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Income Tax Appellate Tribunal, DELHI BENCH: ‘SMC’ NEW DELHI
Before: SMT. DIVA SINGH
The present appeal has been filed by the Revenue assailing the correctness of the order dt. 28.4.2017 of CIT(A)-Rohtak pertaining to 2010-11 AY on following ground: 1. “On the facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs. 46,39,996/- made on account of Client code modification based on the information received from the DIT(I&CI), Mumbai which was based on detailed verification of facts.”
The Ld. AR inviting attention to application dt. 19.2.2018 moved under Rule 27 of the ITAT Rules submitted that the impugned order is silent on the jurisdictional issue despite the fact that the issue had been agitated before the CIT(A). Accordingly, prayer for challenging the impugned order on the following ground was raised: “The Ld. CIT(A) has erred in law and on facts in affirming the jurisdiction of the AO under section 147, ignoring that the jurisdiction for reassessment has been assumed for scrutiny of return and there is no live nexus between the reasons recorded and belief entertained.” 2.1 The said ground, it was submitted, may be admitted on account of the following reasons set out in the application itself:
“3. It is submitted that the above plea of the assessee is purely legal and goes to the root of the matter and no fresh finding exercise is required for deciding this plea. And hence in view of the decision of NTPC reported in 229 ITR 383 (SC) and DHL operators 108 TTJ 152 (SB) (Mum.).
Assessee further seeks to rely on the judgment of the Hon’ble Gujarat High Court in the case of Dahod Shekari Bank reported in 282 ITR 321 (Guj.), and of the Hon’ble Delhi High Court in the case of Brijwasi Impex for the proposition that rule 27 application is exempt from the limitation of one month which is applicable for filing of cross objections before the ITAT.”
The Ld. Sr, DR on considering the impugned order agreed that submissions assailing the jurisdiction have been advanced and would have no objection if the issue is remanded, however, responding to the arguments of the Ld. AR assailing the assumption of jurisdiction it was her submission that the jurisdiction was validly assumed. It was her submission that reasons recorded, copy available in page 29 of the Paper Book filed, support the assumption of jurisdiction. Reliance placed by the assessee on the decision of Signature Hotels it was her submission was misplaced. Referring to the record it was her submission that it is not the case of the AO or the Department that the assessee was a broker or a sub-broker the fact is that the assessee was a client of a broker and it is the broker who has misused the client code modification facility and the assessee has participated in purchasing shares so as to make bogus claim of losses. Thus, no doubt the CIT(A) is silent on the said issue. However, relief at this point of time as canvassed by the assessee may not be granted and the matter at best may be remanded. Addressing the relief granted on merits it was her submission that the CIT(A) after reproducing the arguments of the assessee upto page 18 in the final order has granted relief holding as under: “A perusal of the facts of the case that the AO has not properly examined the facts of the case. It is seen that the amount of Rs. 4,02,000/- as mentioned in the reasons recorded for reopening the case was a debit balance in the name of M/s R.K. Investments. Moreover, it has not been established with evidence how the disallowance of Rs. 46,39,996/- is a fictitious loss. It is also seen that there was an error in punching the code by the stock broker for the said transaction for another entity which was rectified. The appellant has clearly denied before the AO that such transaction took place. No attempt was made to give the appellant a chance to rebut this allegation. In the absence of any concrete evidence of such a transaction having taken place by the assessee. I delete the said addition.” 3.1. Inviting attention to the assessment. order it was her submission that the issue for consideration was claim of fictitious losses amounting to Rs. 46,39,996/- made by the assessee. Referring to the conclusion/relief granted by the CIT(A) it was her submission that the CIT(A) has not even cared to consider the facts of the case and has erroneously cut pasted the conclusion from the order of the ITAT dt. 16.01.2015 in the case of ITA 3595/Del/ 2011 in the case of M/s Bhagaria Finance & Investment P. Ltd. relied upon by the assessee and reproduced at pg 16 of the impugned order.
4. The ld. AR did not dispute the fact that the conclusions drawn in the assessee's favour refers to incorrect facts which do not pertain to the assessee.
I have heard the submissions and perused the material available on record. I find on considering the submissions of the parties before the Bench that the impugned order having based its reasoning and conclusion on incorrect facts cannot be upheld as the perversity in the order itself IS evident and glaring on record. The order being peverse and non-speaking cannot be upheld. It is seen that the assessee having agitated the assumption of jurisdiction before the CIT(A) is also aggrieved as the issue remains unaddressed. Accordingly, the order is set aside in toto back to the CIT(A) to first address the jurisdictional issue by way of a speaking order and thereafter, if need be, proceed to decide the appeal on merits. Needless to say, that the assessee shall be provided a reasonable opportunity of being heard. Said order was pronounced in the open court at the time of hearing itself.
In the result, the appeal of the Revenue is allowed for statistical purposes.