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Facts
The assessee, an individual employed by a firm, had his premises searched, leading to additions made by the AO under Section 153C. The assessee argued that the assessment proceedings were initiated during the COVID-19 pandemic, resulting in insufficient opportunity for hearing.
Held
The Tribunal found that the assessment order was passed during the COVID-19 pandemic, and the AO did not have adequate opportunity to examine the full facts. Therefore, the Tribunal restored the file to the AO for de novo assessment proceedings, offering the assessee a sufficient opportunity of being heard.
Key Issues
Whether the assessment order passed under Section 153C during the COVID-19 pandemic provided sufficient opportunity to the assessee, and whether the assumption of jurisdiction was valid.
Sections Cited
153C, 153A, 132
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Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI
Before: SHRI GEORGE GEORGE K & SHRI S.R. RAGHUNATHA
आदेश /O R D E R
PER S. R. RAGHUNATHA, ACCOUNTANT MEMBER: These six appeals filed by the assessee are directed against consolidated order passed by the learned Commissioner of Income Tax (Appeals)-18, Chennai, dated 29.09.2023 and pertains to assessment years 2014-15 to 2019-20. Since, facts are identical and issues are common, for the sake of convenience, the appeals filed by the assessee are being heard together and disposed of, by this consolidated order.
to 1549/Chny/2023 2. The assessee has raised the following common grounds of appeal for all the assessment years 2014-15 to 2019-20:
1. The order of the CIT (Appeals) - 18 dated 29.09.2023 vide DIN & Order No. ITBA/APL/M/250/2023-24/1056646159(1) for the above mentioned Assessment Year is contrary to law, fact and in circumstances of the case.
2. The CIT (Appeals) - 18 erred in sustaining the assumption of jurisdiction for completing the search assessment in terms of Section 153C of the Act impliedly without assigning proper reasons and justification.
3. The CIT (Appeals) -18 went wrong in confirming the search assessment completed u/s 153C of the Act instead of 153A of the Act and hence ought to have appreciated that the search assessment order under consideration should be reckoned as invalid as well passed without jurisdiction.
4. The CIT (Appeals) - 18 failed to appreciate that the order of the search assessment under consideration was passed out of time, invalid, passed without jurisdiction and not sustainable both on facts and in law.
5. The CIT (Appeals) - 18 failed to appreciate that the findings from Para 8.2 of the impugned order to Para 8.12 were wrong, erroneous, incorrect, invalid, unjustified and not sustainable both on facts and in law.
6. The CIT (Appeals) - 18 ought to have appreciated that on the lack of satisfaction emanating from the files of the searched person, the consequential search assessment should be treated as nullity in law, there by vitiating the related findings from Para 7.1 to Para 7.9 of the impugned order.
7. The CIT (Appeals) - 18 further failed to appreciate that in the absence of the incriminating material from the search records, the assumption of jurisdiction u/s 153A/ 153C of the Act on various facets was wrong, erroneous, incorrect, invalid, unjustified and not sustainable both on facts and in law.
8. The CIT (Appeals)- 18 failed to appreciate that the findings recorded from Para 9.1 to 9.3 in this regard were wrong, erroneous, incorrect, invalid, unjustified and not sustainable both on facts and in law.
9. The CIT (Appeals) - 18 erred in confirming the addition to the tune of Rs.1,00,000/- as unexplained income by rejecting the claim of earning of agricultural income and further without referring to seized materials and ought to have appreciated that the rejection of claim of earning of the agricultural income was wrong, erroneous, unjustified, incorrect, invalid and not sustainable both on facts and in law.
10. The CIT (Appeals) - 18 failed to appreciate that the findings from Para 10.5 to Para 10.14 were wrong, erroneous, incorrect, invalid, unjustified and not sustainable both on facts and in law.
11. The CIT (Appeals)- 18 erred confirming the addition of Rs.3,92,108/- being the part of the credits in the bank account of the appellant and in the bank account of the appellant's minor son as part of computation of taxable total income without proper reason/justification. to 1549/Chny/2023
12. The CIT (Appeals) - 18 failed to appreciate that the sustenance of the addition without incriminating material should be reckoned as bad in law and further ought to have appreciated that the rejection of the cash flow statement filed in this regard for the reasons more fully captured in Para 11.1.4 to 11.1.13 of the impugned order was wrong, erroneous, incorrect, invalid, unjustified and not sustainable both on facts and in law.
13. The CIT (Appeals) - 18 erred in confirming the addition of Rs.14,00,000/- being the presumed loan lent/investment made and Rs.3,36,000/- being the interest presumed to have been received as part of computation of taxable total income without assigning proper reasons and justification.
The CIT (Appeals) - 18 failed to appreciate that the findings recorded in this regard in Para 11.1.4 to 11.1.13 of the impugned order was wrong, erroneous, incorrect, invalid, unjustified and not sustainable both on facts and in law.
The CIT (Appeals) - 18 failed to appreciate that in the absence of direct evidence forming part of the search records, sustenance of additions on more presumption, suspicion and surmises should be considered as nullity in law.
The CIT (Appeals) - 18 failed to appreciate that overlooking the explanation offered during the assessment as well as before him on the evidentiary value of the loose sheets relied upon by the Revenue would vitiate the sustenance of the two additions disputed in the present appeal.
The CIT (Appeals) -18 failed to appreciate that there was no effective/proper opportunity given before passing the impugned order and any order passed in violation of the principles of natural justice is nullity in law.
The Appellant craves leave to file additional grounds / arguments at the time of hearing.
At the outset, we find that there is a delay of 24 days in filing the appeals filed by the assessee and the ld.AR explained the reasons for delay in filing the appeal. After hearing both the parties, we find that there is a reasonable cause for the assessee in not filing appeal on or before the due date prescribed under the law and thus, in the interests of justice, we condone delay in filing of appeal and admit the appeal filed by the revenue for adjudication.
4. The brief facts of the case are that the assessee is an individual and is an employee of the partnership firm, New Saravana Stores, situated at T. Nagar, to 1549/Chny/2023 Chennai. The assessee had filed his return(s) of income in reporting income from salary and rent during the assessment year(s) under consideration. A search and seizure operation u/s.132 of the Income Tax Act, 1961 was carried out on 29.01.2019 at various business and residential premises of Shri Y.Pondurai and his Group. The assessee, Shri Lingam, is an employee of the firm, 'New Saravana Stores Brahmandamai', T. Nagar, Chennai was also searched by the Income Tax Department. Thereafter the assessee was served upon a notice u/s.153C of the Act by the AO for the A Ys 2013-14 to 2019-20 on 15.04.2021. In response to the notice issued u/s.153C of the Act, the appellant filed returns of income on 06.09.2021 for the above assessment years. The AO completed the assessments by making additions for the AYs 2013-14 to 2019-20 as follows:
AY S. Particulars No. 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 Income returned vide Return of lncome dated 218310 218730 296400 296170 323000 469850 06.09.2021 Unexplained 1 100000 100000 100000 94600 98200 92300 agricultural income Unexplained receipt in 2 392108 799420 1034554 779956 2760342 0 bank accounts Unexplained loan 3 1400000 0 0 0 0 5250000 lent/investment Unexplained interest 4 336000 0 0 0 0 1260000 received Unexplained investment 5 0 0 0 2005000 0 0 in property Assessed Income 2446418 1118150 1430954 3175726 3181542 7072150
The ld.AR at the outset at the time of hearing of the appeals pleaded for an opportunity before the Assessing Officer to effectively represent considering the limited opportunity granted in the original search assessment proceedings. The to 1549/Chny/2023 Ld.AR pleaded that the assessment proceedings u/s.153C of the Act were initiated by way of issuance of notice u/s.153C of the Act dated 15.04.2021 and the assessment order was passed on 26.09.2021 within a span of 5 months resulting in ineffective and insufficient opportunity of hearing at the stage of assessment proceedings.
Furthermore, the Ld. AR brought to our notice that the proceedings were initiated and completed during the onset of 2nd wave of COVID -19 Pandemic and the resultant movement restrictions enforced by the Government of Tamil Nadu had resulted in passing of the assessment order in depriving the assessee of effective opportunity of hearing.
Per contra, the Ld. DR placed reliance on the orders of the lower authorities and prayed for confirming the orders of the ld.CIT(A).
We have heard the rival contentions perused the material available on record and gone through the orders of the authorities. It is undisputed fact that the assessment order was passed u/s.153C of the Act for the Assessment Years under consideration during the COVID- 19 Pandemic. It is abundantly clear that the Ld. AO has not had the opportunity to examine the full facts of the case in the light of requisite evidences. In the interest of justice and of fair play, we deem it appropriate to restore the file back to the AO with the directions to conduct the assessment proceedings de novo after considering all the material placed on records. The assessee is directed to render all the details required by the AO and comply with his notices. The AO on his part would offer sufficient opportunity of being heard to the assessee. All the issues raised in the present batch of appeals including the validity of assumption of jurisdiction u/s.153C of the Act on various facets as well as the to 1549/Chny/2023 merits are left open for consideration in the denovo proceedings. The relief already granted by the First Appellate Authority shall stand confirmed in the absence of any appeal filed by the Revenue before us. To the said extent, the orders of lower authorities are set aside and the grounds of appeal raised by the assessee for all the six assessment years are allowed for statistical purposes.
In the result, the appeals filed by the assessee are allowed for statistical purposes.
Order pronounced in the court on 19th May, 2025 at Chennai.