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Facts
The assessee's appeal is against the order of the CIT(A) for AY 2011-12. The assessment was reopened under section 147 of the Income-tax Act, 1961, due to alleged escaped income. The AO made additions of Rs. 82,23,500/- for unexplained investment and Rs. 67,11,000/- for unexplained cash received, totaling Rs. 1,49,34,500/-.
Held
The Tribunal held that the CIT(A)'s order was passed without considering the remand report or the Assessing Officer's comments on additional evidence filed by the assessee, violating Rule 46A of the Income-tax Rules, 1962. Therefore, the matter was restored back to the CIT(A) for a fresh decision.
Key Issues
Whether the CIT(A) erred in confirming the additions made by the AO without proper consideration of the evidence and principles of natural justice, and whether the reassessment proceedings were valid.
Sections Cited
147, 148, 144, 69, 250, 271(1)(c), 271F, 46A
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Income Tax Appellate Tribunal, MUMBAI BENCH “D” MUMBAI
Before: SHRI OM PRAKASH KANT & SHRI SUNIL KUMAR SINGH
This appeal by the assessee is directed against order dated 04.09.2024 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2011-12, raising following grounds:
On the facts and in the circumstances of the case and in law, appellate order dated 04 September 2024 ("Order")
passed by passed by the National Faceless Appeal Centre, New Delhi the National Faceless Appeal Centre, New Delhi ("NFAC") under section 250 of the IT Act is contrary to the ("NFAC") under section 250 of the IT Act is contrary to the ("NFAC") under section 250 of the IT Act is contrary to the facts and the law and, therefore, not tenable in law. facts and the law and, therefore, not tenable in law. facts and the law and, therefore, not tenable in law.
2. On the facts and in the circumstances of the case and in On the facts and in the circumstances of the case and in On the facts and in the circumstances of the case and in law, the NFAC erred in not granting a law, the NFAC erred in not granting adequate opportunity dequate opportunity to the Appellant and accordingly impugned Order is to the Appellant and accordingly impugned Order is to the Appellant and accordingly impugned Order is violative of principles of natural justice and deserves to be violative of principles of natural justice and deserves to be violative of principles of natural justice and deserves to be quashed. quashed.
3. On the facts and in the circumstances of the case and in On the facts and in the circumstances of the case and in On the facts and in the circumstances of the case and in law, the NFAC erred in confirming the action of the learned law, the NFAC erred in confirming the action of the learn law, the NFAC erred in confirming the action of the learn assessing officer ("Ld. AO") in initiating reassessment assessing officer ("Ld. AO") in initiating reassessment assessing officer ("Ld. AO") in initiating reassessment proceedings vide issuance of reopening notice dated 29 proceedings vide issuance of reopening notice dated 29 proceedings vide issuance of reopening notice dated 29 March 2018 under section 148 of the IT Act and passing of March 2018 under section 148 of the IT Act and passing of March 2018 under section 148 of the IT Act and passing of consequential assessment order dated 20 December 2018 consequential assessment order dated 20 December 2018 consequential assessment order dated 20 December 2018 under section 147 read with se under section 147 read with section 144 of the IT Act ction 144 of the IT Act without appreciating the fact that they are bad in law, without appreciating the fact that they are bad in law, without appreciating the fact that they are bad in law, and, therefore, not tenable in law. and, therefore, not tenable in law.
4. On the facts and in the circumstances of the case and in On the facts and in the circumstances of the case and in On the facts and in the circumstances of the case and in law, the NFAC erred in confirming the action of the Ld. AO law, the NFAC erred in confirming the action of the Ld. AO law, the NFAC erred in confirming the action of the Ld. AO in initiating reassessme in initiating reassessment proceedings vide issuance of nt proceedings vide issuance of reopening notice dated 29 March 2018 under section 148 reopening notice dated 29 March 2018 under section 148 reopening notice dated 29 March 2018 under section 148 of the IT Act and passing of consequential assessment of the IT Act and passing of consequential assessment of the IT Act and passing of consequential assessment order dated 20 December 2018 under section 147 read order dated 20 December 2018 under section 147 read order dated 20 December 2018 under section 147 read with section 144 of the IT Act without appreciating the fact with section 144 of the IT Act without appreciating the fact with section 144 of the IT Act without appreciating the fact that the reopening notice was never served to the at the reopening notice was never served to the at the reopening notice was never served to the Appellant and thus the entire reassessment proceedings Appellant and thus the entire reassessment proceedings Appellant and thus the entire reassessment proceedings are bad in law, and, therefore, not tenable in law. are bad in law, and, therefore, not tenable in law. are bad in law, and, therefore, not tenable in law.
