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Facts
The appellant filed an original return for AY 2009-10. The AO initially assessed income at Rs.81,20,650/- under section 143(3), including additions for bogus sundry creditors, LTCG u/s 50C, and disallowance of non-business expenses. The CIT(A) reduced this to Rs.8,11,900/-, but the ITAT remanded the matter back to the CIT(A). Subsequently, the AO reopened the assessment under section 147 based on information from the Investigation Wing and reassessed income again at Rs.81,20,650/-, which the CIT(A) dismissed ex-parte.
Held
The Tribunal observed that the original assessment had attained finality at Rs.8,11,900/-. The AO failed to provide justification for computing income under section 147 at a higher amount, as the reassessed income was based on the original assessment, which had already been reduced. Given that the CIT(A) decided the issue of reopening ex-parte, the Tribunal remitted the case back to the CIT(A) to decide the appeal on merit after providing reasonable opportunities of being heard.
Key Issues
1. Validity of reopening of assessment under section 147 of the Income Tax Act. 2. Justification for enhancement of income during reassessment proceedings. 3. Propriety of CIT(A) dismissing the appeal ex-parte.
Sections Cited
Section 50C, Section 143(3), Section 147
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘A’: NEW DELHI
Before: MS. MADHUMITA ROY & SHRI AVDHESH KUMAR MISHRA
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘A’: NEW DELHI BEFORE MS. MADHUMITA ROY, JUDICIAL MEMBER AND SHRI AVDHESH KUMAR MISHRA, ACCOUNTANT MEMBER Sh. Bhim Sain Gupta Vs. ACIT, K 736, GadaiPur, Circle-47(1), Mehrauli Road, New Delhi New Delhi-110030 PAN : ADKPG7977R (Appellant) (Respondent) Appellant by Mr. Mirzamuhiuddin Baig, CA Respondent by Sh.Kanv Bali,Sr.DR Date of Hearing 20/05/2024 Date of Pronouncement 28/05/2024 ORDER PER AVDHESH KUMAR MISHRA, AM
This appeal of the Assessment Year [In short, the ‘AY’] 2009-10, preferred by the appellant/assessee, challenges the order dated 24.01.2019, of the Commissioner of Income Tax (Appeals)-16, New Delhi [In short, the ‘CIT(A)’].
The appellant/assessee challenged, vide 9 grounds of appeal, the finding of the CIT(A) upholding (i) reopening of the assessment and (ii) enhancement of the income.
3. The relevant facts for deciding this appeal, in brief, are that the appellant/assessee filed his original return of income on 30.09.2009 declaring income of Rs.7,38,520/-. The Assessing Officer [In short, the ‘AO’] scrutinized the case and assessed the income at Rs.81,20,650/-, by making additions on account of bogus sundry creditors & long term capital gains under section 50C of the Act and disallowance of certain non-business expenses, under section 143(3) of the Act on 30.12.2011. On first appeal, the assessed income as per the original assessment order dated 30.12.2011 was reduced to Rs.8,11,900/-. Aggrieved with the order of the CIT(A), the Revenue appealed before the Tribunal (ITA No. 3252/Del./2012), who remitted the matter back to the CIT(A). Meanwhile [during the set aside proceedings before the CIT(A)], the AO received certain information from the Investigation Wing of the Income Tax Department. Based on that information, the AO reopened the case under section 147 of the Act. Vide order dated 08.12.2016, the AO; observing as under, completed the assessment at income of Rs.81,20,650/-under section 147 of Act:-
“5. From the perusal of the case records for AY 2009-10, it is seen that the income of the assessee has already been assessed u/s 143(3), including the claim of business loss and set off the capital gains against this loss. Further, the case is currently sub-judice at the level of the CIT(A) after being set aside by Hon’ble ITAT. In view of the above facts, the income of the assessee is being assessed at Rs.81,20,650/- as per order u/s 254 giving effect to the order of Hon’ble ITAT vide ITA No.3252/Del/2012.”
3.1. Aggrieved with the reopened assessment order dated 08.12.2016, the appellant/assessee challenged it before the CIT(A), who dismissed the appeal vide order dated 24.01.2019. Thereafter, the matter was raised before us.
At the outset, the Ld. AR contended that the Ld.CIT(A) decided the matter ex-parte. Hence, the issue may be remitted back to him to decide the appeal on merit. Further, our attention was also drawn to the fact that the CIT(A), vide order dated 20.12.2017, had decided the restored appeal (by the Tribunal in the ITA No. 3252/Del./2012) allowing major relief. The appeal effect resulted the assessed income at Rs. 8,11,900/-. It was further contended that the income reassessed, vide order dated 08.12.2016 passed under section 147 of the Act, at Rs. 81,20,650/-, was subject to the outcome of the pending appeal at that point of time before the CIT(A). Since the original assessment, at income of Rs.81,20,650/-, had attained the finality at Rs.8,11,900/-; therefore, the reopened assessment which was based on the outcome of the set aside appeal by the CIT(A) also needed to be restricted to the income of Rs. 8,11,900/-. On the issue of reopening under section 147 of the Act, the case was requested to be set aside before the CIT(A).
The Ld. AR, emphasizing on the order of the CIT(A), prayed dismissal of the appeal.
We have heard both the parties and considered the material available on the record. The original assessment had attained the finality at Rs.8,11,900/-. The AO; except referring the original assessment order sub-judiced before the CIT(A), has not given any justification for computing the income under section 147 of the Act.Therefore, at most, the fate of the reassessed income would be the same as of the original assessment on the reasoning that the reassessed income is based onthe original assessment. Since the issue of reopening of the assessment was decided ex parte; therefore, we are refraining to adjudicate this issue on merit.
We have considered the facts of the case in entirety and perused the orders of the subordinate authorities. We are of the considered view that this case is fit for remitting back to the CIT(A) to decide the appeal on merit after affording reasonable opportunities of being heard. Accordingly, we order so. However, we are refraining from commenting on merit of the case.