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2022 (10) TMI 1118 - MADRAS HIGH COURTValidity of assessment - unexplained credit under Section 68 - stay application filed by the petitioner pending statutory appeals filed by it challenging orders of assessment passed in terms of the provisions of the Income Tax Act - claim of the petitioner had been disbelieved by the Assessing Officer who had proceeded on the basis that the alleged loan represented the funds of the petitioner, being illegal gratification relatable to, and received in connection with the 2G scam - HELD THAT:- All additions have merely been re-confirmed in an automated fashion, simply copying the reasons adduced in the original order of assessment dated 31.03.2014 that has expressly been set aside by the Income Tax Appellate Tribunal as having been framed in blatant disregard to the principles of natural justice, and pasting the same onto the impugned assessment order. Upon a comparison of assessment orders dated 31.03.2014 and 20.12.2019, I find substantial and near total identity in the reasoning adduced for the additions. No doubt there are two instances where the officer reduces the quantum of the addition, one on account of interest. However that would not, in any way, justify or excuse the mere reiteration of an assessment that has been set aside. The officer does have the liberty to adopt the same view as earlier taken, however, following the proper procedure in regard to the framing of a denovo assessment. In the present case, the facts, as set out above leave in no doubt that there was no intention of the officer to afford a fair or a denovo hearing, which, in my view, borders on contempt. The framing of an assessment has to be in line with the procedures that have been set out in the Manual of office procedure - Volume-II issued by the Directorate of Income Tax. We refer to the Manual only to drive home the point that the proper procedure for framing of assessment is not just one evolved by the Courts, but one codified by the department by way of the Guidelines framed for the Officers. The principles of natural justice are reiterated therein on all fronts. That apart at paragraph 3.2.7 the manual requires officers to furnish copies of all documents that are referred to in the assessment order and relied upon by the Officer to the assessee. This has not been done in this matter despite a specific direction by the Tribunal in this regard. Courts have consistently reiterated the position that an order as repugnant to the provisions of natural justice and proper procedure, as the present one, is liable to be set aside and thus have no hesitation in doing so. The only question that survives is whether, as the Standing Counsel would urge, an opportunity be given once again to the Department to go through the process of assessment and reframe the assessment. I think not. An assessment cannot be set aside merely for the asking and simply as a measure of affording multiple opportunism/innings to the respondents. There are simply no mitigating circumstances in the present case that commend themselves to me, that would persuade me to remand the matter yet again. Instead, the blatant disregard to all cannons of law, fairness as well as to the order of the Tribunal, convince me to conclude that this is not a matter where the respondent must be afforded one more innings. The impugned assessment stands annulled. The issue on merits in AYs 2009-10 and 2010-11 pending in first appeal relates to the claim of the petitioner in regard to loans that it had allegedly obtained in the respective FYs, from Cineyug. According to the respondents, the claim is bogus and the funds represent illegal gratification. For the subsequent AY, the petitioner claims that the loan has been repaid from out of advertisement revenues received from four companies. Though the assessment for AY 2011-12 stands annulled by virtue of the present order, the Commissioner of Income Tax Appeals, while disposing the appeals for the previous two (2) years that is 2009-10 & 2010-11, can certainly examine, analyse and take into account subsequent events including the claim of the petitioner relating to repayment of the loans. The transaction must be looked at in entirety including events that have transpired in the subsequent years. That is to say that the proper facts in regard to whether the advertisement advances had indeed been received in AY 2011-12 and utilized for repayment of the loans must be looked into by the Assessing Officer in order to determine the veracity of the additions under Section 68 for AY 2009-10 & 2010-11 as well. Annulment of the order of assessment for AY 2011-12 has been effected only for the reasons as above, and does not, by any stretch of the imagination, lead to the acceptance of the petitioner’s claims and arguments on merits and I categorically clarify so. Direction to the assessee to pay 10% of the disputed amount requires no interference and hence confirm the same.
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