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Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI
Before: SHRI MAHAVIR SINGHAND SHRI S.R. RAGHUNATHA
आदेश /O R D E R
PER MAHAVIR SINGH, VICE PRESIDENT:
These appeals by the assessee are arising out of the orders of the Commissioner of Income-Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi in Order No.ITBA/NFAC/S/250/2023- 24/1057534382(1) & 1057536785(1) both dated 31.10.2023. The - 2 - & 1630/Chny/2023 assessments for the assessment year 2017-18 were framed by the Income Tax Officer, Exemptions Ward 3, Chennai u/s.143(3) of the Income Tax Act, 1961 (hereinafter the ‘Act’) vide order dated 30.12.2019 and by the Additional/Joint/Deputy/Assistant Commissioner of Income Tax/Income-tax Officer, National Faceless Assessment Centre, Delhi u/s.147 r.w.s. 144 of the Act dated 29.03.2022.
The first issue in this appeal of assessee is as regards to the order of CIT(A)-NFAC confirming the action of the AO in making assessment in violation of principles of natural justice. For this, assessee has raised the following grounds:-
1. CIT (A) erred both in Law and on the facts of the case in : (a) holding that re-assessment had been made after giving reasonable opportunity; and (b) sustaining the addition of Rs, 1,64,31,530 U/s.115 BBE of the Act.
2. The appellant submits that the assessment had been made violating the principles of natural justice for the following reasons: (a) The assessment had been completed on 29.03.2022, without considering the Written Submissions made on 25.03.2022, filed in response to the Show-Cause Notice dated 15.03.2022; (b) The Show-Cause Notice, proposing the variations, was issued on 26.03.2022 (being Saturday) ignoring the Written Submissions filed on 25.03.2022 and asking the appellant to file its objections on 27.03.2022 (being Sunday).
3. CIT (A) erred in dismissing the appeal ignoring the Online Written Submissions made before CIT(A) on 13.08.2022.
- 3 - & 1630/Chny/2023 4. He erred in stating that the appellant had been non compliant in the appellate proceedings.
The appellant submits that the reassessment had been made based on the materials submitted during original assessment and that there were no fresh materials warranting the re-opening of the assessment.
Without prejudice to the above, it further submits that the assessment may be set-aside and that the A0 may be directed to re-do the assessment, after giving reasonable opportunity to the appellant and that, the appellant is relying on the decision of the Supreme Court in Tin Box Company Vs. CIT (249 ITR 216).
7. The appellant, therefore, prays that the re-assessment may be cancelled and that, the addition of Rs.1,64,31,350/- may be deleted.
At the outset, the ld.AR for the assessee stated that the show cause notice proposing variations was issued on 26.03.2022 being Saturday, whereas the assessee has already filed written submissions on 25.03.2022. The AO in its show-cause notice issued on 26.03.2022 asked the assessee to file its submissions on or before 27.03.2022 and that also falling on Sunday. The ld.AR for the assessee stated that the entire premise of CIT(A)-NFAC is on draft assessment order issued on 26.03.2022 but there is no discussion on merits of the case. The ld.AR pointed out to para 4.2.2 and para 5 of the CIT(A)-NFAC order. Thereafter, he took us through the assessment order and stated that the submissions filed by assessee on 25.03.2022 which is enclosed in assessee’s paper- book at pages 19 to 23 are not at all considered. The ld.AR stated that the entire explanation including the fee collected from four
- 4 - & 1630/Chny/2023 schools and the expenditure incurred as well as bank account details are enclosed and given vide letter dated 25.03.2022 and finally, assessment was framed on 29.03.2022. Hence, the ld.AR stated non-consideration of written submissions and not allowing reasonable opportunity of being heard, clearly vitiate the assessment order and further the CIT(A)-NFAC not adjudicating on the same is clear violation of principles of natural justice.
When these facts were confronted, ld. Senior DR filed written submissions on merits. But, when pointed out of clear violation of principles of natural justice, the ld. Senior DR could not point out how proper opportunity was allowed to assessee or the written submissions dated 25.03.2022 was considered by AO or by CIT(A)- NFAC. He could not answer.
5. After hearing rival contentions on the issue of violation of principles of natural justice, we feel that this assessment framed by AO is in clear violation of principles of natural justice and hence, we set aside the orders of lower authorities i.e., the CIT(A) and that of the AO and remand the matter back to the file of the AO for fresh adjudication. Needless to say, the AO will allow reasonable opportunity of being heard and to file documents and AO will
- 5 - & 1630/Chny/2023 consider all the documents and then will finalize the assessment as per law.
6. The only issue in this appeal of assessee on merits is as regards to the order of CIT(A)-NFAC confirming the action of the AO in disallowing the claim of exemption u/s.11 of the Act by taxing the amount of Rs.2,20,00,000/- in violation of section 11(1) of the Act and that to at maximum marginal rate u/s.164(2) of the Act.
For this, the ld.AR for the assessee stated that the order of CIT(A)-NFAC on the issue of eligibility of exemption u/s.11 of the Act and assessing the income of Rs.2.20 crores at the maximum marginal rate has not adjudicated by a speaking order and not allowing proper opportunity of being heard except one notice dated 29.08.2022. When ld.AR was pointed out that the CIT(A)-NFAC has issued many notices and this was observed in para 4 of his order as under:- “4.1 During the course of assessment proceedings notices were issued to the assessee on 31.12.2020, 15.07.2022, 29.08.2022, 06.10.2023 and 18.10.2023 fixing the case for hearing on 07.01.2021, 25.07.2022, 13.09.2022, 13.10.2023 and 27.10.2023. The assessee has reply on 28.09.2022 and 13.10.2022.”
- 6 - & 1630/Chny/2023 The ld.AR made statement at bar that it did not receive any notice as mentioned by CIT(A)-NFAC except the one dated 29.08.2022, to which it had filed its written submission on 13.10.2022. Hence, the ld.AR requested that this is a clear cut case of violation of principles of natural justice and therefore, requested for setting aside of the order of CIT(A)-NFAC and remitting the matter back to his file for fresh adjudication.
When these facts were confronted to ld. Senior DR, he filed written submissions on merits but could not controvert the violation of principles of natural justice.
Having heard rival contentions and going through the facts of the case, we noticed that the CIT(A)-NFAC has adjudicated the issue of exemption u/s.11 of the Act, issue of addition of Rs.2.20 crores and assessed the same under maximum marginal rate by observing that the assessee has not filed evidences in regard to claim made or to substantiate the grounds of appeal regarding application of money for charitable purpose, evidence regarding purchase of property and hence, the appeal was dismissed. The CIT(A)-NFAC further in regard to revised return also noted that the assessee failed to demonstrate what was omission for which the return was revised
- 7 - & 1630/Chny/2023 and hence, has not accepted the revised return. As the facts clearly demonstrate that the assessee has filed reply dated 28.09.2022 and also on 13.10.2022 but from the order of CIT(A)-NFAC it is not emerging what was the reply.
9.1 Without speaking on merits, we are of the view that the CIT(A)-NFAC has not allowed reasonable opportunity and even has not considered the reply of the assessee dated 28.09.2022 and 13.10.2022 and hence, we set aside the order of CIT(A)-NFAC and remand this matter back to his file for fresh adjudication. Accordingly, the appeal of the assessee is allowed for statistical purposes.
In the result, the appeals filed by the assessee are allowed for statistical purposes.
Order pronounced in the open court at the time of hearing on 10th June, 2024 at Chennai.