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Facts
For AY 2016-17, the assessee's case was selected for scrutiny based on information about involvement in bogus purchase transactions. The Assessing Officer initiated reassessment proceedings u/s 148 and made an addition of Rs.92,09,090/- for alleged bogus purchases, determining income at Rs.98,15,940/-.
Held
The Income Tax Appellate Tribunal upheld the order of the Ld. CIT(Appeals)/NFAC, which had set aside the Assessing Officer's reassessment order and remanded the case for fresh assessment. The CIT(A) exercised powers under the newly inserted proviso to Section 251(1)(a) of the Income Tax Act. The Tribunal clarified that the assessee is at liberty to raise all legal pleas, including the challenge to the sanction u/s 151, before the AO during the fresh assessment.
Key Issues
1. Validity of reassessment proceedings and the notice u/s 148 due to alleged invalid sanction u/s 151. 2. Legality of disallowance of Rs.92,09,090/- on account of alleged bogus purchases.
Sections Cited
Section 148, Section 151, Section 147, Section 144, Section 251
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, RAIPUR BENCH, RAIPUR
Before: SHRI PARTHA SARATHI CHAUDHURY & SHRI ARUN KHODPIA
आदेश / ORDER
PER PARTHA SARATHI CHAUDHURY, JM:
This appeal preferred by the assessee emanates from the order of the Ld. CIT(Appeals)/NFAC, dated 16.12.2024 for the assessment year 2016-17 as per the following grounds of appeal on record:
1. The AO erred in making disallowance of Rs.92,09,090/- on account of alleged bogus purchases. The disallowance made by the AO is illegal, arbitrary, baseless and not justified.
2. The notice issued u/s.148 and consequent reassessment order passed by AO is illegal inasmuch as the sanction u/s.151 from specified authority is not as per law and without jurisdiction.
3. The reassessment order passed by AO is illegal, bad in law and is liable to be quashed.
4. Without prejudice to above ground, assumption of jurisdiction by the AO, initiation of reassessment proceedings and the consequent reassessment order passed by the AO is illegal, ab initio void.
5. The appellant reserves the right to add, amend or alter any of the ground/s of appeal.”
Brief facts in this case are that the assessee had filed its return of 2. income for A.Y.2016-17 on 16.09.2016, declaring an income of Rs.6,06,850/-. As per the information received by the ITO (Investigation), Raipur from the Commercial Tax Department, the case has been selected for scrutiny after obtaining prior approval from the Pr. CIT-1, Raipur. Accordingly, the Assessing Officer issued notice u/s.148 of the Act, dated 29.07.2022 with a direction to file ITR within 30 days. However, the assessee had not filed the same.
During the course of assessment proceedings, the Assessing Officer observed that investigation was conducted in case of one, Shri Deepak Nanjyani wherein it was found that 28 entities belonging to 22 different individuals are involved in providing bogus bills to various beneficiaries and the assessee is one of such beneficiary who had taken accommodation entries. Assessment was completed by the Assessing Officer vide his order passed u/s.147 r.w.s. 144 of the Act, dated 22.05.2023 wherein after making an addition of Rs.92,09,090/- on account of bogus purchases, income of the assessee was determined at Rs.98,15,940/-.
On appeal before the first appellate authority, the Ld. CIT(Appeals)/NFAC who set-aside the order of the Assessing Officer and restored the matter back to his file with the direction to frame the assessment afresh after giving adequate opportunity of being heard to the assessee. For the sake of completeness, the observations of the Ld. CIT(Appeals)/NFAC are culled out as follows:
“5. During the course of appellate proceedings, the legal heir of the appellant submitted that the appellant Shri Sudham Chand Chimnani has expired on 24.10.2020 and his legal heir is his son Rajesh Chimnani. Rajesh Chimnani has been registered as legal heir of Late Shri Sudham Chand Chimnani in e-filing portal since 13.01.2022. The Notices in respect of hearing were sent to e-mail "caamitchimnani@yahoo.in" which belongs to the counsel of appellant and all the tax related matters/compliances are looked after by the counsel of the appellant only. However, the counsel, owing to his personal reasons and pre-occupation, could neither himself look into the matter nor did he communicate about the non-compliance of notices to the legal heir of appellant. This is how the notices remained un-complied. I find that the explanation submitted by the appellant was not submitted before the AO during assessment proceedings. Therefore, the contention of the appellant needs to be examined by the AO, hence this is fit case for setting aside to the file of AO for fresh adjudication.
