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Facts
The assessee challenged the CIT(A)'s order which partly allowed their appeal against an assessment order passed under Section 144 read with Section 147. The assessee contended that the reassessment proceedings were invalid due to improper notice and lack of opportunity to be heard. The CIT(A) had remanded the issue of cash deposits to the Assessing Officer.
Held
The Tribunal noted that the validity of the reassessment proceedings and the underlying facts were not examined by the Assessing Officer or the CIT(A). The CIT(A) also erred in remanding the issue back to the Assessing Officer without proper adjudication. Therefore, the Tribunal set aside the orders and restored the issue to the Assessing Officer.
Key Issues
Whether the reassessment proceedings under Section 147 were validly initiated and conducted, and if the CIT(A) correctly adjudicated on the grounds raised by the assessee.
Sections Cited
144, 147, 148, 133(6), 251
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, K (SMC
IN THE INCOME TAX APPELLATE TRIBUNAL "K" (SMC) BENCH, MUMBAI SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER Prakash Ishwardas Suhanda Flat No.403/A, Sai Arpan CHS Ltd. Near Mysore Colony Monoraid, Chembur Colony, Mumbai - 400074 [PAN: AGDPS8111P] …………. Appellant Vs Income Tax Officer Ward 27(2)(5), Mumbai …………. Respondent Appearance For the Appellant/Assessee : Shri Venugopal C. Nair For the Respondent/Department : Shri Manoj Kumar, Date Conclusion of hearing : 14.08.2024 Pronouncement of order : .08.2024 O R D E R Per Rahul Chaudhary, Judicial Member: 1. By way of the present appeal the Assessee has challenged the order dated 12/04/2024 passed by the National Faceless Appeal Centre (NFAC) [hereinafter referred to as the ‘CIT(A)’] for the Assessment Year 2009-10, whereby the Ld. CIT(A) had partly allowed the appeal against the Assessment Order, dated 23/03/2015, passed under Section 144 read with section 147 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’).
The appellant has raised following grounds of appeal :
1. The Learned CIT (A) erred in facts circumstances of the case and in law in resorting to re-opening assessment u/s 147 by issue of notice U/s 148 on erroneous reason that mere cash deposit represents income escaping assessment, appellant has not filed ROI and about non response to a notice U/s Assessment Year: 2009-10 133(6) issued when no proceedings were pending.
WITHOUT PREJUDICE TO ABOVE 2. The Learned AO erred in facts and circumstances and in law in making assessment without valid service of notice under section 148 of Income Tax Office.
WITHOUT PREJUDICE TO ABOVE 3. The Learned AO erred in facts and circumstances and in law in making addition of cash deposited in bank account.
The Learned AO erred in facts and circumstances and in law in making addition of deposits other than cash into bank account without giving an opportunity to the assessee for providing explanation.
Reasons given by the AO for resorting to assessment under section 144 without valid service of notice and making these additions are wrong, insufficient and contrary to facts and evidence on record and in law.”
The relevant facts in brief are that the assessment was framed on the Appellant under Section 144 read with Section 147 of the Act vide Assessment Order, dated 23/03/2015.
4. Being aggrieved, the Appellant preferred appeal before CIT(A), challenging validity of the reassessment proceedings as well as the additions made in the hands of the Appellant on merits. The CIT(A), vide order dated 12/04/2024, partly allowed the Appeal preferred by the Appellant.
Being aggrieved, the Appellant has preferred the present Appeal on the grounds reproduced in paragraph no. 2 above.
Learned Authorised Representative for the Appellant appearing before us submitted that best judgment assessment was framed on the Appellant since the Appellant did not have any knowledge of the reassessment proceedings. It was submitted that the 2 Assessment Year: 2009-10 Appellant had shifted from the premises bearing address M.S. Building No. 23/795, Chembur Colony, Chembur, Mumbai-400074. It was vehemently contended that in appeal before CIT(A), the Appellant had raised various objections challenging the validity of the reassessment proceedings. However, the CIT(A) has not dealt with the objections raised by the Assessee. It was pointed out that the Assessing Officer had initiated reassessment proceedings on the presumption that the assessee had not filed the return of income whereas the return of income for the Assessment year 2009-2010 was filed by the Appellant with the Office of Income Tax Officer, Ward 22(2)(2). It was submitted that income tax returns for subsequent assessment years 2010-2011 to 2013- 2014 were also filed electronically with the Income Tax Officer, Ward 22(2)(2) and this shows that the return of income for the relevant assessment year was filed before the correct jurisdictional Assessing Officer. The aforesaid aspect was not taken into consideration by the CIT(A) while deciding the appeal. The Learned Authorised Representative also challenged issuance/service of notice issued under Section 148 of the Act. On merits, the Learned Authorised Representative for the Appellant submitted that without going through the details and documents to show source of debits/credits to the bank account of the Appellant, the CIT(A) merely remanded the issue to the file of Assessing Officer for verification which was contrary to the provisions contended in Section 251 of the Act, since the CIT(A) no longer had power to set aside the issue back to the file of the Assessing Officer.
