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2022 (10) TMI 1118 - HC - Income TaxValidity 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.
Issues Involved:
1. Challenge to the order passed by the Assistant Commissioner of Income Tax (Appeals) regarding stay of demand for AY 2009-10 and 2010-11. 2. Challenge to the assessment order for AY 2011-12 regarding the genuineness of advertisement advances and loans. Issue-wise Detailed Analysis: 1. Challenge to the Order of Stay of Demand for AY 2009-10 and 2010-11: The petitioner challenged the order passed by the Assistant Commissioner of Income Tax (Appeals) under the Income Tax Act, 1961, which disposed of a stay application pending statutory appeals against assessment orders for AY 2009-10 and 2010-11. The officer had stayed 90% of the demand and directed the petitioner to remit 10% of the demand. The court found no reason to interfere with the direction to pay 10% of the disputed amount and confirmed the same. The court also noted that any refunds due to the petitioner as a result of the annulment of the assessment for AY 2011-12 should be considered in determining the balance payable for AY 2009-10 and 2010-11. 2. Challenge to the Assessment Order for AY 2011-12: The petitioner challenged the assessment order for AY 2011-12, which added Rs. 150 crores as unexplained income from advertisement advances received from four companies and Rs. 83 crores from a subsidiary company. The Income Tax Appellate Tribunal had set aside the original assessment order for lack of adherence to natural justice and directed a denovo assessment. The court found that the Assessing Officer failed to comply with the Tribunal's directions to provide the petitioner with the documents relied upon for the assessment. The court noted that the assessment was completed without giving the petitioner an opportunity to rebut the evidence, and the assessment was based on presumptions and suppositions. The court emphasized the importance of judicial discipline and adherence to procedural fairness in assessments. The court observed that the Assessing Officer merely reiterated the reasons from the original assessment order without proper application of mind, despite the Tribunal's directions for a denovo assessment. The court concluded that there was no intention to afford a fair hearing, which bordered on contempt. Consequently, the court annulled the impugned assessment order for AY 2011-12. The court clarified that the annulment of the assessment for AY 2011-12 does not imply acceptance of the petitioner's claims on merits. The Commissioner of Income Tax Appeals can consider subsequent events, including the petitioner's claim of repayment of loans from advertisement revenues, while disposing of the appeals for AY 2009-10 and 2010-11. Conclusion: - W.P.No.9801 of 2019: Dismissed, confirming the direction to pay 10% of the disputed amount. - W.P.No.1451 of 2020: Allowed, annulling the assessment order for AY 2011-12. - Connected writ miscellaneous petitions: Closed with no costs.
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