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Facts
The assessee appealed against an ex-parte order by the CIT(A), which upheld an assessment order passed under Section 144 read with Section 147 for AY 2013-14. The CIT(A) had issued notices to an incorrect email address, allegedly violating natural justice. The core dispute centered on the validity of the reopening of assessment, with the assessee contending non-application of mind by the Assessing Officer (AO) and contradictory statements in the reasons recorded, particularly regarding the filing of the original return of income.
Held
The Tribunal found that the CIT(A)'s ex-parte order resulted from notices being sent to an incorrect email, violating natural justice. Crucially, the Tribunal observed that the AO's reasons for reopening contained contradictory statements about whether the assessee had filed a Return of Income, demonstrating a non-application of mind by both the AO and the approving authority. Citing Bombay High Court judgments, the Tribunal held that the reopening of assessment was bad in law.
Key Issues
1. Whether the CIT(A)'s ex-parte order violated the principles of natural justice due to notices being sent to an incorrect email address. 2. Whether the reopening of assessment under Section 147/148 was valid, given the Assessing Officer's non-application of mind and contradictory statements in the reasons recorded regarding the filing of the original return of income.
Sections Cited
250, 144, 147, 69, 151, 148, 234A, 234B, 271(1)(b), 271(1)(c), 271D, 139(1), 143(1), 143(3)
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Income Tax Appellate Tribunal, PUNE BENCHES “SMC” :: PUNE
Before: DR.DIPAK P. RIPOTE & SHRI VINAY BHAMORE
Assessment Year: 2013-14 Bharat Shivaji Chavan, V The Income Tax Officer, At Sonarsiddhnagar, Post s Ward-5, Sangli. Kowthali, Tal Atpadi, District Solapur, Kotali – 413101. Maharashtra. PAN: AUWPC0996M Appellant/ Assessee Respondent / Revenue Assessee by Shri Piyush Bafna and Shri Aakash Parakh – AR’s Revenue by Shri Rajesh Haladkar – Addl.CIT(DR) Date of hearing 25/06/2025 Date of pronouncement 26/06/2025 आदेश/ ORDER
PER DR. DIPAK P. RIPOTE, AM:
This appeal filed by the Assessee is directed against the order of ld.Commissioner of Income Tax(Appeals)[NFAC] passed under section 250 of the Income Tax Act, 1961, dated 30.01.2025 emanating from the Assessment Order passed u/s.144 r.w.s 147 of the Income Tax Act, 1961, for A.Y.2013-14 dated 25.03.2022. The Assessee has raised following grounds of appeal :
“1. On the facts and in the circumstances of the case and without prejudice to any other grounds, the learned CIT(A) has erred in law and on facts in passing an order under section 250 of the Act without adjudicating the matter on merits and without dealing with the specific grounds raised by the appellant, in violation of the mandate of section 250(6) of the Act and therefore, the impugned order, being non- speaking and devoid of proper reasoning, is bad in law and deserves to be quashed.
2. On the facts and in the circumstances of the case and in law and without prejudice to other grounds, Ld. NFAC has erred in upholding the addition of Rs 34,99,584/-made by Ld. NaFAC u/s 69 of the Act and hence, the same is bad in law and thus, the impugned addition may please be deleted
3. On the Facts and circumstances of the case and in law, Ld. CIT has erred in confirming the addition of Rs.30,73,237/- to the retuned income by invoking provisions of Sec.69, thereby ignoring the explanation about the nature and sources of investments as explained as explained by the AO.
4. On the facts and in the circumstances of the case and in law and without prejudice to other grounds, as the assessment order u/s 147 r.w. 144 of the Act passed by Ld. NaFAC is illegal and bad in law since it is without complying with multiple jurisdictional conditions as per section 147 to 151A and, therefore the said assessment order may please be quashed.
5. On the Facts and circumstances of the case and in law, the learned Assessing Officer erred in reopening the assessment beyond 4 years especially when allmaterial facts were disclosed in the return of income, therefore the action of reopening is void-ab-initio and deserves to be struck down.
6. On the facts and in the circumstances of the case and in law and without prejudice to other grounds the assessment order passed u/s 147 r.w.s. 144 of the Act is bad in law inasmuch as there was mechanical sanction by the prescribed authority under section 151 of the Act and hence the said order deserves to be quashed.
7. On the facts and in the circumstances of the case and without prejudice to any other grounds the notice u/s 148 of the Act dated 31- 03-2021 issued by Ld. JAO on 01-04-2021 without complying with the decision of Hon'ble Supreme court in case of Ashish Agrawal - 444 ITR 1 and therefore, the impugned reassessment proceedings and the consequential reassessment order may please be quashed.
