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Income Tax Appellate Tribunal, “H” BENCH, MUMBAI
Before: SHRI R.C. SHARMA, AM & SHRI SANDEEP GOSAIN, JM
आदेश / O R D E R Per Sandeep Gosain, J. M.: The Present Appeal has been filed by the Assessee against the order of Commissioner of Income Tax (Appeals)-17, Mumbai dated 30.05.2010 for A.Y. 2000-01 on the grounds of appeal
mentioned hereinbelow.
1. The Learned Commissioner of Income tax (Appeals) 17 erred in (A.Y. 2000-01) Homeland Networks (India) Pvt. Ltd. Vs. ITO 8(2)4 law and on the facts of the case in confirming the action of the assessing officer in invoking the provisions of section 148 of the Act and issuing notice under the said section and completing the assessment u/s. 144 r.w.s. 147 of the Act assessing total income at Rs. 28,20,350/- 2. The Learned Commissioner of Income tax (Appeals) 17 erred in law and on the facts of the case in confirming the action of the assessing officer in treating the remittances of Rs. 28,20,350/- received on 27/3/2000 from Homeland Networks USA being share application money as income of the appellant.”
2. The brief facts of the case are that in the course of proceedings u/s.143(3) for A.Y. 2001-02, the Assessing Officer had made an addition of Rs.28,20,350/- on account of unexplained foreign remittance. The Assessing Officer had rejected the assessee’s contentions that the impugned amount was share application money received from M/s. Home Land Networks, U.S.A. on the grounds that the certificate issued by the bank, where remittance were deposited, had mentioned that the amount was received as “Operation Expenses”. Subsequently, the asesssee filed appeal against the order of CIT(A) for A.Y.2001-02 and the CIT(A) vide his order dated 13.12.2004 had given relief to the assessee. Since the foreign remittance has been received on 27.03.2000, therefore, the same cannot be a subject matter for A.Y.2001-02. The CIT(A) also passing
(A.Y. 2000-01) Homeland Networks (India) Pvt. Ltd. Vs. ITO 8(2)4 the order by observing that “the AO is liberty to examine its genuineness in the A.Y.2000-01, for which he still has time to take necessary remedial measures.”
2.1 After the decision by CIT(A), the Assessing Officer reopened the assessment u/s.147 of the Income Tax, 1961 as he found that there was reasons to believe that sum of Rs.28,20,350/- chargeable to tax for assessment year 2000-01 has escaped assessment within the meaning of Section 147 of the IT Act, 1961. Subsequently, the Assessing Officer passed the order after serving a notice, thereby making additions of Rs.28,20,350/-.
Aggrieved by the order of the AO, assessee preferred an appeal before CIT(A) and the CIT(A) after considering both the parties partly allowed the appeal of the Assessee.
Aggrieved by the order of CIT(A), the assessee filed the present appeal before us on the grounds mentioned herein above.
(A.Y. 2000-01) Homeland Networks (India) Pvt. Ltd. Vs. ITO 8(2)4
During the pendency of the present appeal, the assessee moved an application for additional ground of appeal on the ground that the assessment order passed u/s.144 r.w.s. 147 of the Income Tax Act dated 27.02.2005 is bad in law as before any hearing could take place, the Assessing Officer passed the assessment order on 27.09.2005 whereas the date fixed for hearing of the matter was after the date of passing the assessment order.
The learned AR submitted that no opportunity at all was given to the assessee before passing the order of re-assessment u/s.144 r.w.s. 147 of the Income Tax Act and no reasons were recorded before issuing the notice u/s.148. Learned AR further submitted that inadvertently those legal grounds could not be taken in the memo of appeal because of over sighted next. Learned AR next submitted that additional ground raised by the assessee is purely legal in nature and facts relevant for arguing the additional ground, are on record.
(A.Y. 2000-01) Homeland Networks (India) Pvt. Ltd. Vs. ITO 8(2)4 7. On the other hand, learned DR contested the application moved by the assessee for admission of additional grounds.
We heard the counsel for the parties and perused material on record. We observed that the additional grounds of appeal now raised by the assessee are legal in nature and goes to the roots of the case and in case the assessee is not permitted to raise additional ground then inadvertently the rights of the assessee would be prejudice. We derive our strength from the judgment of Hon’ble Supreme Court in the case of NTPC Vs/ CIT, 229 ITR 383 (SC), wherein the Hon’ble Supreme Court has categorically held that legal points can always be taken on any stage and since the grounds now raised by assessee by way of additional grounds of appeal are purely legal in nature, therefore, we allow the application of the assessee for raising additional ground of appeal.
8.1 Since, the additional ground now raised before us are purely legal in nature, therefore, we think it fit to decide these grounds first.