6. Vide Finance Act, 2024, in section 251 of the Income-tax Act, in sub-section (1), in clause (a), the following proviso has been inserted w.e.f.01.10.2024 – "Provided that where such appeal is against an order of assessment made under section 144, he may set aside the assessment and refer the case back to the Assessing Officer for making a fresh assessment". The above amendment to section 251 of the Act is relating to the powers of the Joint Commissioner (Appeals) or the Commissioner (Appeals). Sub-section (1) of the said section provides that Commissioner (Appeals) have the powers to confirm, reduce, enhance or annul the assessment, in the case of an appeal against an order of assessment; or confirm, cancel, or vary to enhance or reduce, the penalty order, in the case of an appeal against an order imposing a penalty while disposing of such appeal. Prior to the above amendment, Commissioner (Appeals) was not having the powers of setting aside the assessment order. However, vide aforesaid amendment by inserting a proviso in clause (a) of subsection (1) thereof, Commissioner (Appeals) have been empowered to set aside the assessment order where an appeal have been filed against an order of assessment under section 144 of the Act and refer the case back to the Assessing Officer for making a fresh assessment. This amendment is in force w.e.f. 01.10.2024. The AO has issued various notices to the appellant from time to time. The appellant remained non responsive to the notices issued, during entire Assessment Proceedings. As per Memorandum Explaining Powers of CIT(A) in the bill to set aside and refer case back to AO for making fresh assessment one of the reasons for introducing bill is non-responsive attitude of assessee to the various notices during the course of Assessment Proceedings. In the case of appellant, the appellant also remained non responsive to various notices issued by AO. Therefore, the case of the appellant is set aside to the file of AO.
7. Considering the facts and circumstances of the case discussed in para 5 above and the powers vested in me vide proviso in clause (a) of subsection (1) of section 251 of the Act, I hereby set aside the order of the AO and restore the same back to the file of the AO with the directions to the AO to frame the assessment order afresh after giving adequate opportunity of being heard to the appellant.
In the result, the appeal is set aside.”
The Ld. Counsel for the assessee has raised a legal ground that the notice u/s.148 of the Act, dated 29.07.2022 and consequent reassessment order passed by the Assessing Officer is illegal as sanction u/s. 151 of the Act from the specified authority is not as per the mandate of law and without jurisdiction, therefore, the same is liable to be quashed for want of valid assumption of jurisdiction.
Per contra, the Ld. Sr. DR relying on the order of the Ld. CIT(Appeals)/NFAC submitted that the first appellate authority had rightly set-aside the order of the Assessing Officer and remanded the same to his file with a direction to frame the assessment order afresh after giving adequate opportunity of being heard to the assessee.
We have thoughtfully considered the submissions advanced by both the parties and facts and circumstances involved in the present case. We find that the Ld. CIT(Appeals)/NFAC as per powers vested with him vide proviso to in clause (a) of Sub-section (1) of Section 251 of the Act (vide Finance Act, 2024 w.e.f. 01.10.2024), set-aside the order of the Assessing Officer and restored the same back to the file of the Assessing Officer with the directions to the Assessing Officer to frame the assessment order afresh after giving adequate opportunity of being heard to the assessee. Therefore, we find no infirmity with the findings of Ld. CIT(Appeals)/NFAC which is hereby upheld.
8. At this stage, it would be relevant to point out that as we have upheld the order of the Ld. CIT(Appeals)/NFAC who had set-aside the order of the Assessing Officer and restored the same to his file for denovo adjudication with similar terms, which in effect would be the new adjudication all together, therefore, the assessee shall be at liberty to raise the legal plea as had been raised before us at the time of denovo adjudication before the Assessing Officer.
As per the above terms the grounds of appeal raised by the assessee are allowed for statistical purposes.
In the result, appeal of the assesse is allowed for statistical purposes.
Order pronounced in the open court on 20th March, 2025.