SHRI VENKATESHWARA PANMASALA INDUSTRIES PVT LTD,KOLHAPUR vs. ACIT, CENTRAL CIRCLE-1(1), KOLHAPUR, KOLHAPUR

During the course of hearing, adverting to additional evidences submitted on 16/07/2024 for scheduled hearing on 01/08/2024 the appellant raised an additional ground challenging jurisdiction of assessing officer who invoked jurisdiction & framed assessment. Adverting to very first ground it was contended that, since the assessment in this case framed without considering the submission & evidences placed before the Ld. AO, therefore the assessment proceedings deserves to be vitiated. Per contra, the Ld. DR submitted that, the Ld. AO before culminating the assessment proceedings meticulous perused all the submissions and evidences placed on record by the appellant, however by application of mind only relevant material facts ITAT-Pune Page 4 of 8 Shri Venkateshwara Panmasala Industries Pvt Ltd Vs ACIT AY: 2019-20 and findings are noted in the assessment to support his final conclusion. Pinpointing the missing facts, material text etc., the appellate cannot challenge the process & proceedings. The assessee cannot dictate as to what should be mentioned in assessment order to come to the conclusion, the claim of the appellant is devoid of any force, hence deserves to be rejected.

We have heard the rival parties submission on this limited issue and subject to rule 18 of ITAT Rules, 1963 perused the material placed on records and considered the limited issue as well as the facts in the light of settled position of law and case laws relied by rival parties and forewarned to the parties present. We have given thoughtful consideration to the documents and evidences placed by the appellant before the Ld. AO in the course of assessment proceedings and the find that, the while coming to conclusion about invocation of jurisdiction u/s 147 of the Act and in drawing conclusion about his satisfaction over threefold stipulation inscribed in section 68 of the Act, the Ld. AO failed to take the cognition of convincing material placed on records and (a) the written submission made by the assessee vide his reply dt. 21/03/2023 & 13/07/2023 whereby audited financial statements alongwith the computation of income, banking transaction statements and the copies of ledger account of WIFCPL were produced, (b) the reply furnished in response to notice dt. 31/07/2023 u/s 142|(1) of the Act which was in addition to aforestated documents also accompanied by Form 26AS issued to the appellate by the Revenue confirming the transaction relating to interest etc., ITAT-Pune Page 5 of 8 Shri Venkateshwara Panmasala Industries Pvt Ltd Vs ACIT AY: 2019-20 statement of both unsecured loans taken/obtained and unsecured loan given/advanced thereagainst, banking transaction representing repayment thereof, confirmation of parties, KYC documents and other ledger accounts (c) reply dt. 25/08/2023 made by Mr Rajendra Malu the Karta of his HUF and (d) submission made on 04/09/2023 whereby transaction undertaken by HUF were confirmed with their audited financial statements and evidences in relation to interest income vide form no 26AS issued by the Revenue. The cursory look of these documents and conjoint reading of assessment order with that of additional evidences clear suggests that, the proceedings hassled without taking due cognizance of former submission/evidences including additional evidences etc., before forming an opinion about the failure of appellant to explain the threefold stipulations of section 68 of the Act. Thus, the proceedings in our considered view is suffered for natural justice.

The assessing officer & first appellate authority are quasi-judicial authorities and respective proceedings they undertake are quasi-judicial proceedings. The section 136 of the Act however relishes that ‘Proceedings before Income-tax Authorities to be judicial proceedings’. As per the said provision, the proceedings before the Income-tax Authorities are deemed to be judicial proceedings for the purposes of section 196 of Indian Penal Code as laid in ‘Chickanna Silk House Vs State of Madras’ [1974, 95 ITR 422 (Mad.)]. Now the term ‘proceedings’, in stricter sense signifies a set of actions undertaken in relation to subject. Accordingly, the proceedings relate ITAT-Pune Page 6 of 8 Shri Venkateshwara Panmasala Industries Pvt Ltd Vs ACIT AY: 2019-20 to the methods in which they are conducted and concluded judicially in accordance with statute/law, thus proceedings are prescribed course of action and sum of all the steps taken by either party for the enforcement of their respective legal rights & obligations. The proceedings under the Act includes proceedings at original assessment, re-assessment stage, appellate stages and/or such other stages till the matter attains finality under provisions of the Act. In nutshell under the Act the proceedings thus represents either the steps taken by taxpayer assessee or the acts of Income-tax Authorities. Any action/step of Income Tax Authorities which creates obligation on the part of taxpayer assessee needs to be validated from its contents. The action/step of Revenue if taken without cognizance of taxpayers step/action i.e. reply, response or submission, would in effect overturn their action as unlawful.

In recent times, the Hon’ble Jurisdictional High Court in ‘Pankaj Vs Ne-AC’ [2022, 286 Taxman 228 (Bom)] in similar circumstances annulled the order passed by the Revenue ignoring the reply filed by the assessee holding that, the validity of the order would have to be judged from its contents, therefore any order passed without considering the reply filed by the assessee in response to show cause notice is bad in law and deserves to be set-aside. The matter in result remanded back to the file of assessing officer for fresh consideration. On a similar line the Hon’ble Madras High Court in ‘Chennai Silk VS Asstt Commissioner (ST-FAC) [2023, 157 Taxmann.com 65 (Mad)] occasioned to considered the validity of assessment ITAT-Pune Page 7 of 8 Shri Venkateshwara Panmasala Industries Pvt Ltd Vs ACIT AY: 2019-20 where the Revenue failed to considered the reply or submission of the assessee. Their Hon’ble Lordship therein held that, failure on the part of the Assessing Officer to address the reply of the assessee by a speaking order, would vitiate the impugned proceedings. A similar ratio can also be squinted in ‘Bhagyam Exports Vs AC-ST’ [2024, 160 Taxmaan.com 521 (Mad)], ‘PBL Transport Corp. Pvt. Ltd. Vs AC-ST’ [2024, TaxPub(GST) 210 (AP)].

In instant case, the assessment proceedings were culminated without duly & fully considering/addressing all the submissions, response & evidences, thus suffered from judicial process; hence in view of the former judicial precedents (supra) set-aside for remand with a direction to reframe the assessment de-novo after according reasonable opportunity to the appellant assessee to explain through three effective virtual hearings. The ground no. 1 thus stands partly allowed and all other grounds & arguments thereagainst render academic.

In result, the appeal stands partly allowed for statistical purposes. In terms of rule 34 of ITAT Rules, the order pronounced in the open court on date of conclusive hearing.