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Facts
The assessee's appeal was filed 175 days late, but the delay was condoned. The assessee raised additional grounds challenging the reopening of assessment, alleging it was mechanical and without proper information. The reasons for reopening cited an addition to capital account not disclosed in the ITR, requiring verification.
Held
The Tribunal held that the first additional ground regarding the mechanical nature of the reopening was rejected. The second ground challenging the PCIT's approval was also rejected for lack of proper documentation and affidavit. The third ground regarding the absence of DIN was restored for further action pending Supreme Court decision. The fourth ground challenging jurisdiction was dismissed. The merits of the case were restored to the AO for readjudication.
Key Issues
Whether the reopening of assessment was valid and based on sufficient reasons, and whether the approval for reopening was mechanically granted and contained mandatory requirements like DIN.
Sections Cited
147, 148, 124(3), 120(1), 46A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “SMC” BENCH, KOLKATA
आदेश / O R D E R This is an appeal filed by the assessee against the order of Id.Addl./JCIT(A)-9, Mumbai, dated 28.12.2023 passed for Assessment Year 2013-2014. 2. The appeal of the assessee is barred by 175 days. In this regard, the assessee has filed condonation of application stating therein sufficient reasons which are plausible and not found to be false. Ld.Sr. DR did not raise any serious objection. Accordingly, the delay of 175 days in filing the present appeal is condoned and the appeal is admitted for hearing. 3. At the time of hearing, the Id. AR has raised the additional grounds challenging the reopening as follows :- Additional Grounds: 1. For that the Reasons Recorded in this case is mechanical and without any information suggesting escapement of income, hence such re-opening is bad in law 2 ITANo.1748/KOL/2024 2. For that the approval granted on 11/12/2018 by Ld. PCIT, Siliguri for issuing Notice under section 148 of the Act with only remarks that "Yes, I am satisfied" is mechanical one, and therefore bad in law, hence reopening based on the said approval is void-ab-initio. Therefore, Assessment Order passed to be quashed.
For that the communication dated 29/11/2018 issued from the office of Ld. PCIT, Siliguri does not contain Document Identification No. (DIN) on its face, therefore fails the mandatory requirement in terms of CBDT Circular 19/2019 dated 14th August, 2019 therefore, re-opening based on such approval is void-ab-initio. Therefore, Assessment Order passed to be quashed.
4. That on the facts and in the circumstances of the case and in law, the Ld. AO erred in assuming jurisdiction over the re- assessment proceedings which was beyond his pecuniary jurisdiction as per CBDT's circulars/instructions binding on him, and hence the impugned notice under section 148 of the Act dated 11/12/2018 is without jurisdiction, void ab initio and the Assessment Order passed pursuant to the same deserves to be quashed.
In regard to the first additional ground, it was the submission that the reason recorded are mechanical. The Id. AR drew the attention of the Bench to page 1 of the paper book filed which is a reason recorded mentioned as follows :-
3 ITANo.1748/KOL/2024
Other than mentioning that the reasons are mechanical, no further arguments have been placed by the Id. AR.
In reply, Id. Sr. DR submitted that the issue has been brought out for the first time before the Tribunal and the assessee has been non- cooperative before the AO and Id.CIT(A).
I have considered the rival submissions. A perusal of the reasons recorded shows that the Assessing Officer has placed reliance on the audited balance sheet. Here it is worthwhile to extract the Explanation 1 to Section147 of the Act as was available during the relevant assessment year, which reads as under :- [Income escaping assessment. 147. xxxxxxxxxxxxx Explanation 1.—Production before the Assessing Officer of account books or other evidence from which materia evidence could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the foregoing proviso.
The said explanation clearly shows that even the production before the Assessing Officer of the books and accounts and other evidence from which material evidences could have been discovered by the Assessing Officer within the meaning of the earlier proviso to Section 147 of the Act. Admittedly, the reason recorded clearly shows that the Assessing Officer has relied upon the audited balance sheet and capital account of the assessee. It is worthwhile to mention here that there has been absolutely non-cooperation by the assessee before the Assessing Officer and Id. CIT(A). The assessee could very well had brought this issue and the 4 ITANo.1748/KOL/2024 explanation thereto to do all what has been expected to be done. Just waiting for time barring and raising the technical issue is an afterthought. This being so, ground No.1 of the additional ground as raised by the assessee stands rejected.
