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Facts
The assessee filed an appeal against the CIT(A)'s order which confirmed additions and disallowances made by the AO. The AO had rejected the assessee's books of account and estimated the G.P. rate, leading to an addition. The assessee also raised additional grounds regarding the illegal transfer of the case and the rejection of audited books of account.
Held
The Tribunal noted that the additional grounds raised by the assessee were not considered by the CIT(A). Therefore, the Tribunal restored these issues to the file of the CIT(A) for a fresh decision after providing the assessee with a reasonable opportunity of being heard.
Key Issues
Whether the CIT(A) erred in confirming the rejection of books of account and GP rate estimation without proper appreciation of facts and opportunity to the assessee? Whether the assessment order is bad in law due to illegal transfer of case?
Sections Cited
145(3), 127, 120(4), 144, 143(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, LUCKNOW BENCH ‘B’, LUCKNOW
Before: SHRI ANADEE NATH MISSHRA & SHRI SUBHASH MALGURIA
This appeal has been filed by assessee for assessment year 2011-12 against impugned appellate order dated 22/02/2017 passed by learned Commissioner of Income Tax (Appeals) [“CIT(A)” for short]. The grounds of appeal are as under:
“1. The Ld. CIT(A) erred in passing order dated 22nd, February 2017 confirming the following additions and disallowances
Page 2 of 4 made by the Learned Assessing Officer without appreciating the facts and circumstances of the case.
A. Rejection of Books of Account
2. The Ld. CITA) erred in confirming the rejection of books of account u/s.145(3) of the Income Tax Act, 1961 without appreciating the fact that your appellant produced audited books of accounts and no defects were pointed out by the learned A.O.
3. The Ld. CIT(A) failed to appreciate that the learned A. O. has not given any opportunity to your appellant to rebut the inferences drawn against your appellant.
B. Addition on account of estimating G.P. rate
The Ld. CIT(A) erred in confirming the addition of Rs.29,31,368/-on account of estimating additional G.P. The Ld. Assessing Officer estimated the G.P. rate at 0.38% and the Ld. CIT(A) confirmed the same. The G.P. declared by your appellant was 0.27%.
Additional grounds:
“1. BECAUSE, on the facts and in the circumstances of the case, the order of Assessment dt. 14.03.2014 is illegal and bad in law since assessment proceedings have been transferred from one Assessing Officer to another Assessing Officer in violation of section 127 of Income Tax Act. It is settled position of law that an order transferring a case from one Officer to another could only be made after following the procedure prescribed under law. Since the transfer of the case from ACIT, Range-1, Lucknow to JCIT, Range-1, Lucknow is by means of order u/s 120(4) of Income Tax Act, the order of assessment issued by such officer is without any authority of law as he did not obtain seisin over matter, in accordance with law. The Order of Assessment is therefore null and void.
BECAUSE, on the facts and in the circumstances of the case, the learned Assessing Officer chose to reject legitimate and duly audited Books of Account of the assessee, on mere conjecture as also without the issuance of a mandatory and statutory Notice u/s 144/145 of the Income Tax Act, accordingly the Books of Account could not have been rejected by the Assessing Officer and the income of the assessee ought to have been assessed on the basis of books of account and not best judgment assessment.”
The facts of the case, in brief, are that for the assessment year 2011- 12 i.e. the year under consideration, the assessee filed his return of income showing total income of Rs.31,91,630/-. The assessment was completed by the Assessing Officer at a total income of Rs.62,59,960/- vide order under section 143(3) of the I. T. Act. Aggrieved with the action of the Assessing Officer, the assessee carried the matter in appeal before the learned CIT(A), who confirmed the action of the Assessing Officer. Now the assessee is in appeal before the Income Tax Appellate Tribunal. We have heard the rival parties and have gone through the material placed on record. As regards the additional grounds taken by the assessee before the Income Tax Appellate Tribunal, these grounds were not considered by the learned CIT(A). Under these facts and circumstances of the case, we deem it fit to restore these issues raised in additional grounds to the file of learned CIT(A) with the direction to decide the issues and pass de novo appellate order in accordance with law after providing reasonable opportunity of being heard to the assessee.
Since we have restored back the present case to the file of the learned CIT(A) to take decision in accordance with law on the issues raised by the assessee vide aforesaid additional grounds, the other grounds in the present appeal need no adjudication, at present.
In the result, the appeal of the assessee is allowed for statistical purposes.
(Order pronounced in the open court on 03/01/2025)