2024 (5) TMI 1099 - AT - Income Tax

Validity of reassessment Order - difference in grounds pointed out by CIT(A) and grounds raised by assessee - copy-paste order passed by CIT(A) - Non independent application of mind - as per AO CIT (A) has captioned one order but has stated something in order which is absolutely irrelevant to the matter HELD THAT - In this case CIT (A) has decided altogether different grounds of appeal which were not there in the appeal memo in Form no 35 before him, but has taken grounds of appeal which are not at all issues in appeal and allowed the appeal of the assessee a) Reference of assessment order in caption of the order of ld CIT (A) is correct but the reference of the assessment order in the body of the appellate order is different. b) Facts stated in assessment order are not at all facts mentioned by the ld CIT (A). Both are strangely different. c) Statement of facts reproduced by the ld CIT (A) in appellate order is not the statement of facts submitted before us by the ld. AO. d) Grounds of appeal of the assessee before ld CIT (A) are different then grounds of appeal reproduced by the ld CIT (A)in body of appellate order is different Reading of each of the grounds of appeal raised by the ld AO, we are of the view that those are emphatic, clear and forthright. All the grounds of appeal are appropriate and are submitting in guarded words to set aside the appellate order passed by National Faceless Appellate Authority in most casual manner. Thus, we are constrained to state that this is the perfect case of 'cut paste' that too without application of mind. Without mincing many words, we find that order of the ld CIT (A) is passed without application of mind, devoid of any merit, unsustainable and perverse. Thus, for the reasons stated above we allow all the grounds of appeal, direct the ld CIT (A) to look in to the facts and pass the order on the merits of the case, after giving proper opportunity of hearing to the assessee/appellant. Appeal of AO allowed.

Issues Involved:
1. Jurisdiction of the order passed under Section 143(3) read with Section 147 of the Income Tax Act, 1961.
2. Grounds of appeal raised by the assessee in Form No. 35.
3. Errors in the appellate order by the CIT (A).
4. Assessment of unexplained cash credits under Section 68.
5. Application of principles of natural justice and procedural fairness.
6. Consistency in the application of tax laws and principles.
7. Penalty proceedings under Sections 271(1)(c) and 271B.
8. Interest levied under Sections 234B and 234C.

Detailed Analysis:

1. Jurisdiction of the Order Passed under Section 143(3) read with Section 147:
The appellate order under scrutiny pertains to the assessment year 2014-15, where the original assessment was completed under Section 143(3) on 28th December 2015. Subsequently, based on information received from the investigation wing about high-value credit transactions, a notice under Section 148 was issued, leading to a reassessment. The CIT (A) allowed the appeal against this reassessment, leading to the current appeal by the Assessing Officer (AO).

2. Grounds of Appeal Raised by the Assessee in Form No. 35:
The AO contended that the CIT (A) disposed of grounds of appeal that were not raised in Form No. 35. The grounds in Form No. 35 included issues such as the legality of the order under Section 147, procedural fairness, and the treatment of credits in the bank account under Section 68. However, the CIT (A) addressed different grounds, leading to the AO's grievance.

3. Errors in the Appellate Order by the CIT (A):
The appellate order by the CIT (A) was found to be inconsistent and erroneous. The CIT (A) mentioned an incorrect assessment order date and addressed grounds of appeal that were not raised by the assessee. The order was deemed to lack factual accuracy and coherence, leading to the conclusion that it was passed without proper application of mind.

4. Assessment of Unexplained Cash Credits under Section 68:
The AO had made an addition of Rs. 2,46,92,401/- under Section 68, treating the credits in the bank account as unexplained cash credits. The assessee's explanation that the credits were unsecured loans used for business transactions was rejected by the AO due to lack of supporting evidence. The CIT (A) did not address this issue adequately in the appellate order.

5. Application of Principles of Natural Justice and Procedural Fairness:
The assessee argued that the reassessment was done without providing adequate opportunity to present their case, violating the principles of natural justice. The AO had relied on information received from the investigation wing without conducting an independent inquiry or providing the assessee with an opportunity to rebut the information.

6. Consistency in the Application of Tax Laws and Principles:
The assessee contended that the AO did not follow the principle of consistency, as interest income had been assessed under the head "Income from Business" in previous years. The AO's application of different accounting methods for income and expenditure was also challenged.

7. Penalty Proceedings under Sections 271(1)(c) and 271B:
The AO had initiated penalty proceedings under Sections 271(1)(c) and 271B for concealment of income and failure to get accounts audited, respectively. The assessee contested these penalties, arguing that the conditions for their application were not met.

8. Interest Levied under Sections 234B and 234C:
The AO had levied interest under Sections 234B and 234C for default in payment of advance tax. The assessee sought deletion of this interest, arguing that the additions made to their income were not justified.

Conclusion:
The Tribunal found that the CIT (A) had passed the order without proper application of mind and had addressed grounds not raised in the appeal. The order was deemed unsustainable and perverse. Consequently, the Tribunal allowed the appeal by the AO and directed the CIT (A) to re-examine the case on its merits, providing the assessee with a proper opportunity to be heard. The appeal was allowed, and the order was pronounced in the open court on 21.05.2024.

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