In regard to ground No.2, it was submitted by the Id. AR that the issue was in regard to approval granted by the Id. Pr.CIT. Ld. AR placed reliance on the decision of the coordinate Delhi Bench of the Tribunal in the case of Sandeep Bajaj passed in dated 29.05.2024. No further submissions have been made by the Id.AR.
One of the primary requirement while challenging the said approval is that the copy of the said approval be placed before the authorities. It is also one of the primary requirement under Rule 10 of the ITAT Rules, 1963 that necessary affidavit be raised. Rule 10 of the ITAT Rules, 1963 reads as follows:- 10. Filing of affidavits - Where a fact which cannot be borne out by, or is contrary to, the record is alleged, it shall be stated clearly and concisely and supported by a duly sworn affidavit.
In the present case, admittedly, the said affidavit is not there. Neither has the assessee produced the same before approval which has specifically been granted by the Id.CIT(A). The approval is being granted by the Id.Pr.CIT is clearly an administrative act and the same is done after thorough application of his mind and verification of the records. Opportunity before granting approval is not required under the rule provided to the assessee. True, it is very much required that the approval must be clear and the reasons for giving approval must be available or deciphered from 5 ITANo.1748/KOL/2024 the approval granted. In the present case, nothing has been brought out by the Id.AR on behalf of the assessee to show that the approval has been given in a mechanical manner or on account of non-application of mind. Just because the Id. Pr.CIT has made a noting "Yest I am satisfied" that does not mean that Id. Pr.CIT has not applied his mind. This being so, as nothing has been brought on record to show that the approval granted by the Id. Pr.CIT is without application of mind or mechanical one, being approval, no defect in approval is found. Thus, the approval granted by the Id. Pr.CIT is upheld. Consequently, the decision of the coordinate bench of the Tribunal relied on by the Id. AR in the case of Sandeep Bajaj, referred to supra, does not apply to the present facts of the case.
Next ground raised
by the Id. AR is that there is no DIN in the said approval. The issue of DIN is now pending before the Hon'ble Supreme Court. This being so, the issue is restored to the file of Id.AO with a direction to wait for the final outcome of the Hon'ble Apex Court in regard to the issue of DIN and the principle to be laid down by the Hon'ble Supreme Court in this regard.
13. In regard to the fourth ground, the submission of the Id.AR that the reopening done by the DCIT, Circle-1, Siliguri does not have jurisdiction over the assessee. Here, the challenge to the jurisdiction is also affected by the provision of Section 124(3) of the Act. The assessee is to call in question the jurisdiction of the Assessing Officer within one month from the issuance of notice. Here as mentioned earlier, the assessee chose to remain silent. The assessee having chosen to remain silent, cannot now raise the ground challenging the jurisdiction as the said challenge is barred 6 ITANo.1748/KOL/2024 by the provisions of Section 124(3) of the Act. Here it is also worthwhile to refer to Explanation to Section 120(1) of the Act. There are multiple circulars issued by the CBDT which have directed that the senior authorities have the powers to exercise the duties of subordinate authorities. Here, repeatedly notices have been issued by the Id. Pr.CIT where the assessee desires to be issued by the ITAT. As the ground itself is hit by the provision of Section 124(3) of the Act, the said ground stands dismissed.
Coming to the merit of the case, the Id. AR submitted that admittedly the order of the Assessing Officer and Id.CIT(A) are ex-parte orders. Here it is relevant to mention that on merits, the issues may be restored to the file of Assessing Officer for readjudication.
Ld. Sr. DR did not raise any serious objection in restoring this issue to the file of Id. Assessing Officer.
As it is noticed that the assessee has been non-compliant before the Assessing Officer and the Id. CIT(A), insofar as evidences have not been produced before the Assessing Officer and the evidences have been produced before the Id.CIT(A) and the Id.CIT(A) has not admitted the evidence, insofar as there has been violation of Rule 46A, in the interest of justice, so as to grant another opportunity to the assessee to substantiate his case before the Id. Assessing Officer, this issue on merits is restored to the file of Assessing Officer for readjudication after granting the assessee adequate opportunity of being heard.