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Income Tax Appellate Tribunal, RAJKOT BENCH, RAJKOT
Before: Shri Ramit Kochar & Ms. Suchitra R. Kamble
आदेश/ORDER PER : RAMIT KOCHAR, ACCOUNTANT MEMBER:-
This appeal bearing Assessment Year: 2013-14 filed by the assessee arises from the appellate order dated 08th March, 2023 (DIN & Order No. ITBA/NFAC/S/250/2022-23/
Yesha Dhirjla Thakarar v. National Faceless Assessment Centre, Delhi Assessment Year : 2013-14 1050510273(1) ) passed by ld. Commissioner of Income-tax (Appeals) NFAC, New Delhi (hereinafter called “ the CIT(A)”) in appeal No. NFAC/2012-13/10095697 u/s. 250 of the Income-tax Act, 1961(hereinafter called “the Act”) dismissing the appeal filed by the assessee, the appellate proceedings have arisen before ld. CIT(A) from penalty order dated 29.01.2022 (DIN: ITBA/PNL/F/271(1)(b)/2021-22/1039193062(1)) passed by ld. Assessing Officer,NFAC, Delhi(hereinafter called “the AO”) u/s 271(1)(b) of the 1961 Act levying penalty of Rs. 30,000/- against the assesse for non compliance of three notices dated 27.07.2021, 06.08.2021 and 16.08.2021 issued during reassessment proceedings , all three aforesaid notices u/s 142(1) of the 1961 Act. The proceedings were conducted before Division Bench through E-Court through virtual hearing mode.
The grounds of appeal raised by assessee in memo of appeal filed with Income-Tax Appellate Tribunal, Rajkot, in 2013-14, reads as under:-
“1) The CIT(A) erred in confirming the levy of penalty u/s 271B(sic. 271(1)(b)) of the Act. The levy of Penalty is not justified.”
The brief facts of the case are that the reassessment proceedings u/s 147 read with Section 148 of the 1961 Act were initiated against the assessee for the impugned assessment year , which culminated into an reassessment order dated 17.09.2021 passed by the AO u/s 147 read with Section 144 read with Section 144B of the 1961 Act(DIN ITBA/AST/S/147/2021-22/ 1035663980(1), wherein addition of Rs. 1,90,50,000/- was made against the assessee by the AO. The reasons for reopening of the assessment were that 2
Yesha Dhirjla Thakarar v. National Faceless Assessment Centre, Delhi Assessment Year : 2013-14 the assessee has purchased immovable property of Rs. 1,91,00,000/- on 09.07.2012, which as per Revenue had escaped assessment. The AO observed during reassessment proceedings that the assessee has changed her name after marriage , while the PAN is same, and the property was purchased in her new name after marriage. The AO further observed that the assessee has not filed any return of income originally as well in pursuance to notice issued u/s 148. The three notices u/s 142(1) , dated 27.07.2021, 06.08.2021 and 16.08.2021 also remained not complied with by the assessee. It was observed by the AO during reassessment proceedings from the bank statement that payment of Rs. 1,91,00,000/- was made to the assessee by Hotel K K India Private Limited, which was used to purchase the immovable property for Rs. 1,90,50,000/- in the name of the assessee, but no evidence is filed w.r.t. relationship of the assessee with said Hotel K K India Private Limited. The AO ,thus, passed an ex-parte reassessment order dated 17.09.2021 against the assessee u/s 147 read with Section 144 read with Section 144B of the 1961 Act, making an addition of Rs. 1,90,50,000/- against the assessee u/s 56(2)(vii) of the 1961 Act as an unexplained investment. The AO also initiated penalty proceedings against the assessee u/s 271(1)(b) of the 1961 Act, which culminated into an ex- parte penalty order dated 29.01.2022 passed by the AO levying penalty of Rs. 30,000/- against the assessee u/s 271(1)(b) for non complying with the three notices all issued u/s 142(1), dated 27.07.2021, 06.08.2021 and 16.08.2021 by the assessee. During aforesaid penalty proceedings conducted, the AO also issued notices requiring assessee to offer explanation, but the same also remained un-complied with the assessee. Even, SCN’s issued by the AO remained non complied with by the assessee.
Yesha Dhirjla Thakarar v. National Faceless Assessment Centre, Delhi Assessment Year : 2013-14 The assessee filed appeal before ld. CIT(A) against quantum addition made by the AO vide reassessment order , which appeal is stated by the assessee to be still pending for disposal before ld. CIT(A), and the ld. DR has not disputed the same. The assessee also filed first appeal with ld. CIT(A) against penalty order dated 29.01.2022 passed by the AO u/s 271(1)(b) levying penalty of Rs. 30,000/- against the assessee, and the same was decided by ld. CIT(A) dismissing the appeal filed by the assessee, vide appellate order dated 08.03.2023 passed by ld. CIT(A). During appellate proceedings before ld. CIT(A), the assessee prayed before ld. CIT(A) to keep the appellate proceedings pending against penalty levied by the AO, also on the grounds that the appeal against quantum addition is pending for disposal before ld. CIT(A).