5. On the facts and in the circumstances of the case and in On the facts and in the circumstances of the case and in On the facts and in the circumstances of the case and in law, the NFAC erred in confirming the action law, the NFAC erred in confirming the action of the Ld. AO of the Ld. AO in initiating reassessment proceedings vide issuance of in initiating reassessment proceedings vide issuance of in initiating reassessment proceedings vide issuance of reopening notice dated 29 March 2018 under section 148 reopening notice dated 29 March 2018 under section 148 reopening notice dated 29 March 2018 under section 148 of the IT Act without appreciating the fact that no income of the IT Act without appreciating the fact that no income of the IT Act without appreciating the fact that no income chargeable to tax has escapement. chargeable to tax has escapement.
On the facts and in the circumstances On the facts and in the circumstances of the case and in of the case and in law, the NFAC erred in confirming the action of the Ld. AO law, the NFAC erred in confirming the action of the Ld. AO law, the NFAC erred in confirming the action of the Ld. AO in making an addition of INR 82,23,500/ in making an addition of INR 82,23,500/- on account of on account of alleged 'unexplained investment' under section 69 of the IT alleged 'unexplained investment' under section 69 of the IT alleged 'unexplained investment' under section 69 of the IT Act.
7. On the facts and in the circumstances of the case and in On the facts and in the circumstances of the case and in On the facts and in the circumstances of the case and in law, the NFAC erred in confirming the action of the Ld. AO law, the NFAC erred in confirming the action of the Ld. AO law, the NFAC erred in confirming the action of the Ld. AO in making an addition of INR 67,11,000/ in making an addition of INR 67,11,000/- on account of on account of alleged 'unexplained sale receipt. alleged 'unexplained sale receipt.
On the facts and in the circumstances of the case and in On the facts and in the circumstances of the case and in On the facts and in the circumstances of the case and in law, the NFAC erred in confirming the action of the Ld. AO law, the NFAC erred in confirming the action of th law, the NFAC erred in confirming the action of th in levying consequential interest under the IT Act. in levying consequential interest under the IT Act. in levying consequential interest under the IT Act.
On the facts and in the circumstances of the case and in On the facts and in the circumstances of the case and in On the facts and in the circumstances of the case and in law, the NFAC erred in not quashing the action of the Ld. law, the NFAC erred in not quashing the action of the Ld. law, the NFAC erred in not quashing the action of the Ld. AO of initiating penalty proceedings under section AO of initiating penalty proceedings under section AO of initiating penalty proceedings under section 271(1)(c), 271F of the IT Act 271(1)(c), 271F of the IT Act.
Briefly stated facts of the case are that assessee had not filed Briefly stated facts of the case are that assessee had not filed Briefly stated facts of the case are that assessee had not filed its regular return of income for the year under consideration, its regular return of income for the year under consideration its regular return of income for the year under consideration therefore, assessment for the year under consideration was therefore, assessment for the year under consideration was therefore, assessment for the year under consideration was reopened u/s 147 of the Income reopened u/s 147 of the Income-tax Act, 1961 (in short ‘the Act’ tax Act, 1961 (in short ‘the Act’) by way of issue of notice u/s 148 of the Act dated 29.03.2018 after way of issue of notice u/s 148 of the Act dated 29.03.2018 after way of issue of notice u/s 148 of the Act dated 29.03.2018 after recording the reasons to believe that income escaped assessment. recording the reasons to believe that income escaped assessment. recording the reasons to believe that income escaped assessment. During the reassessment proceedings, the Assessing Officer During the reassessment proceedings, the Assessing Officer During the reassessment proceedings, the Assessing Officer observed unexplained investment u/s 69 of the Act amounting to observed unexplained investment u/s 69 of the Act amounting to observed unexplained investment u/s 69 of the Act amounting to Rs.82,23,500/- and unexplained cash received of Rs.67,89,000/ and unexplained cash received of Rs.67,89,000/- and unexplained cash received of Rs.67,89,000/ but in view of the non but in view of the non-compliance of the notices issued by of the notices issued by the assessee, the Assessing Officer made addition of Rs.1,49,34,500/- assessee, the Assessing Officer made addition of Rs.1,49,34,500/ assessee, the Assessing Officer made addition of Rs.1,49,34,500/ in order u/s 147 read with 144 of the Act passed on 20/12/2018. in order u/s 147 read with 144 of the Act passed on 20/12/2018 in order u/s 147 read with 144 of the Act passed on 20/12/2018
On further appeal, the Ld. CIT(A) rejected the contention of the On further appeal, the Ld. CIT(A) rejected the contention of the On further appeal, the Ld. CIT(A) rejected the contention of the assessee and upheld the addition observing as under: assessee and upheld the addition observing as under: assessee and upheld the addition observing as under:
