2023 (4) TMI 999 - AT - Income Tax

Validity of the assessment framed u/s 147 - Denial of natural justice - assessee not given adequate opportunity to put forward its defense/explanation - Necessity to get approval as required under the law u/s 151 - HELD THAT - As assessee has not been provided with adequate opportunity to put forward its defense/explanation with supporting evidences to make out its case that the action of the Revenue authorities are not valid. When the Revenue authorities noticed that the notices could not be served upon the assessee, it has not carried out its primary responsibility to ascertain the company, against which notices were issued, and proceedings under section 148 was contemplated, whether was existing or not. Documents filed in the PB before us show that it was intimated to the ld.CIT(A) that the assessee-company was defunct and was struck off from the record of the ROC - contention of the assessee that while recording the reasons, the AO has not applied his mind and has not even obtained the approval as required under the law before issuing the same, cannot be simply brushed aside. Copy of the documents place show the ld. Commissioner has not put his signature on the reasons recorded by the AO. Therefore, various objections raised by the assessee before us, which have been noted by us in the foregoing paragraphs require adjudication afresh on merit at the end of the Revenue authorities. We set aside the impugned order of the ld.CIT(A) with direction to consider various issues and objections raised by the assessee, both on the facts and in law and pass a speaking order.We allow the quantum appeal of the assessee for statistical purpose.

Summary

Issues Involved:
1. Condonation of Delay
2. Validity of Exparte Assessment Order
3. Jurisdiction of Assessing Officer
4. Addition of Unexplained Credits
5. Penalty Proceedings

Condonation of Delay:
The assessee's appeals were delayed by 42 days. The delay was attributed to the director's incarceration, which prevented the signing of appeal papers. The Tribunal found this reason reasonable and condoned the delay, citing the precedence of substantial justice over technicality as established by the Hon'ble Apex Court in Collector, Land Acquisition vs. Mst. Katiji & Others, 167 ITR 471 (SC).

Validity of Exparte Assessment Order:
The assessee did not file a return for AY 2011-12, leading to a notice under section 148. Subsequent notices under sections 142(1) and 142(1) r.w.s. 129 were ignored, resulting in an exparte assessment under section 144. The Tribunal noted that the assessee was not provided adequate opportunity to present its case, and the company was defunct, struck off from the ROC records.

Jurisdiction of Assessing Officer:
The assessee challenged the AO's jurisdiction, arguing that the AO did not have the authority to pass the order. The Tribunal found that the AO had jurisdiction, as the necessary approvals were obtained, but noted that the reasons for reopening were not properly recorded, and the approval did not bear the PCIT's signature.

Addition of Unexplained Credits:
The AO added Rs.2,98,56,934 as unexplained credits based on bank statements. The Tribunal noted that the assessee did not deny the credits but failed to provide explanations or details of expenses. The Tribunal directed the CIT(A) to reconsider the issues, allowing the assessee to present supporting evidence.

Penalty Proceedings:
The penalty appeal was set aside, as the quantum appeal was remanded to the CIT(A). The penalty would be reconsidered based on the outcome of the reassessment.

Conclusion:
The Tribunal set aside the orders of the CIT(A) and directed a fresh adjudication, providing the assessee an opportunity to present its case. Both appeals were allowed for statistical purposes.