M/S PRAVIN BASANTILAL JAIN,MUMBAI vs. ITO 29(2)(5)`, MUMBAI

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ITA 3673/MUM/2019Status: DisposedITAT Mumbai13 May 2022AY 2011-123 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the CIT(A) did not provide reasons for confirming the validity of the reopening and that a legal ground regarding non-compliance with Section 151 was not adjudicated. Therefore, the matter was restored to the CIT(A) for fresh adjudication.

What were the facts?

The assessee received a loan of Rs. 20 lakhs from a company suspected of providing accommodation entries. The Assessing Officer reopened the assessment and added the loan amount as an unexplained cash credit. The CIT(A) upheld the reopening and the addition.

What were the issues?

The key issues were the validity of reopening the assessment and the compliance with mandatory procedural requirements before reopening.

Which sections of the Income-tax Act were involved?

Section 147,Section 151,Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” Bench, Mumbai

For Respondent: Shri Ashish Phophare
Hearing: 11.05.2022Pronounced: 13.05.2022

The assessee has filed this appeal challenging the order dated 25.3.2019 passed by learned CIT(A)-40, Mumbai and it relates to A.Y. 2011-12.

2.

The grounds urged by the assessee give rise to following issues :-

a) Validity of reopening of assessment under section 147 of the I.T. Act b) Non-compliance of mandatory requirement under section 151 of the I.T. Act c) Cash credit addition of Rs. 20,00,000/-

3.

None appeared on behalf of the assessee, even though notice of hearing was sent by registered post on several occasions by the Registry to the assessee. Hence, we proceed to dispose of the appeal ex-parte, without presence of the assessee.

4.

We heard learned Departmental Representative and perused the record. Facts relating to the issue are that the assessee had availed loan of Rs.20.00

2 M/s. Pravin Basantilal Jain lakhs from a company named M/s. Fastline Multitrade Pvt. Limited (FMTPL). It came to the notice of the Assessing Officer that the above said company belongs to Praveen Kumar Jain group and the said group was engaged in the business of providing accommodation entries. On the basis of the above said information, the Assessing Officer took the view that financial transactions entered between the assessee and FMTPL has resulted in escapement of income. Accordingly, he reopened the assessment under section 147 of the Act. The Assessing Officer completed reassessment by making addition of Rs. 20,00,000/- under section 68 of the Act treating the same as unexplained cash credit.

5.

Before learned CIT(A) assessee challenged the validity of reopening of assessment and also addition of Rs. 20 lakhs made. However, learned CIT(A) dismissed the appeal holding that the reassessment is valid and also confirming the addition of Rs. 20 lakhs made by the Assessing Officer.

6.

Aggrieved, the assessee has filed this appeal before the Tribunal.

7.

We heard Ld D.R and perused the record. On going through the order passed by learned CIT(A), we noticed that the first appellate authority has not given any reason for confirming the validity of reopening of assessment. Further the assessee has raised another legal ground before us contending that the mandatory requirement under section 151 of the Act has not been complied with by the Assessing Officer. This contention of the assessee also, in our view, requires to be adjudicated by Ld CIT(A). Since both these legal issues go to the root of the matter, we are of the view that these legal issues require adjudication by learned CIT(A) by giving proper reasoning. The fate of the issue urged on merits would depend upon the decision taken on above said legal issues.

8.

In view of the foregoing discussions, we are of the opinion that all the issues are required to be restored to the file of the learned CIT(A) for 3 M/s. Pravin Basantilal Jain adjudicating them afresh in accordance with law. Accordingly, we set aside the order passed by learned CIT(A) and restore all above said issues to his file for adjudicating them afresh, after providing proper opportunity of being heard to the assessee.

9.

In the result, appeal filed by the assessee is treated as allowed for statistical purposes.

Order pronounced in the open court on 13.05.2022.

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