The additional grounds are reproduced below:
(A.Y. 2000-01) Homeland Networks (India) Pvt. Ltd. Vs. ITO 8(2)4 ADDITIONAL GROUNDS OF APPEAL
BEST JUDGMENT ASSESSMENT U/S. 144 r.w.s. 147 OF THE ACT:
1.1 The Id. CIT (A) erred in confirming the action of the Assessing Officer in framing the best judgment assessment by invoking the provisions of section 144 r.w.s. 147 of the Act [the Act"]. 1.2 While doing so, the Id. CIT (A) failed to appreciate that: (i) The necessary conditions for invoking the provisions of section 144 of the Act were not fulfilled; (ii) No opportunity at all was provided to the Appellant at the reassessment stage as the assessment order was passed much prior to the date when the hearing was fixed by the Assessing Officer. (iii) in any case, that the Appellant was prevented by the reasons beyond its control to represent its case properly and fully before the Assessing Officer.
RE-OPENING INVALID: 1.1 The Assessing Officer erred in framing the assessment under section 144 read with section 147 of the Act only on the basis of the observation made by the CIT(A) while passing the order for the A.Y.2001-02.
1.2 The Assessing Officer failed to appreciate that –
( i ) the necessary pre-conditions were not fulfilled before initiating as well as before the framing the reassessment. (ii) the reasons for re-opening has not been recorded before issuing the notice under section 148 of the Act. 1.3 It is submitted that in the facts and the circumstances of the case, and in law, the reassessment be held is bad, illegal and void.”
Additional Ground No.1
Learned AR appearing on behalf of the assessee drawn our attention to the order passed by AO u/s.144 r.w.s. 147 of the Income
(A.Y. 2000-01) Homeland Networks (India) Pvt. Ltd. Vs. ITO 8(2)4 Tax Act, 1961. The operative portion of the order is reproduced below:
“During scrutiny proceedings, notice u/s.143(2) of the IT Act was issued to assessee on 1.9.2005. Another notices u/s.143(2)/142(1) dtd. 12.09.2005 fixing hearing on 20.10.2005 were served on 29.09.2005. In response to this nobody attended nor they filed any reply or letter of adjournment. Another notice u/s.142(1) dtd. 13.12.2005 calling upon the assessee to show cause on 19.12.2005. Another notices u/s.143(2)/142(1) dtd. 12.09.2005 were served on 29.09.2005. IN response to this nobody attended nor they filed any reply or letter of adjournment. Another notice u/s.142(1) dtd. 13.12.2005 calling upon the assessee to show cause on 19.12.2005 at 12.00 noon, why the assessment should not be completed to the best of my judgment. In response to this neither anybody attended nor they filed any reply in writing. Under such circumstances, I am compelled to complete the assessment to the best of my judgment.”
From a bare perusal of the assessment order in Column No.12 in the date of order is mentioned as 27.09.2005 whereas in the body of assessment order, the date fixed for hearing in notice issued u/s.143(2)/143(1) is mentioned as 20.10.2005 which goes to show that the assessment order was already passed on 27.09.2005 u/s. 144 r.w.s. 147 of Income Tax Act, 1961 whereas the hearing to the assessee was fixed on 20.10.2005 which on the face of it, is illegal and bad in law. Moreover, it has also been mentioned in the assessment order that another u/s. 142(1) dated 13.12.2005 calling
(A.Y. 2000-01) Homeland Networks (India) Pvt. Ltd. Vs. ITO 8(2)4 upon the assessee to show cause on 19.12.2005 at 12.00 noon has also been issued which also goes to show that all those notices were issued after passing of assessment order, therefore, in these circumstances in our considered view the assessment order passed by AO u/s.143(3) r.w.s. 147 has been passed without providing proper/sufficient opportunity of hearing to the assessee, therefore, the same is bad in law and not maintainable. Considering the facts of the present case as well as taking into account the principles of natural justice, equity and fair play, we set aside the order of the CIT(A) and assessment order passed u/s.143(3) r.w.s. 147 of the Income Tax Act and also order of CIT(A) upholding the said order of assessment and remit the matter back to the file of AO with a direction to pass afresh order of assessment after giving proper and sufficient opportunity of hearing to the assessee. The assessee would be at liberty to take all its contentions before the AO.
Since, we have already decided the preliminary issue therefore we set aside the order of the CIT(A) and remit the matter back to the file
(A.Y. 2000-01) Homeland Networks (India) Pvt. Ltd. Vs. ITO 8(2)4 of the Assessing Officer, therefore, in these facts and circumstances of the case, there does not require any adjudication for other grounds raised by the assessee.
In the result, the appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced in the open court on 21st September, 2016 Sd/- Sd/- (R.C. Sharma) (Sandeep Gosain) लेखा सद�य / Accountant Member �या�यक सद�य / Judicial Member मुंबई Mumbai; �दनांक Dated :21.09.2016 P.K.K., Sr.P.S. आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent 3. आयकर आयु�त(अपील) / The CIT(A) 4. आयकर आयु�त / CIT - concerned 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, मुंबई / DR, ITAT, Mumbai 6. गाड� फाईल / Guard File आदेशानुसार/ BY ORDER,