“5.1 During the appellate proceedings, the appellant has not 5.1 During the appellate proceedings, the appellant has not 5.1 During the appellate proceedings, the appellant has not furnished any cogent explanation about above said transactions. furnished any cogent explanation about above said transactions. furnished any cogent explanation about above said transactions. However, as per the submission made by the appellant, "The AO as per the submission made by the appellant, "The AO as per the submission made by the appellant, "The AO was wrong in treating the purchase of property of Rs. 82,23,500 was wrong in treating the purchase of property of Rs. 82,23,500 was wrong in treating the purchase of property of Rs. 82,23,500 as unexplained investment and Rs. 67, 11,000/ as unexplained investment and Rs. 67, 11,000/- as undisclosed as undisclosed income. The Property was purchased and Sold by the appellant's The Property was purchased and Sold by the appellant's The Property was purchased and Sold by the appellant's husband namely husband namely Mr. Laxman Manjiramani and son Mr. Jitin Mr. Laxman Manjiramani and son Mr. Jitin Manji and capital gain was taxable in their hands only. The Manji and capital gain was taxable in their hands only. The Manji and capital gain was taxable in their hands only. The name of the appellant was merely added as a joint holder in the name of the appellant was merely added as a joint holder in the name of the appellant was merely added as a joint holder in the purchase and sale deed for good luck purpose." The appellant purchase and sale deed for good luck purpose." The appellant purchase and sale deed for good luck purpose." The appellant has also stated that no tax w has also stated that no tax was liable on the long-term capital term capital gain on transfer of property as the Capital Gain received from gain on transfer of property as the Capital Gain received from gain on transfer of property as the Capital Gain received from sale of the property in the same year towards purchase of sale of the property in the same year towards purchase of sale of the property in the same year towards purchase of another residential property. The appellant has furnished only another residential property. The appellant has furnished only another residential property. The appellant has furnished only sale & purchase deeds of the properti sale & purchase deeds of the properties as documentary es as documentary evidences. On perusal of all the documentary evidence and evidences. On perusal of all the documentary evidence and evidences. On perusal of all the documentary evidence and available records, it has been observed that the appellant has not available records, it has been observed that the appellant has not available records, it has been observed that the appellant has not furnished any cogent explanation about above said transaction. furnished any cogent explanation about above said transaction. furnished any cogent explanation about above said transaction. The appellant has neither explained about source o The appellant has neither explained about source of purchase of f purchase of the property which was sold on 03.07.2010 for Rs.67,11,000/ the property which was sold on 03.07.2010 for Rs.67,11,000/ the property which was sold on 03.07.2010 for Rs.67,11,000/- nor the source of additional amount i.e. Rs. 15,12,500/ nor the source of additional amount i.e. Rs. 15,12,500/ nor the source of additional amount i.e. Rs. 15,12,500/- (82,23,500-67, 11,000) 67, 11,000) to purchase another property for to purchase another property for Rs.82,23,500/ Rs.82,23,500/- on 12.07.2010. In view of these facts, the 12.07.2010. In view of these facts, the submission made by the appellant are not comprehensive and made by the appellant are not comprehensive and made by the appellant are not comprehensive and not accepted. In view of this, I have confirmed both the additions not accepted. In view of this, I have confirmed both the additions not accepted. In view of this, I have confirmed both the additions i.e. Rs.82,23,500/ i.e. Rs.82,23,500/- & Rs. 67,11,000/- under the provision of the under the provision of the IT Act'1961, made by the A.O in the assessment order as IT Act'1961, made by the A.O in the assessment order as IT Act'1961, made by the A.O in the assessment order as discussed above. discussed above.”
Before us, the Ld. counsel for the assessee filed a Paper Book Before us, the Ld. counsel for the assessee filed a Paper Book Before us, the Ld. counsel for the assessee filed a Paper Book containing pages 1 to 65. The Ld. counsel only pressed ground No. containing pages 1 to 65. The Ld. counsel only press containing pages 1 to 65. The Ld. counsel only press 6 and 7 of the appeal and submitted that assessee had filed 6 and 7 of the appeal and submitted that assessee had filed 6 and 7 of the appeal and submitted that assessee had filed additional evidence before the Commissioner of Income-tax additional evidence before the Commissioner of Income additional evidence before the Commissioner of Income (Appeals) and the Commissioner had called for a remand report s) and the Commissioner had called for a remand report s) and the Commissioner had called for a remand report from the Assessing Officer. However there is no mention of the from the Assessing Officer. However there is no mention of the from the Assessing Officer. However there is no mention of the finding brought on record in remand report by the Assessing Officer finding brought on record in remand report by the Assessing Officer finding brought on record in remand report by the Assessing Officer and therefore, the order of the Ld. CIT(A) being in violation of Rule and therefore, the order of the Ld. CIT(A) being in violation of Rule and therefore, the order of the Ld. CIT(A) being in violation of Rule 46A of the Income-tax Rules, 1962 tax Rules, 1962, need to be set aside and matter to be set aside and matter may be restored back to the Ld. CIT(A) may be restored back to the Ld. CIT(A) for deciding afresh. afresh.