On the facts and in the circumstances of the case and in law and without prejudice to the other grounds, Ld. NaFAC, without assigning any reasons and overlocking 26AS statement, has erred in not giving the credit of Self-Assessment Tax of Rs 28,900/-while computing the tax liability of the Appellant, and therefore, the same may please be allowed 9. On the facts and in the circumstances of the case and without prejudice to any other grounds, the Ld. NaFAC erred in charging interest under sections 234A and 234B of the Act without properly considering the return filed, tax paid, and the computation of income based on estimated additions 10.On the facts and in the circumstances of the case and without prejudice to any other grounds, the Ld. NaFAC erred in initiating penalty proceedings under section 271(1)(b), 271(1)(c) and 271D of the Act. 11. The Appellant craves leave to add, amend, alter, modify, vary, or withdraw all or any of grounds of appeal
, in the interest of justice, if necessary, at the time of hearing of the appeal.” Submission of ld.AR :
2. Ld.AR for the assessee filed a paper book. Ld.AR submitted that ld.CIT(A) has passed an Ex-parte order without adjudicating grounds of appeal. Ld.AR submitted that none of the notices issued by ld.CIT(A) were received by the assessee, hence, there was no compliance. Ld.AR submitted that ld.CIT(A) had issued notices at the email address “nitingkudaleandco@gmail.com”. Ld.AR invited our attention to Form No.35 filed by Assessee, wherein the email address of the assessee mentioned is “efiling.ngk50@gmail.com”. Therefore, ld.AR submitted that assessee could not file any reply.
Hence, ld.AR requested that one more opportunity may be given to Assessee to file all the details before the ld.CIT(A).
2.1 On merits Ld. AR submitted that the Notice u/s 148 and the reassessment is bad in law. He took us through the paper book.
Submission of ld.DR : 3. Ld.DR for the Revenue relied on the order of Assessing Officer and ld.CIT(A).
Findings & Analysis : 4. We have heard both the parties and perused the records. In this case, Assessing Officer issued notice u/s.148 of the Act, for A.Y.2013-14 on 31.03.2021. Subsequently, various notices were issued. Assessing Officer completed the Assessment Order assessing the income of the Assessee at Rs.34,99,584/-.
4.1 Aggrieved by the assessment order, Assessee filed appeal before the ld.CIT(A) who dismissed the appeal of the Assessee without discussing each and every ground raised by the assessee. Ld.CIT(A) has not adjudicated the Legal Grounds raised by the assessee regarding validity of Notice u/s148 and reassessment proceedings.
Aggrieved by the order of the ld.CIT(A), Assessee filed appeal before this Tribunal.
It is observed that ld.CIT(A) had issued the notices at the email address “nitingkudaleandco@gmail.com”, whereas the email address mention in Form No.35 is “efiling.ngk50@gmail.com”. Therefore, these notices were not received by Assessee. Hence, Assessee could not file the reply. Therefore, it is clear from the facts that principle of natural justice has been violated.
On studying the Assessment Order, it is observed that Assessee had filed Return of Income declaring Total Income at Rs.4,26,347/- for A.Y.2013-14 u/s.139(1) of the Act. The assessing Officer has reproduced the reasons recorded for reopening in the assessment order. On careful study of these reasons recorded by the Assessing Officer, it is emanating from the Para 4 of the reasons that a letter was issued by ITO(I & C)-2, Pune on 17.08.2017 to the Assessee and Assessee filed its reply vide letter dated 12.09.2017, along with copy of ITR, Computation of Income, Copy of Purchase Deed dated 24.05.2012.
7.1 However, in Para 5 of the reasons recorded, the Assessing Officer has mentioned as under : “The assessee has filed his return of income for the year under consideration i.e. .A.Y.2013-14. The assessee had made the following transaction during the F.Y.2012-13: No Description of Information/transaction Amount 1 Purchased immovable property i.e. 1,84,39,420 Agricultural land situated Sr.No.103-2, Mauje Akluk, Tal: Malshiras, Distp; Solapur Total 1,84,39,420 The assessee has failed to disclose the above transaction(s) by filing the return of income under section 139 of the IT Act.The sources of investments into the immovable property are not fully explained along with the documents to substantiate the assessee’s claim. Also, The amount of advance received by the assessee is Rs.1,41,75,000/-. Further the assessee taken an amount of Rs.27,50,686 as unsecured loans for the plotting business. The explanation for the same has not been furnished by the assessee. The creditworthiness & genuineness of the loan creditors are to be verified & remain unexplained.”(emphasis supplied) 8. Subsequently, in Paragraph 7 of the reasons, the Assessing Officer has mentioned as under : “7. Applicability of the provisions of section 147/151 to the facts of the case : It is pertinent to mention here that in this case assessee has not filed any return of income though he was having taxable income as discussed in para 2, 3, 4 & 5 above and the assessee was assessable under the Act. In view of the above, the provisions of clause (b) of Explanation 2 to section 147 are applicable to facts of this case and the assessment year under consideration is deemed to be a case where income chargeable to tax has escaped assessment.” (emphasis supplied)
On careful study of the reasons recorded by the Assessing Officer, it is noted that in Para 7, Assessing Officer has stated that Assessee has not filed any Return of Income. Similarly, in the beginning of Paragraph-5, it is mentioned by Assessing Officer that Assessee had filed Return of Income, however, in the second part of the Paragraph-5, Assessing Officer has stated that Assessee had not filed Return of Income u/s.139 of the Act.
9.1 Thus, in one paragraph Assessing Officer states that Assessee has not filed any return of income, then, he states in another Paragraph, Assessee had not filed return of income u/s.139 of the Act, whereas in the same Paragraph, Assessing Officer has admitted that Assessee had filed Return of Income for A.Y.2013-14. In the assessment order, the first sentence is as under : “The assessee has filed his Return of Income declaring total income at Rs.4,26,347/- for the A.Y.2013-14 up to stipulated period of filing of Return u/s.139(1) of the Income-tax act, 1961.” 9.2 Thus, in the Assessment Order, it is categorically recorded that Assessee had filed Return of Income for A.Y.2013-14 u/s.139(1) of the Income-tax Act, 1961.
It is important here to understand that ITO(I & C)-2, Pune had conducted enquiries vide letter dated 17.08.2017 in the case of the Assessee and Assessee had filed the details on 12.09.2017. Thus, the basic details were available before the Assessing Officer when he recorded Reasons for Reopening. Inspite of this, the Assessing Officer has contradicted his own statements in the reasons recorded. This itself explains that there is no application of mind by the Assessing Officer before recording the reasons. The reasons recorded are the most important basis for Reopening of Assessment. In this case, the Assessing Officer has not applied his mind as evident from the reasons recorded.Since these reasons have been approved by the Specified Authority, in this case the Pr.Commissioner of Income Tax, it means even he has not applied his mind.
The Hon’ble Jurisdictional High Court in the case of Paranjape Schemes (Construction) LtdVs. DCIT [2024] 160 taxmann.com 730 (Bombay)[11-03-2024] has held as under : Quote, “ 9. We agree with Mr. Kapadia that the reasons recorded are based on incorrect facts. We also agree with Mr. Kapadia that no attempt has been made to deal with these errors in the order on objections and the order on objections in fact has more errors. All these indicate total non-application of mind and certainly adverse inference has to be drawn against the Revenue. 10. As held in Ankita A. Choksey (supra), the condition precedent of reason to believe that income chargeable to tax has escaped assessment on correct facts must be satisfied by the AO so as to have jurisdiction to issue the reopening notice.
11. In the present case, the AO has proceeded on fundamentally wrong facts to come to a belief/conclusion that income chargeable to tax has escaped assessment. Further, even when the same is pointed out by Petitioner, the AO in his order disposing the objections does not deal with the factual position.
On the facts as found, therefore, there can be no reason for the AO to believe that income chargeable to tax has escaped assessment.
13. In these circumstances, petition allowed in terms of prayer clause (a), which reads..” Unquote. 12. The Hon’ble Bombay High Court in the case of Fine Arts Society vs DCIT [2024] 159 taxmann.com 776 (Bombay)[25-01- 2024] has held as under : Quote, “5. Therefore, there has to be a tangible material to come to the conclusion that there is an escapement of income from assessment to exercise the power to reopen. But if the reasons to believe indicate non application of mind as submitted by Mr.Singh, with whom we concur, the reasons to believe itself cannot be sustained. The reasons to believe proceeds on the basis that an assessment order under Section 143(3) of the Act has been passed when the assessment has been processed only under Section 143(1) of the Act, and also on the basis of judgment, which according to the AO is of Delhi High court, when in reality is that of the Apex Court. All these indicate that the reasons to believe has been formed mechanically and without application of mind. 6. In the circumstances, the Rule granted on 27th March 2015 has to be made absolute.” Unquote. 12.1 In these facts and circumstances of the case,since there is no application of mind by the Assessing Officer and the Approving Authority, we hold for all the reasons mentioned above, respectfully following the Hon’ble Bombay High Court(supra), Reopening of the Assessment is bad in law. Accordingly, the Ground No.7 raised by the assessee is allowed.
Since we have allowed the Legal Ground raised by the Assessee, all other Grounds becomes academic in nature, accordingly, dismissed.
In the result, appeal of the Assessee is partly allowed. Order pronounced in the open Court on 26th June, 2025.