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Facts
The assessee filed its Return of Income for AY 2017-18. A notice under Section 148 was issued based on information of inflated purchases from Aryan Trading Co., leading to an addition of Rs. 2,12,03,561 to its income, with total deemed income at Rs.2,16,42,769/-. The ld. CIT(Appeals) set aside the Assessing Officer's order and remitted the matter back for fresh assessment.
Held
The ITAT noted that the ld. CIT(Appeals) had set aside the AO's order without deciding on the merits. To ensure natural justice, the ITAT set aside the CIT(Appeals)'s order and remitted the matter back to the ld. CIT(Appeals) with a direction to provide another opportunity of being heard to the Revenue before passing appropriate orders.
Key Issues
Whether the ld. CIT(Appeals) erred in setting aside the case and directing the Assessing Officer for fresh assessment without deciding the appeal on merit, and whether the proviso to Section 251(1)(a) was wrongly applied.
Sections Cited
139, 148, 142(1), 143(2), 251(1)(a), 144
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘D’ BENCH, KOLKATA
Before: Shri Duvvuru RL Reddy, Vice-(KZ) & Shri Rakesh Mishra
Per Duvvuru RL Reddy, Vice-President (KZ):- The present appeal is preferred by the Revenue against the order of ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 29th November, 2024 for the assessment year 2017-18.
(A.Y. 2017-2018) Sriyash Vyapaar Pvt. Limited 2. The appeal is time barred by 62 days in filing the appeal by the Revenue. However, by considering the totality of the facts and circumstances of the case, we condone the delay of 62 days. Hence the delay is condoned.
Brief facts of the case are that the assessee-firm filed its return of income for the assessment year 2017-18 under section 139 of the Income Tax Act on 03.11.2017 declaring total income of Rs.3,58,100/-. Notice under section 148 was issued on 28.06.2021 on the basis of credible information available on record for reassessment. In this case, notice was issued within the period from 01.04.2021 and 30.06.2021, i.e. within the extended period of time for issue of notice under section 148 in accordance with the Taxation and other Laws (Relaxation and Amendments of Certain Provisions) Act, 2020 and various Notifications issued during such period referred to as “Extended Reassessment Notice”. In this case, credible information received from ADIT/DDIT(Inv.), Unit-3(4), Kolkata, which has been received through mail from Other Agency i.e. Special Commissioner of Revenue, Bureau of Investigation, Unit-1, Kolkata, South Bengal and Nodal Officer. During the assessment proceedings, notices u/s 142(1) along with questionnaire dated -03.01.23, 31.03.23 and 11.04.23 which were duly served upon assessee through registered e-mail as well as e- filing portal. The notices so issued were proper, well in time, e- mailed and delivered upon assessee. In compliance to the aforesaid notices issued u/s 142(1) of the I T Act, the assessee filed reply on 19.01.23 & 18.04.23. Vide reply filed on 19.01.23, the assessee submitted return of income filed on 04.08.21 declaring total (A.Y. 2017-2018) Sriyash Vyapaar Pvt. Limited income of Rs. 3,58,100/- as return of income filed in compliance to notice issued u/s 148 of the I T Act. Considering the request of the assessee, notice u/s 143(2) of the I. T. Act has been issued on 24.04.23. In compliance to Show cause notice with respect to proposed addition on 24.04.2023, the assessee has neither filed any reply nor requested for adjournment. In view of the facts and report of the Special Officer & Additional Commissioner, Commercial Taxes, Bureau of Investigation, Unit-1, Kolkata forwarded vide letter dated-09.02.2018, it is crystal clear that there was no actual purchase made from Aryan Trading Co and the assessee has inflated its purchase by Rs. 2,12,03,561/- (as evident from ledger of Aryan Trading Co submitted by the assessee vide reply filed on 19.01.23) during year under consideration. Hence Rs. 2,12,03,561/- was added to the net Profit and total income of the assessee as well for year under consideration and ld. Assessing Officer determined the total deemed income of the assessee at Rs.2,16,42,769/-.
On being aggrieved, the assessee preferred an appeal before the ld. CIT(Appeals). The ld. CIT(Appeals) set aside the order passed by the ld. Assessing Officer and remit the matter back to the file of ld. Assessing Officer for fresh assessment.
On being aggrieved, the Revenue preferred an appeal before the ITAT and raised the following grounds:- “That on the facts and circumstances of the case and in law, the CIT(A) has erred in setting aside the case and directing the Assessing Officer for fresh assessment without deciding the appeal on merit.
2. That on the facts and circumstances of the case and in law, the CIT(A) has wrongly applied the proviso to section 251(1)(a) of the Income Tax Act, 1961, without considering that the said proviso is applicable in the case of assessment made under section 144 only.
None appeared on behalf of the asseessee at the time of hearing. Therefore, we have decided to dispose of the appeal after hearing the ld. Departmental Representative and perusing the material available on record.
At the outset, ld. D.R. brought to our notice that the ld. CIT(Appeals) without going into merit of the case set aside the order of ld. Assessing Officer and remit the matter back to the file of Assessing Officer for deciding the assessment afresh. Therefore, he pleaded before the Bench to uphold the order of ld. Assessing Officer.
We have heard the Ld. Departmental Representative and perused the material available on record. Considering the facts and circumstances of the case, we are inclined to set aside the order passed by the ld. CIT(Appeals) in order to meet the principle of natural justice, and remit the matter back to the file of ld. CIT(Appeals) with a direction to provide one more opportunity of being heard to the Revenue. At the same breath, we also hereby caution the Revenue to promptly co-operate with the proceedings before the Ld. CIT(Appeals) failing which the Ld. CIT(Appeals) shall be at liberty to pass appropriate orders in accordance with law and (A.Y. 2017-2018) Sriyash Vyapaar Pvt. Limited merits of the cases, based on the materials available on the record. Thus, the grounds raised by the Revenue in the appeal are allowed for statistical purposes.
In the result, the appeal of the Revenue is allowed for statistical purposes. Order pronounced in the open Court on 24/06/2025.