The assessee has come in second appeal with ITAT, Rajkot Bench, against the appellate order passed by ld. CIT(A) dismissing the appeal of the assessee w.r.t. penalty of Rs. 30,000/- levied by the AO u/s 271(1)(b) of the 1961 Act. We have heard both the parties through virtual hearing mode through e-court. The ld. Counsel for the assessee Shri R D Lalchandani, Advocate submitted at the outset that ld. CIT(A) ought not have to dismissed the appeal of the assessee against penalty levied by the AO u/s 271(1)(b) in haste , as the appeal against quantum assessment is still pending before ld. CIT(A). It is submitted by ld. Counsel for the assessee that legal issue is raised by the assessee in quantum appeal wherein re-opening of the assessment u/s 147 read with Section 148 was challenged on legal ground. It was submitted that if legal ground is upheld by ld. CIT(A) and reassessment proceedings are held to be bad in law, then the whole reassessment order will have to be quashed and these penalty proceedings u/s 271(1)(b) will
Yesha Dhirjla Thakarar v. National Faceless Assessment Centre, Delhi Assessment Year : 2013-14 become non-est. It was submitted that since ex-parte order was passed by the AO during reassessment proceedings in quantum proceedings, there are factual mistakes also in the said order, as it is observed by the AO that no return of income was originally filed by the assessee, while the assessee had filed return of income originally u/s 139(4) on 23.01.2014. These are factual mistakes in the reassessment proceedings, and now it is for ld. CIT(A) to adjudicate first appeal against quantum additions after investigating/ verification of the facts. It was also submitted that the assessee did not received notices , as the then counsel of the assessee has given his address and email , and he did not inform the assessee about these notices and the orders were passed ex-parte . It is claimed that this led assessee to change her counsel as she was not getting proper support from erstwhile counsel . It was submitted that the matter can go back to the file of ld. CIT(A) who can adjudicate both the quantum appeal as well appeal against the penalty order together, so that justice can be delivered to the assessee. The ld. DR on the other hand submitted that sufficient opportunity were granted to the assessee, but the assessee did not furnish any reply to the notices issued during reassessment proceedings as well during penalty proceedings, which led to an ex-parte reassessment order in quantum, as well ex-parte penalty order passed by the AO . After hearing both the parties and perusing the material on record, we are of the considered view, that the appellate order passed by ld. CIT(A) requires to be set aside and the matter need to be restored back to the ld. CIT(A) for denovo adjudication on merits in accordance with law. We have observed that the appeal filed by the assessee against quantum reassessment is still pending before ld. CIT(A) , and the assessee has raised a legal ground ( ground number 1) in Form No. 35 filed
Yesha Dhirjla Thakarar v. National Faceless Assessment Centre, Delhi Assessment Year : 2013-14 before ld. CIT(A) challenging the reopening of the assessment by invoking provisions of Section 147/148 by the Revenue , on legal grounds which is pending for adjudication before ld. CIT(A), and if this legal ground is upheld by ld. CIT(A), then it will have significant bearing on the outcome of the appeal filed by the assessee before ld. CIT(A) against the penalty order passed by the AO u/s 271(1)(b). The AO has observed in the reassessment proceedings that no return of income was originally filed by the assessee, which we have observed is disputed by the assessee as the assessee is claiming that she filed return of income originally on 23.01.2014 , in statement of facts vide Form No. 35 filed with ld. CIT(A) . Regarding notices issued by the AO during reassessment proceedings as well penalty proceedings , the assessee has claimed that the erstwhile counsel had given his address/email in the ITR filed with department, and the notices issued were never handed over by the counsel to the assessee and the assessee was not aware of the proceedings conducted by the AO against the assessee, which ultimately led assessee to change her counsel as she was not getting proper legal assistance from her erstwhile counsel. Regarding amount of Rs. 1,91,00,000 transferred from Hotel K K India Limited to the assessee , which was used by the assessee to purchase immovable property for Rs. 1,90,50,000/- , it is claimed by the assessee that the said company belongs to husband of the assessee. In any case, these averments made by the assessee requires investigation/verification of facts , and the quantum appeal is stated to be pending for disposal with ld. CIT(A).We donot want to make any observations/comments about the averments made by the assessee, and it is for ld. CIT(A) to investigate/verify the facts and unravel the truth. Needless to say that powers of ld. CIT(A) is co-terminus with powers of the AO.
Yesha Dhirjla Thakarar v. National Faceless Assessment Centre, Delhi Assessment Year : 2013-14 Since , the quantum appeal is pending with ld. CIT(A) and the assessee has also raised a legal challenge to reopening of the concluded assessment by AO by invoking provisions of Section 147/148, it will be fair and appropriate in the interest of justice, that this matter be restored to the file of ld. CIT(A) for fresh adjudication on merits in accordance with law. The ld. CIT(A) shall denovo adjudicate appeal of the assessee , uninfluenced by any of the observations made by us in this order. The ld. CIT(A) shall adhere to the principles of natural justice while denovo adjudication of the appeal of the assessee. Thus, in nut-shell, the appeal of the assessee is allowed for statistical purposes. We order accordingly.
In the result, appeal of the assessee in for assessment year 2013-14 is allowed for statistical purposes.
Order pronounced in the open court on 18-08-2023 at Ahmedabad, Gujarat.