Per contra, Learned Departmental Representative placed reliance upon the order passed by the Assessing Officer and CIT(A). It was contended on behalf of the Revenue that the notice was issued/served at the address available with the Assessing Officer 3 Assessment Year: 2009-10 and therefore, the issuance/service of notice under Section 148 of the Act was in compliance with the applicable provisions of the Act. The reassessment proceedings were conducted in a compliance with the applicable provisions of the Act. During the assessment proceedings the additions were made by the Assessing Officer as no documents/details were filed by the Appellant. The CIT(A) had called for the remand report from the Assessing Officer before deciding the appeal and therefore, it cannot be said that the CIT(A) had merely set aside the issue to the file of the Assessing Officer.
In rejoinder, it was submitted by the Learned Authorised Representative for the Appellant that the reassessment proceedings were not in compliance with applicable provisions. The Appellant was not provided with reasons recorded for reopening the assessment and therefore, the Appellant could not file objections before the Assessing Officer. The Appellant had challenged the validity of reassessment proceedings on various grounds, however, the CIT(A) failed to consider the same.
We have considered the rival submissions and perused the material on record.
The grievance of the Appellant is that since the Appellant was not available on the address, and therefore, the Appellant could not file objections to initiation of reassessment proceedings under Section 147 of the Act before the Assessing Officer. We note that the Appellant had challenged initiation/validity of the reassessment proceedings under Section 147 of the Act before the CIT(A). However, the CIT(A) has not adjudicated upon the same. We note that the objections of the Appellant and the underlying facts could not have been examined by the Assessing Officer since the Appellant could not raise objections before the Assessing 4 Assessment Year: 2009-10 Officer being unaware of reassessment proceedings. Thus, all the objections raised by the Appellant challenging the validity of the notice issued under Section 148 of the Act and the validity of the reassessment proceedings under Section 147 of the Act as well as the underlying facts neither got examined by the Assessing Officer nor by the CIT(A). We also find merit in the contention of the Appellant that the CIT(A) could not have merely remanded the issue back to the file of the Assessing Officer for verification. However, we find that the CIT(A) has in paragraph 5.3 of the order impugned returned a finding that even after calling for the remand report, the CIT(A) was not in a position to ascertain the genuineness of credits aggregating to INR 45,41,100/- in the bank account of the Appellant. Therefore, the CIT(A) had granted another opportunity to the Appellant to justify the source of credit before the Assessing Officer. On perusal of material on record, we concur with the CIT(A) that the genuineness of the credits could not be ascertained on the basis of material on record. Therefore, keeping in view of the peculiar facts and circumstances of the present case and in the interest of justice, we deem it appropriate to relegate the issue back to the Assessing Officer at the stage of filing objections. The order dated 12/04/2024 passed by the CIT(A) as well as the Assessment Order dated 23/03/2015 are set aside with the directions to Assessing Officer to pass re- assessment order afresh after granting Appellant an opportunity of being heard. The Appellant is granted liberty to file objections challenging the initiation/validity of reassessment proceedings on receiving notice of hearing from the Assessing Officer. The Assessing Officer is directed to consider all the objections raised by the Appellant and dispose off the same by way of a speaking order in accordance with law as applicable for the relevant the assessment year before proceedings to pass the reassessment order afresh. Since we have restored the issue to the file of the 5 Assessment Year: 2009-10 Assessing Officer and not adjudicated on merits, all the rights and contention of the Appellant are left open. The Appellant would be at liberty to place before the Assessing Officer documents and details to support his claim/contentions on merits. At the same time, the Assessing Officer would also be at liberty to carry out such inquiry/verification in relation to the aforesaid claim/contention of the Appellant as the Assessing Officer may deem fit. The Appellant is directed to pursue/track the proceedings before the Assessing Officer diligently (including through ITBA Portal) and not to seek adjournments unnecessarily. It is clarified that in case the Appellant failed to enter appearance or does not file relevant details/documents/submission before the Assessing Officer, the Assessing Officer shall be at liberty to pass the re-assessment order on the basis of material already on record. Thus, in terms of the aforesaid, Ground No. 1 & 2 raised by the Appellant/Assessee are allowed for statistical purposes while all other grounds are dismissed as being infructuous.
In terms of paragraph 8 above, the present appeal by the Assessee is allowed for statistical purposes.