MUSTAFA KATTHAWALA,KOTA vs. DCIT ACIT, CIRCLE-2, KOTA, KOTA

ITA 1156/JPR/2024Status: DisposedITAT Jaipur20 January 2025AY 2015-16Bench: DR. S. SEETHALAKSHMI (Judicial Member), SHRI RATHOD KAMLESH JAYANTBHAI, AM\nआयकर अपील सं./ITA. No. 1156/JPR/2024\nनिर्धारण वर्ष / Assessment Years : 2015-16\nMustafa Katthawala\nProp. Shakti Steels, Near Reliance\nPetrol Pump Jhalawar Road, IPIA\nKota.-324005.\nबनाम | The DCIT/ACIT,\nVs.\nCircle-2,\nKota.\nस्थायी लेखा सं./ जीआईआर सं./PAN/GIR No.: AGPPK5043C\nअपीलार्थी / Appellant\nप्रत्यर्थी / Respondent\nनिर्धारिती की ओर से / Assessee by :Shri Devang Gargieya, Adv.\nराजस्व की ओर से / Reven15 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal noted that the assessee was not given sufficient opportunity of being heard by the CIT(A), as the time provided for submissions was only between 6 to 7 days on multiple occasions. The Tribunal emphasized that principles of natural justice are fundamental to the administration of justice and are part of the guarantee under Article 14 of the Constitution. Since the contention of the assessee regarding the lack of fair opportunity was noted, the Tribunal deemed it fit to remand the matter to the Assessing Officer (AO). The AO is directed to consider the factual aspects raised by the assessee after due verification and charge the correct income, if any, in accordance with law, while affording the assessee a proper opportunity. The assessee is cautioned against seeking frivolous adjournments and is expected to cooperate. The Tribunal clarified that this decision does not reflect on the merits of the dispute, which will be adjudicated independently by the AO.

What were the facts?

The assessee, Mustafa Katthawala, proprietor of Shakti Steels, filed an appeal against the order of the National Faceless Appeal Centre (NFAC) dated August 14, 2024, for Assessment Year 2015-16. The NFAC's order upheld the assessment order dated March 31, 2023, passed by the National Faceless Assessment Unit (AO) under sections 147, 144, and 144B of the Income Tax Act, 1961. The AO had reopened the assessment based on information from the assessment records of M/s Royal Park Developers, a partnership firm in which the assessee is a partner with a 12.50% share. The firm reportedly showed an opening stock of Rs. 13,75,00,000/- in FY 2014-15, relevant to AY 2015-16, which the AO considered as capital contribution by partners and sought to tax under Section 45(3). The assessee's original return declared a total income of Rs. 24,18,000/-.

What were the issues?

1. Whether the impugned additions and disallowances made by the AO under section 147 r.w.s. 144 are bad in law and on facts for want of jurisdiction and other reasons, and thus liable for deletion? (Assessee's contention: Yes, due to want of jurisdiction and other reasons). 2. Whether the action taken under section 147 is bad in law, without jurisdiction, and void ab-initio, consequently quashing the assessment framed under section 144? (Assessee's contention: Yes, the action is void ab-initio). 3. Whether the impugned notice under section 148 and order under section 148A(d) are bad in law and on facts for want of jurisdiction and other reasons, and thus liable for quashing? (Assessee's contention: Yes, due to want of jurisdiction and other reasons). 4. Whether the AO erred in applying Section 45(3) and taxing the entire Fair Market Value (FMV) of Rs. 1,71,87,500/- as Long-Term Capital Gain (LTCG) on the alleged introduction of immovable assets by the assessee partner into the firm M/s Royal Park Developers as capital contribution? (Assessee's contention: No, Section 45(3) is not applicable, and the addition deserves deletion). 5. Whether the CIT(A) erred in passing the impugned order without affording adequate and reasonable opportunity and complying with statutory requirements, thus breaching natural justice? (Assessee's contention: Yes, the order is in gross breach of natural justice). 6. Whether the CIT(A) erred in charging interest under sections 234B, 234C, and 234D and withdrawing interest under section 244A? (Assessee's contention: No liability for such interest). The Revenue contended that the assessee did not represent the case before the CIT(A) despite sufficient opportunity and was not co-operative, hence the appeal should be dismissed.

Which sections of the Income-tax Act were involved?

Section 147,Section 144,Section 144B,Section 148,Section 148A,Section 45(3),Section 45(2),Section 234B,Section 234C,Section 234D,Section 244A

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Income Tax Appellate Tribunal, JAIPUR BENCHES,”B” JAIPUR

Before: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM

For Appellant: Shri Devang Gargieya, Adv
For Respondent: Shri Anup Singh, Addl. CIT
Hearing: 05/11/2024Pronounced: 20/01/2025

PER: RATHOD KAMLESH JAYANTBHAI, AM This is an appeal filed by the assessee aggrieved from the finding so recorded in the order of the learned National Faceless Appeal Centre, [ NFAC ] [ for short CIT(A) ] which was passed on 14.08.2024 and relates to the assessment year 2015-16. Ld. CIT(A) passed that order because the assessee disputed the assessment order passed on 31.03.2023 by th

The order continues below.

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