KALAMANDIR JEWELLERS LIMITED ,SURAT vs. ASSESSING OFFICER NFAC , DELHI

This appeal by the assessee emanates from order passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’) dated 24.12.2024 by the National Faceless Appeal Centre, Delhi/ Commissioner of Income-tax (Appeals), [in short, ‘NFAC/CIT(A)’] for assessment year (AY) 2017-18, which in turn arises out of the assessment order passed by National Faceless Assessment Centre, Delhi/Assessing Officer (in short, ‘AO’ u/s 144 r.w.s. 144B of the Act on 31.03.2022.

Facts of the case in brief are that the assessee filed its return of income for the assessment year 2017-18 declaring total income of Rs.26,38,56,942/-. The case was selected for limited scrutiny under CASS. Thereafter, notice u/s 143(2) of the Act was issued and served upon the assessee. Thereafter, various notices u/s 142(1) were issued, in response to which assessee has filed replies from time to time, which is noted at para-2 of the assessment order. The AO found discrepancy regarding the sales turnover in VAT return with that in the ITR. After receiving reply from the assessee, AO added Rs.9,02,74,840/- u/s 69 of the Act. Total income was determined at Rs.35,41,31,782/- as against Rs.26,38,56,942/-. Aggrieved by the addition made by the AO, assessee preferred appeal before CIT(A).

The CIT(A) issued notices of hearing and after considering the reply of assessee and materials on record observed that though the AO completed u/s 144 of the Act, it was not strictly a case of complete non-compliance by the assessee. Thereafter, he referred to the proviso of Section 251(1) of the Act and observed that as per the new provisions, inserted by the Finance(No.2) Act, 2024, with effect from 01.10.2024, the CIT(A) may set aside the assessment and refer the case back to the AO for making a fresh assessment if the appeal is against an order of assessment made u/s 144 of the Act. He, accordingly, set aside the order of AO and restored it to the file of AO for fresh assessment after considering all evidences produced by the assessee after granting reasonable opportunity to explain the case.

Aggrieved by the order of Ld.CIT(A), appellant filed present appeal before the Tribunal. The Ld. AR submitted a paper book and submitted that that assessment order does not qualify for application of section 144 of the Act. The CIT(A) was not justified in restoring the matter to the file of AO because the only limited issue before the CIT(A) was reconciliation of turnover as per VIT return and audited profit and loss account. He submitted that the assessee had filed replies on 19 occasions, which is acknowledged by the AO himself in the assessment order. He further submitted that the AO himself at para-6 of the order has mentioned that the order was passed u/s 143(3) r.w.s. 144B of the Act but inadvertently mentioned 144 r.w.s. 144B of the Act at column No. 12 of the details of the assessee at page-1 of the order. He, A.Y 17-18 Kalamandir Jewellers Ltd. therefore, requested to allow appeal on merit or set aside the matter to the CIT(A) for re-adjudication on the limited point of reconciliation.

On the other hand, Ld. CIT-DR for the Revenue supported the order of the lower authorities. He submitted that the CIT(A) rightly set aside the order of AO and restored the matter to his file for fresh assessment.

We have heard both parties and perused the materials available on record. It is seen from para-2 of the assessment order that the appellant had filed replies on 19 occasions. The reply of the appellant regarding discrepancy in turnover as for VAT return and audited profit and loss account is also reproduced by the AO in the assessment order. After considering the reply, the AO has added Rs.9,02,74,840/- u/s 69 of the Act and passed the order u/s 143(3) r.w.s 144B of the Act, as evident from para-6 of the assessment order. However, he has wrongly mentioned in page-1 at column 12 of the assessment order that the order was passed under section “144 read with section 144B of the Income-tax Act, 1961”. It was evidently a apparent mistake, which cannot disprove the fact that the order was in fact passed u/s 143(3) and not u/s 144 of the Act. Hence, the proviso to section 251(1) of the Act was not applicable in the instant case. Therefore, we set aside the order of CIT(A) and remit the matter back to the file of CIT(A) for re-adjudication of the grounds raised before him in the appellate proceedings. The appeal is allowed for statistical purposes.