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Facts
The assessee's original assessment was reopened under Section 147 due to observed profit from captive consumption and significant rent expenses, leading to disallowance under Section 80-IA. The Ld. CIT(A) set aside the assessment for de novo assessment citing a violation of natural justice, but failed to adjudicate crucial legal grounds raised by the assessee concerning the jurisdiction of reopening and procedural non-compliance.
Held
The Income Tax Appellate Tribunal found that the Ld. CIT(A) erred by not adjudicating the legal grounds pertaining to the jurisdiction under Section 147, non-compliance with Section 144B, and invocation of Section 144. The Tribunal set aside the CIT(A)'s order to this extent and remanded the matter back to the Ld. CIT(A) for de novo adjudication of these specific legal issues.
Key Issues
Whether the reassessment proceedings initiated under Section 147 were without jurisdiction; whether the assessment order was void due to non-compliance with Section 144B; and whether the invocation of Section 144 was unwarranted, all of which the Ld. CIT(A) failed to adjudicate.
Sections Cited
143(3), 147, 80-IA(8), 148, 143(2), 144B, 144
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B” BENCH, AHMEDABAD
Before: DR.BRR KUMAR & SHRI SIDDHARTHA NAUTIYAL
O R D E R PER: DR. BRR KUMAR, VICE PRESIDENT: Delay Condoned The captioned two appeals have been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeal)/National Faceless Appeal Centre (NFAC), Delhi, vide order dated 10.03.2025 and 06.03.2025 for the Assessment Years 2015-16 & 2016-17 respectively. Since the issue involved in these two appeals are common, we extract the grounds of appeal raised in for AY 2016-17 for the purpose of adjudication.
1. 1. 1. Ld.CIT(A) has erred in not adjudicating the legal ground that the reassessment proceedings initiated u/s.147 were without jurisdiction, as there was no valid reason to believe that income has escaped assessment.
2. The learned CIT(A) erred is not adjudicating the ground that the assessment order passed without compliance of mandatory procedure u/s.144B is void ab initio and non-est in law.
The learned CIT(A) failed to appreciate that when the assessee had duly filed submission including workings under Form 10CB, the assessment could not have been completed ex-parte u/s.144.
The assessee craves leave to add, alter amend or withdraw any of the above grounds of appeal
3. The brief facts of the case are that the assessee is a company which filed its return of income declaring a total income of Rs. 13,76,41,770/-. The assessment was originally completed under section 143(3) of the Act on 05.12.2018, determining the total income at Rs. 26,83,75,625/-. On scrutiny of the assessment records, the learned Assessing Officer observed that the assessee had shown a profit of Rs. 13,07,33,858/- on sale of steam power to its own unit. It was further observed that this issue had not been verified during the original assessment proceedings and therefore required examination in the context of section 80-IA(8) of the Act. The learned Assessing Officer also noticed that the assessee had paid rent amounting to Rs. 13,72,50,000/-, which, according to him, required verification. Accordingly, the assessment was reopened under section 147 of the Act & 1620/Ahd/2025 Asst.Years 2015-16 & 2016-17 - 3– and notice under section 148 was issued on 27.03.2021, in response to which the assessee filed its return of income on 27.05.2021. Subsequently, notice under section 143(2) along with the reasons recorded for reopening was served on 29.03.2022. Various notices were issued from time to time, which were substantially complied with by the assessee. A show-cause notice was thereafter issued proposing disallowance of deduction under section 80-IA(8) of the Act in respect of profits arising from captive consumption. In response, the assessee vide letter dated 25.03.2022 furnished detailed workings justifying the claim as reflected in Form No. 10CCB. However, the learned Assessing Officer did not accept the submissions and disallowed Rs. 13,07,33,858/- under section 80-IA of the Act.
4. Aggrieved by the assessment order dated 29.03.2022, the assessee preferred an appeal before the Ld. CIT(A). The Ld. CIT(A), while passing the order dated 06.03.2025, set aside the assessment order and remanded the matter to the Assessing Officer for de novo assessment after affording reasonable opportunity to the assessee, primarily on the ground of violation of the principles of natural justice. However, the Ld. CIT(A) did not adjudicate the legal grounds raised by the assessee challenging the jurisdiction under section 147, non- compliance of section 144B, and invocation of section 144 of the Act. The appeal was thus statistically allowed.
The Ld. Counsel for the assessee submitted that the Ld. CIT(A) failed to adjudicate the following grounds of appeal:
& 1620/Ahd/2025 Asst.Years 2015-16 & 2016-17 - 4– 1. The reassessment proceedings initiated under section 147 of the Act are without jurisdiction and liable to be quashed.
The assessment order passed without following the mandatory procedure prescribed under section 144B of the Act is non est in law in terms of section 144B(9).
3. The invocation of section 144 of the Act was unwarranted and bad in law. It was prayed that these grounds, being legal in nature, ought to have been adjudicated by the Ld. CIT(A).
We have carefully perused the records and find merit in the submissions of the Ld. Counsel for the assessee. It is evident that the Ld. CIT(A), while setting aside the assessment order and remanding the matter to the Assessing Officer, has not adjudicated the legal grounds raised by the assessee relating to jurisdiction under section 147, validity of the assessment under section 144B, and invocation of section 144 of the Act. Accordingly, in the interest of justice, we set aside the order of the Ld. CIT(A) to the extent of non-adjudication of the aforesaid grounds and restore the same to the file of the Ld. CIT(A) for de novo adjudication in accordance with law. The assessee is directed to file all relevant submissions, documents, and evidences before the Ld. CIT(A) and cooperate in the appellate proceedings without seeking unnecessary adjournments.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
The facts involved in the present appeal are identical to those in for A.Y. 2016-17, which has been decided by us in favour of the assessee for statistical purposes in the preceding paragraphs. Accordingly, the decision rendered in for A.Y. 2016-17 shall apply mutatis mutandis to A.Y. 2015-16 as well.
In the result, both the appeals of the assessee are allowed for statistical purposes.
This Order pronounced in Open Court on 18.12.2025
Sd/- Sd/- (SIDDHARTHA NAUTIYAL) (DR. BRR KUMAR) JUDICIAL MEMBER VICE PRESIDENT (True Copy) Ahmedabad; Dated 18.12.2025 MV आदेश क� �ितिलिप अ�ेिषत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबंिधत आयकर आयु� / Concerned CIT 4. आयकर आयु�(अपील) / The CIT(A)- 5. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER,