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Facts
The assessee's appeals were filed against orders passed by the CIT(A) which set aside reassessment proceedings. A survey was conducted, leading to reopening of assessment under Section 147. Additions were made towards unexplained investment and cash.
Held
The Tribunal held that the CIT(A) was justified in setting aside the assessment for fresh adjudication, finding no infirmity in the order. However, the directions were modified to ensure the Assessing Officer considers the binding decision of a coordinate bench and adjudicates the validity of reopening.
Key Issues
Whether the reassessment proceedings initiated under Section 147 were valid without sufficient tangible material and proper opportunity to the assessee.
Sections Cited
250(6), 148, 151, 251, 133A, 147, 144
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आयकर अपील"य अ"धकरण, च"डीगढ़ "यायपीठ, च"डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH, ‘SMC’, CHANDIGARH BEFORE SHRI LALIET KUMAR, JUDICIAL MEMBER आयकर अपील सं./ to 284/CHD/2025 "नधा"रण वष" / Assessment Years : 2013-14 to 2017-18 Anish Garg, The ACIT / DCIT, बनाम 102, Central Circle, New Colony Patiala Vs. Sular, Patiala "थायी लेखा सं./ PAN NO: AOCPG6331A अपीलाथ"/Appellant ""यथ"/Respondent ( VIRTUAL MODE ) "नधा"रती क" ओर से/Assessee by : Sh. Rajiv Saldi, CA राज"व क" ओर से/ Revenue by : Smt. Surinder Kaur Waraich, Addl. CIT,Sr.SR सुनवाई क" तार"ख/Date of Hearing : 27.08.2025 उदघोषणा क" तार"ख/Date of Pronouncement : 27.08.2025 आदेश/Order Captioned appeals have been filed by the assessee against the separate orders, each dated 27.12.2024( AY 2013-14 to 2016-17) and 26.12.2025 (AY 2017-18) passed by the Commissioner of Income Tax-5, Ludhiana under section 250(6) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”).
The Assessee has preferred identical grounds of appeal in these appeals. So, these were heard together and are being disposed off by this common and consolidated order. We shall take for assessment year 2013-14, as a lead case, wherein following grounds have been raised by the Assessee.
1. That the CIT(A) has failed to give any finding on the additional ground that the notice U/s 148 has been issued without any impounded material much less incriminating material on record to form an opinion of escapement of income, as such the notice Us 148 and all subsequent proceedings are bad in law 2. That the CIT(A) has failed to give any finding on the additional ground that the Pr. CIT has accorded the approval U/s 151 in a mechanical manner and as such the notice U's 148 and all subsequent proceedings are bad in law. 3 That CIT(A) has wrongly set aside the order of AO for fresh adjudication without giving any finding on the legal grounds of the appellant 4. That the appellant craves the right to add, delete or amend any ground(s) of appeal before or during the appellate proceedings.
3. The assessee is engaged in running a car service station under the name M/s Prowash. A survey was conducted under Section 133A of the Income-tax Act on 27.09.2018. Based on the material gathered, the Assessing Officer reopened the assessment under section 147 and completed the assessment u/s 147 r.w.s. 144 of the Act. Additions were made towards unexplained investment in the construction of a residential house and unexplained cash.
4. On appeal, the learned CIT(A) noticed that there was a lack of proper compliance, the assessment was framed ex- parte, and the assessee was not given sufficient opportunity during the Covid-19 period. Considering these facts, the learned CIT(A) invoked powers u/s 251 and set aside the matter to the file of the Assessing Officer with the direction to grant a reasonable opportunity and frame an assessment afresh. Feeling aggrieved by the order Ld. CIT(A), the assessee is in appeal before us on the grounds mentioned in the memo of appeal.
Submissions of the Assessee
Before me the learned AR, placed reliance on the order of the Tribunal in the case of Anish Garg v. ITO in ITA No. 739/Chd/2024. In that case, on identical facts, the Tribunal had decided the legal ground of validity of reassessment proceedings in favour of the assessee. The relevant finding of the Tribunal in Anish Garg (supra), as relied upon by the assessee, reads as under:
At the stage of issuance of notice u/s 148, the Assessing Officer is required to have tangible and credible material to form a belief that income has escaped assessment. Mere assumptions or mechanical approval by higher authorities cannot confer jurisdiction. In the case before us, it is evident that the reasons recorded were based merely on general observations without any independent material pertaining to the assessee for the relevant assessment year. Once the reasons earlier recorded were rejected by the competent authority as insufficient, the same could not have been approved subsequently without fresh tangible material. Accordingly, the very assumption of jurisdiction u/s 147 is invalid and the reassessment proceedings are liable to be quashed.
The learned AR contended that the above finding squarely applies to the assessee’s case, and therefore, the action of the Assessing Officer in reopening the assessment is unsustainable in law.
Submissions of the Revenue
The learned DR, on the other hand, relied upon the assessment order and supported the reopening, contending that sufficient reasons existed for the formation of a belief of escapement of income and the additions made were justified. It was submitted that the assessee had not appeared before the lower authorities and had also failed to demonstrate how the facts of the present case were identical to those decided by the Tribunal in the case relied upon. The DR argued that for search proceedings, the existence of incriminating material is a requirement; however, where additions are made based on material gathered during survey or regular proceedings, there is no such condition that incriminating material must be with the Assessing Officer. It was further submitted that the learned CIT(A) had already taken a liberal view in setting aside the matter to the file of the Assessing Officer, despite the assessee not cooperating during the proceedings, and therefore, no further relief is called for.
I have considered the rival submissions. It is evident that the learned CIT(A) has examined the matter in detail and found that the assessment was framed without proper opportunity and in violation of principles of natural justice. Moreover, the legal ground as decided by the Tribunal in Anish Garg v. ITO (ITA No. 739/Chd/2024) was admittedly not raised before the lower authority, as the assessee had failed to appear during the course of proceedings. In my considered view, it was necessary for the assessee to demonstrate before the CIT(A) that the facts of the present case were identical to those decided by the Tribunal in Anish Garg (supra). Such a finding can only be recorded by the lower authorities on the basis of specific submissions and supporting documents, if any, filed by the assessee in the course of appellate proceedings. Since the assessee did not discharge this obligation, I find no infirmity in the approach adopted by the learned CIT(A) in remanding the matter back to the file of the Faceless Assessing Officer for affording a fresh opportunity of hearing. Further it is pertinent to note that the proceedings, if any initiated by the Assessing Officer, will be transferred to the Faceless Assessing Officer. The Faceless Assessing Officer to whom the proceeding have been assigned, would hear the matter afresh without being influenced by any observation or conclusion drawn by the earlier AO and the Faceless Assessing Officer will start the assessment de novo.
Thus, the learned CIT(A) was justified in setting aside the assessment for fresh adjudication, and I find no infirmity in the well-reasoned order. However, the directions of the learned CIT(A) are modified to the limited extent that the Faceless Assessing Officer, while framing the assessment afresh, shall specifically consider the binding decision of the Coordinate Bench in the case of Anish Garg v. ITO (supra). The Assessing Officer shall also adjudicate the legal ground raised by the assessee with respect to the validity of reopening, and record a clear finding as to whether the alleged escapement of income had a direct nexus or live link with the material relied upon by him. Subject to this modification, the order of the learned CIT(A) is upheld.
In the result, appeal of the Assessee stands allowed for statistical purposes. to 284/Chd/2024:- 11. Since the grounds involved in all the appeals for the assessment years 2014-15 to and 2017-18 are similar and even the facts and circumstances involved and submissions of the ld. Representatives too are similar, therefore, the findings arrived at by us, in the former part of our order, shall apply mutatis mutandis to these appeals also. Accordingly, these appeals also stand allowed for statistical purposes.
In the result, all the appeals filed by the assessee are allowed for statistical purposes.
Order pronounced in the open Court on 27/08/2025. ( LALIET KUMAR ) JUDICIAL MEMBER rkk