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Facts
The Revenue filed an appeal against an order allowing the assessee's appeal and deleting additions made by the Assessing Officer. The assessee also filed a cross-objection challenging the validity of reassessment proceedings. The Assessing Officer had reopened the case based on information about substantial deposits made by the assessee.
Held
The Tribunal held that the CIT(A)/NFAC had failed to adjudicate the legal grounds raised by the assessee concerning the validity of reassessment proceedings before deciding on merits. Consequently, both the cross-objection and the Revenue's appeal were remanded back to the CIT(A)/NFAC for proper adjudication of legal grounds first.
Key Issues
Whether the CIT(A)/NFAC correctly adjudicated the grounds of appeal by deciding merits before legal grounds concerning the validity of reassessment proceedings?
Sections Cited
147, 148, 142(1), 144, 69A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE
Before: SHRI MANISH BORAD & SHRI VINAY BHAMORE
िनधा�रण वष� / Assessment Year : 2015-16 Kailas Bansilal Sethi, Vs. ITO, Ward-2, Suregaon, Kolpewadi, Ahmednagar. Kopargaon- 423602. PAN : BDPPS0675A Appellant Respondent Revenue by : Shri Ramnath P. Murkunde Assessee by : Shri Vinay V. Kawdia (Virtual) Date of hearing : 17.02.2025 Date of pronouncement : 16.05.2025 आदेश / ORDER
PER VINAY BHAMORE, JM:
This appeal filed by the Revenue is directed against the order dated 27.03.2024 passed by Ld. CIT(A)/NFAC for the assessment C.O. No.09/PUN/2025 year 2015-16. The assessee is also in cross objection against the appeal of the Revenue.
First, we shall take up the cross objection filed by the assessee for adjudication. C.O. No.09/PUN/2024 : 3. The assessee has raised the following grounds in cross objection :-
1. On the facts and circumstances of the case, the learned CIT(A) has erred in not adjudicating legal ground numbers 2 and 5 pertaining to validity of reassessment proceedings raised before him.
2. On the facts and circumstances of the case, the learned CIT(A) ought to have held that reassessment proceedings and consequential assessment order dated 29.03.2022 passed by the NFAC u/s. 144 r.w.s. 147 of the Act are bad in law.
3. The assessee craves leave to add to, alter, amend, modify and/or delete all or any of the foregoing cross objections.”
4. Facts of the case, in brief, are that the assessee is an individual and filed its return of income on 31.03.2017 declaring total income of Rs.2,36,000/-. Further, on the basis of information available with the Department and after recording reasons for reopening the case of the assessee was reopened and notices u/s 148 and 142(1) of the IT Act were issued respectively. However, according to the C.O. No.09/PUN/2025 assessee, the notice u/s 148 was manually served upon him after 31.03.2021 & reasons of reopening were also not provided to him in full. The assessee furnished return in response to notice u/s 148 however, the same was treated to be non-est by the Assessing Officer. During the course of assessment proceedings, Assessing Officer found that the assessee has deposited an amount of Rs.1,14,98,784/- in Shri Renuka Martha Multi State Co-operative Society. It was also found by the Assessing Officer that the assessee also deposited an amount of Rs.98,96,890/- in his State Bank of India, Kopergaon Branch account. After considering the reply of the assessee, the assessment was completed on total income of Rs.2,16,31,674/- as against the income returned by the assessee at Rs.2,36,000/- only. The above assessed income includes unexplained money u/s 69A of the IT Act of Rs.1,14,98,784/- deposited in Renuka Mata Multistate Urban Credit Co-operative Society account and also unexplained money u/s 69A of the IT Act of Rs.98,96,890/- deposited in State Bank of India account.
After considering the reply of the assessee, Ld. CIT(A)/NFAC allowed the appeal filed by the assessee and deleted the addition of C.O. No.09/PUN/2025 Rs.2,13,95,674/- made by the Assessing Officer. However, Ld. CIT(A)/NFAC also estimated net profit at the rate of 3% of the turnover declared by the assessee, thereby determining the income at Rs.6,03,256/- only. Before Ld. CIT(A)/NFAC assessee has raised as many as 7 effective grounds of appeal
and Ld. CIT(A)/NFAC has decided ground no.1, 3, 4, 6 and 7 related to the merits of the case & allowed the appeal of the assessee. However, ground no.2 and 5 mentioned in the memo of appeal which are legal in nature were not decided by Ld. CIT(A)/NFAC with regard to challenging the validity of the reopening of assessment u/s 148 of the IT Act since both these grounds were found to be academic in nature and the same were not decided since the appeal was allowed on merits of the case. It is this order wherein Ld. CIT(A)/NFAC has allowed the appeal of the assessee on merits against which the Revenue has filed appeal before this Tribunal and assessee has also filed a cross objection before this Tribunal.
6. We are now deciding the cross objection filed by the assessee first since legal ground have been raised by the assessee.
C.O. No.09/PUN/2025 7. In this regard, we find that the assessee has raised legal grounds as well as grounds on merit also before Ld. CIT(A)/NFAC and Ld. CIT(A)/NFAC was required to decide legal grounds first however we find that Ld. CIT(A)/NFAC first decided the grounds related to merit and did not decide the legal grounds raised by the assessee. In the second ground, Ld. Counsel of the assesse requested that Ld. CIT(A)/NFAC ought to have held that the order passed by Ld. CIT(A)/NFAC u/s 147 r.w.s. 144 of the IT Act as bad in law. Accordingly, it was prayed by Ld. counsel of the assessee that the order passed by the Assessing Officer may kindly be set- aside. In support of its contentions Ld. counsel of the assessee produced copy of a screen shot wherein the date of issue of notice was mentioned as 01-04-2021. It was also submitted before the bench that the full reasons for reopening were not provided to the assessee.
8. Ld. DR appearing from the side of the Revenue has objected to the cross objection filed by the assessee.
9. We have heard the Ld. Counsels from both the sides and perused the material available on record. We find force in the C.O. No.09/PUN/2025 arguments of Ld. counsel of the assessee that Ld. CIT(A)/NFAC has not decided the legal grounds raised by the assessee. Accordingly, we remand the matter back to the file of Ld. CIT(A)/NFAC for adjudicating the legal grounds raised by the assessee after providing reasonable opportunity of hearing to the assessee. Thus, the cross objection filed by the assessee is allowed for statistical purposes.
: 10. So far as the Revenue’s appeal is concerned, the same has been filed raising the issue of merits of the case. However, as we have already allowed the cross objection filed by the assessee on the ground that the legal issues raised by the assessee before Ld. CIT(A)/NFAC were not adjudicated prior to adjudication of issues on merits, therefore, dealing with the ground on merits at this stage would be merely academic in nature. Thus, along with legal grounds, the grounds on merits are also restored to the file of Ld. CIT(A)/NFAC for necessary adjudication. In case Ld. CIT(A)/NFAC decides against the Revenue/Assessee, both the parties can file the appeal/cross objection as the case may be after the completion of set-aside proceedings. Accordingly, impugned