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Facts
The assessee filed an appeal against the order of NFAC, Delhi, pertaining to AY 2010-11. The assessee requested condonation of delay due to ill health. The appeal involved a reassessment order passed under Section 144 r.w.s 147 of the Income Tax Act, 1961.
Held
The Tribunal condoned the delay and admitted the appeal. The primary issue revolved around the validity of the reassessment proceedings, specifically whether the AO had the proper jurisdiction and followed the correct procedure. The assessment order was passed for an AOP, while the reopening was initiated under the status of an individual. This discrepancy rendered the reassessment order invalid.
Key Issues
Whether the reassessment order passed by the Assessing Officer was legally valid, considering the alleged lack of jurisdiction and procedural irregularities in the reopening process.
Sections Cited
144, 147, 120, 124, 250, 151
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Income Tax Appellate Tribunal, DELHI ‘C’ BENCH,
Before: SHRI ANUBHAV SHARMA, & SHRI NAVEEN CHANDRA
This appeal by the assessee is directed against the order of the NFAC, Delhi dated 04.12.2024 pertaining to A.Y 2010-11.
The ld. counsel for the assessee has filed an application for condonation of delay. Having perused the condonation petition, we find [A.Y 2010-11] Shri Duleechanda Vs. ITO that the reason for delay in filing the appeal is the ill health of the assessee for which he has filed an affidavit alongwith medical certificates, to be plausible. Hence the assessee has sufficient cause for not filing the appeal in time. Accordingly, we condone the delay and admit the appeal.
3. The grounds raised by the assessee read as under:
“1. That on the facts and circumstances of the case and in law, the impugned order dated 18.12.2017 passed by the Assessing Officer ("AO") u/s 144 r.w.s 147 of the Income Tax Act, 1961 ("the Act") imposing an addition of Rs. 1,08,00,000/- is arbitrary, bad in law and liable to be quashed.
2. That on the facts and circumstances of the case and in law, the impugned assessment order dated 18.12.2017 passed u/s 144 r.w.s 147 of the Act is null and void ab initio, as it has been passed by AO who lacked the requisite statutory jurisdiction under Section 120 r.w.s 124 of the Act.
That on the facts and circumstances of the case and in law, the reasons to believe recorded by a non-jurisdictional AO suffers from an incurable defect and renders the income escaping assessment proceedings non-est in the eyes of law.
That on the facts and circumstances of the case and in law, the CIT(A) vide order dated 04.12.2024 passed u/s 250 of the Act, erred in setting aside the impugned proceedings to the AO, who lacks jurisdiction over the case.
5. XXX 6. That on the facts and circumstances of the case and in law, the approval granted by the competent authority u/s 151 of the Act is mechanical in nature lacking independent application of mind, thereby rendering the income escaping assessment proceedings legally invalid and liable to be quashed. 7. That on the facts and circumstances of the case and in law, the "reasons to believe" is vague, arbitrary, being based upon borrowed satisfaction, thereby vitiating the income escaping assessment proceedings.” 4. In addition to the above grounds, the assessee has also filed an additional legal ground of appeal which reads as under:
That based on the facts and circumstances of the case and in law, the assessment order dated 18.12.2017 issued u/s 144 r.w.s 147 passed jointly in the name of Shri Duli Chand & Sh. Dharmender Chaudhary as an Association of Persons is arbitrary and illegal thereby rendering the said order non-est in the eyes of law
The ld. counsel for the assessee vehemently submitted that the aforesaid additional ground of appeal purely raises a legal issue. In view of the above, the additional ground of appeal calls for being admitted and adjudicated on merits in terms of the discretion vested u/r 11 of the Rules. The ld. counsel for the assessee placed reliance is also placed on decision of the Hon'ble Supreme Court in the case of National
The ld. counsel for the assessee further submitted that the case of the assessee was reopened u/s 147 and reasons recorded for reopening was under the status of an individual. However, the assessment order was passed under the status of an AOP. Therefore, the assessment order is bad in law.
Per contra, the ld. DR pointed out that the appeal memo is under a different name i.e. Shri Rajendra Chaudhary and the appeal filed by the assessee before the ITAT is in the name of individual.
Since the additional ground raised goes to the root of the matter, we decided to adjudicate it first.
After hearing both the parties and perusing the relevant material on record, we find that AO has framed the reassessment order in the name of Shri Duleechanda and Dharmender Chaudhary and the status of the assessee adopted by the AO, is that of AOP. We also note that as per the information received, the Assessing Officer found that Late Shri Duleechanda had deposited cash to the tune of Rs. 1,08,00,000/- in the SB Account held in his name in F.Y. 2009-10 relevant to A.Y 2010-11.
Thereafter, on the basis of the said information, the AO reopened the Page 4 of 6
However, the Assessing Officer while framing reassessment order u/s 144 r.w.s 147, made an addition of Rs. 1,08,00,000/- in the hands of Shri Duleechanda and Shri Dharmender Chaudhary in the status of AOP.
We note that the AO never started any proceedings against Shri Dharmender Chaudhary for reopening his case u/s 147 of the Act. We find that the reopening u/s 147 is in name of Duli Chand in the status of Individual and thereafter assessment is framed on Duli Chand and Dharmender Choudhary, in the status of AOP, which is not permissible under the law. In view of the same, we are of the considered view that the reassessment order u/s 144/147 of the act is invalid, vitiated and liable to be quashed. The reassessment order passed in the status of AOP, is accordingly quashed as bad in law and the addition made is, therefore, directed to be deleted. The additional ground of the assessee is allowed.
Since we have decided the issue on legal ground, we do not find it necessary to dwell into the merits of the case.