(A) subsequently dismissed the assessee's appeal.
Held
The ITAT found that the CIT(A) erred by making an incorrect factual finding, treating the addition as under Section 69A instead of Section 69C, and failed to consider the assessee's submissions. Consequently, the ITAT set aside the CIT(A)'s order and remanded the matter back for fresh adjudication with proper opportunity to the assessee.
Key Issues
1. Validity of reassessment proceedings and addition of bogus purchases. 2. Whether the CIT(A) correctly adjudicated the appeal, considering the proper section for addition and the assessee's submissions.
Sections Cited
250, 144, 147, 148, 142(1), 143(2), 69C, 69A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “H(SMC
order : 28.01.2025 O R D E R [ Per Rahul Chaudhary, Judicial Member:
1. 1. The present appeal preferred by the Assessee is directed against the order, dated 16/05/2024, passed by the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘the CIT(A)’] under Section 250 the Income Tax Act, 1961 [hereinafter referred to as ‘the Act’] whereby the Learned CIT(A) had dismissed the appeal against the Assessment Order, dated 10/12/2018, passed under Section 144 read with Section 147 of the Act for the Assessment Year 2011-2012.
2. The Assessee has raised following grounds of appeal :
“1. In the facts and in the circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeals) has erred Assessment Year 2011-2012 in upholding the action of the Ld. Assessing Officer in reopening the assessment under section 147 of the Act merely based on borrowed satisfaction and alleged information received from the sale tax department without any independent application of mind thereto.
In the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) has erred in upholding the addition of Rs.27,02,500/- being 100% of the alleged bogus purchases; merely on surmises and conjectures in utter disregards to the factual and legal matrix of the case.
3. In the facts and in the circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeals) has erred in upholding the action of the Ld. Assessing Officer in concluding the re-assessment without providing the Appellant with sufficient and adequate opportunity of being heard; thereby violating the principles of natural justice.”
The relevant facts in brief are that Assessee, a partnership firm, filed return of income for the Assessment Year 2011-2012 on 30/09/2011 declaring total income of INR.1,94,985/-. Reassessment proceedings were initiated in the case of Appellant under Section 147 of the Act on the basis of information received from Director General Income Tax, Mumbai, to the effect that the Appellant had taken accommodation entries from M/s. Rahul Exports a concerned operated and managed by Mr. Bhanwarlal Jain and his group engaged in fraudulent transactions to providing accommodation/hawala entries for bogus purchases, loans and advances. Notice under Section 148 of the Act was issued to the Assessee on 28/03/2018 and in response to the same the Appellant requested that the original return of income filed on 30/09/2011 be treated as return filed in response to the notice under Section 148 of the Act. Thereafter, notices were issued to the Assessee under Section 142(1) of the Act on 26/09/2018 and 26/10/2018 which were not complied with by the Appellant. Notice issued under Section 143(2) of the Act on 26/09/2018 along with reasons recorded for reopening the assessment was also not responded to by 2 Assessment Year 2011-2012 the Appellant. Accordingly, the Appellant was proceeded ex-parte and the Assessing Officer framed assessment under Section 144 read with Section 147 of the Act upon the Appellant vide Assessment Order, dated 10/12/2018, assessing total income of the Assessee at INR.28,97,490/- after making addition of INR.27,02,500/- under Section 69C of the Act holding the same to the accommodation entry taken by the Appellant in the form of bogus purchases of INR.27,02,500/- made from M/s. Rahul Exports.
Being aggrieved, the Appellant preferred appeal before the CIT(A) challenging the validity of the reassessment proceedings as well as the addition of INR.27,02,500/- made by the Assessing Officer under Section 69C of the Act.
The CIT(A) dismissed the aforesaid appeal vide, order dated 16/05/2024. The Appellant has now preferred the present appeal against the aforesaid dismissal order passed by the CIT(A) on the grounds reproduced in Paragraph 2 above.
We have heard both the sides, perused the material on record and examined the position in law in view of the submissions advanced. The primary contention advanced on behalf of the Appellant was that the Ld. CIT(A) has proceeded to decide the appeal of incorrect understanding of fact and without taking into consideration the documents and written submission filed by the Appellant. On perusal of the impugned order passed by the Ld. CIT(A) we find that the Ld. CIT(A) has proceeded on a incorrect understanding that addition of INR.27,02,500/- was made by the Assessing Officer under Section 69A of the Act whereas the Assessing Officer had made the addition under Section 69C of the Act. Further, we note that the impugned order does not deal with any of the submissions made by the Appellant. The Ld. CIT(A) has, after summarizing the view taken by the Assessing Officer on the grounds raised
in appeal before the Ld.
3. Assessment Year 2011-2012 CIT(A), given his findings without making any reference to the submissions filed by the Appellant. We note that the Ld. CIT(A) has in Paragraph 1.3 of the order impugned specifically recorded that Appellant has furnished documents alongwith written submissions on 19/02/2021. We find that the order impugned is also silent about documents/details furnished by the Appellant. Accordingly, given facts and circumstances of the present case, we set aside the order, dated 16/05/2024, passed by the Ld. CIT(A) and restore the appeal back to the file of the Ld. CIT(A) with the directions to adjudicate the grounds raised by the Appellant in appeal before the Ld. CIT(A) afresh as per law after granting the Appellant a reasonable opportunity of being heard and after calling for remand report from the Assessing Officer, in case so desired by the Ld. CIT(A), given the facts and circumstances of the case. All the rights and contentions are left open. Thus, Ground No. 3 raised by the Assessee is allowed while Ground No. 1 & 2 are dismissed as having been rendered infructuous.
In result, in terms of Paragraph 6 above, the appeal preferred by the Assessee is treated as partly allowed for statistical purposes.