On the contrary, the Ld. Departmental Representative (DR) On the contrary, the Ld. Departmental Representative (DR) On the contrary, the Ld. Departmental Representative (DR) relied on the order of the Ld. CIT(A). relied on the order of the Ld. CIT(A).
ission of the parties and perused the 6. We have heard rival subm We have heard rival submission of the parties and perused the relevant material on record. The Ld. counsel for the assessee relevant material on record. The Ld. counsel for the assessee relevant material on record. The Ld. counsel for the assessee submitted that assessee along with other two family members had submitted that assessee along with other two family members had submitted that assessee along with other two family members had purchased a property whereas money was contributed by the other purchased a property whereas money was contributed by the other purchased a property whereas money was contributed by the other members and the assessee members and the assessee’s name was only included being a family included being a family member. She did not . She did not contribute any sum for the purchase of the any sum for the purchase of the property. But we find that there is no finding on the record that we find that there is no finding on the record that we find that there is no finding on the record that source of the investment in property was submitted by the assessee investment in property was submitted by the assessee investment in property was submitted by the assessee before the Assessing Of the Assessing Officer. On perusal of the Paper Book page 3 to ficer. On perusal of the Paper Book page 3 to 5, we find that the Assessing Officer has called for submission of 5, we find that the Assessing Officer has called for submission 5, we find that the Assessing Officer has called for submission the assessee on the additional evidence the assessee on the additional evidences which were filed before the re filed before the Ld. CIT(A) and the assessee he assessee had duly filed a reply reply , which is available on PB-6 , but but in impugned order of ld CIT(A), in impugned order of ld CIT(A), there is no reference of any remand report sent by the Assessing Officer or reference of any remand report sent by the Assessing Officer reference of any remand report sent by the Assessing Officer comment of the Assessing Officer on additional evidences. In our comment of the Assessing Officer on additional evidences comment of the Assessing Officer on additional evidences opinion, probably this probably this might be for the reason that the remand be for the reason that the remand report was called for on the additional evidence as called for on the additional evidences filed before the Jurisdictional First Appellate Authority Jurisdictional First Appellate Authority, whereas the impugned whereas the impugned appellate order has been passed by the Faceless Appellate Authority appellate order has been passed by the Faceless Appellate Aut appellate order has been passed by the Faceless Appellate Aut and therefore, probabl and therefore, probably that remand report if any sent by the y that remand report if any sent by the jurisdictional Assessing Officer sdictional Assessing Officer must not have been forwarded to been forwarded to the Faceless Appellate Authority. the Faceless Appellate Authority. The impugned appellate order The impugned appellate order therefore has been passed without taking into consideration therefore has been passed without taking into consideration therefore has been passed without taking into consideration comment of the AO comment of the AO on the additional evidence the additional evidences. In the circumstances, we feel it appropriate to restore the matter back to feel it appropriate to restore the matter back to feel it appropriate to restore the matter back to the file of the Ld. CIT(A) for deciding the matter following the Rule the file of the Ld. CIT(A) for deciding the matter following the Rule the file of the Ld. CIT(A) for deciding the matter following the Rule 46A of the Rules and if any such remand report has already been 46A of the Rules and if any such remand report has already been 46A of the Rules and if any such remand report has already been submitted by the jurisdictional Assessing Officer same may be submitted by the jurisdictional Assessing Officer same may be submitted by the jurisdictional Assessing Officer same may be considered while deciding the issue in dispute. Accordingly while deciding the issue in dispute. Accordingly, the while deciding the issue in dispute. Accordingly issue in dispute involved in the case is restored back to the file of issue in dispute involved in the case is restored back to the file of issue in dispute involved in the case is restored back to the file of the Ld. CIT(A) for deciding afresh after complying the provisions of the Ld. CIT(A) for deciding afresh after complying the provisions of the Ld. CIT(A) for deciding afresh after complying the provisions of the Rule 46A of the Rules. The ground No the Rule 46A of the Rules. The ground Nos. 6 and 7 of the appe . 6 and 7 of the appeal are accordingly allowed for statistical purposes. The other grounds are accordingly allowed for statistical purposes. The other grounds are accordingly allowed for statistical purposes. The other grounds are rendered merely academic and therefore, we are not are rendered merely academic and therefore, we are not are rendered merely academic and therefore, we are not adjudicating upon the same. adjudicating upon the same.
In the result, the appeal of the assessee is allowed for In the result, the appeal of the assessee is allowed for In the result, the appeal of the assessee is allowed for statistical purposes.