2024 (10) TMI 774 - AT - Income Tax

CIT (A) not deciding and considering the legal grounds of appeal with written submission - whether CIT (A) erred in ignoring the legal submissions made and keeping SILENT on it renders all such orders as invalid which is well settled law? HELD THAT - In view of the provisions of section 139(1), Fifth Proviso and section 142(1) of the Act, the assessee was liable to file the return of income and the assessee s arguments on non-filing of return is legally non-tenable. Rather, in the guise of (Assessee s claim that her income is below the limit) low taxable income, the assessee is violating the mandatory provisions of law In view of amendment in section w.e.f. 01.06.2001, it is certain that the First Appellate Authority is not empowered to set aside the Appeal before him and the assessee s reliance on Arun Kumar Bose 2023 (9) TMI 489 - CALCUTTA HIGH COURT has a legal strength. In view of the above facts it is observed that despite of non-cooperation by the assessee and poor representation of the matter before the AO, as discussed (supra), CIT (A), exceeded his powers by setting aside the matter back to the AO, technically his order is faulty and considering the ratio laid down in the case of Arun Kumar Bose SUPRA we declare the order as beyond the powers provided by the statute. In view of the above, we restore the matter back to the file of CIT (A) with a direction to call for a remand report from the AO and then adjudicate the matter of the assessee.

Issues Involved:

1. Non-consideration of legal grounds and submissions by CIT(A).
2. Validity of assessment order due to alleged procedural violations.
3. Partial allowance of appeal by CIT(A) and its implications.
4. Jurisdictional validity of the assessment order due to lack of mandatory notice.
5. Alleged exceeding of powers by CIT(A) under Section 251.
6. Lack of personal hearing by CIT(A) affecting the appellant's interests.

Detailed Analysis:

1. Non-consideration of Legal Grounds and Submissions by CIT(A):

The appellant contended that the CIT(A) failed to consider the legal grounds of appeal and written submissions dated 20th September 2021. It was argued that the assessment order was void due to non-compliance with CBDT instructions and that submissions made on 27th December 2019 were ignored. The tribunal noted that the CIT(A) did not address these submissions adequately, rendering the order questionable.

2. Validity of Assessment Order Due to Alleged Procedural Violations:

The appellant argued that the assessment order was void as it violated CBDT instructions. The tribunal examined whether the assessment was conducted in compliance with the relevant instructions and found that the CIT(A) had considered the appellant's reliance on CBDT Instruction No. 03/2017, granting partial relief by deleting the addition of Rs. 28.63 Lacs. However, the tribunal found that the appellant's claims regarding procedural violations were not substantiated with sufficient evidence.

3. Partial Allowance of Appeal by CIT(A) and Its Implications:

The CIT(A) had partly allowed the appeal by deleting the addition of Rs. 28.63 Lacs. The appellant argued that since this was the sole reason for scrutiny, the entire appeal should have been allowed. The tribunal found that the CIT(A) had correctly addressed the issue of cash deposits during the demonetization period, but the appellant's argument for complete allowance of the appeal was not supported by the facts.

4. Jurisdictional Validity of the Assessment Order Due to Lack of Mandatory Notice:

The appellant claimed that the assessment order was void ab initio due to the absence of a mandatory notice under Sections 147/148. The tribunal noted that the assessment was completed under Section 144 as a "Best Judgment Assessment" due to non-compliance by the appellant. The tribunal concluded that the appellant's argument regarding jurisdictional validity was not tenable given the circumstances of non-compliance.

5. Alleged Exceeding of Powers by CIT(A) Under Section 251:

The appellant contended that the CIT(A) exceeded his powers by directing the Assessing Officer (AO) to compute income in a specific manner, which was beyond his mandate under Section 251. The tribunal agreed with the appellant, citing the amendment to Section 251 effective from 01.06.2001, which restricts the CIT(A) from setting aside an appeal. The tribunal found that the CIT(A) had indeed exceeded his powers and declared the order as beyond statutory authority, directing the matter back to the CIT(A) for a remand report from the AO.

6. Lack of Personal Hearing by CIT(A) Affecting the Appellant's Interests:

The appellant argued that the CIT(A) failed to provide a personal hearing, prejudicing the appellant's interests. The tribunal acknowledged the importance of personal hearings in ensuring fair adjudication but found that the appellant did not demonstrate how the lack of a hearing specifically prejudiced the outcome. Therefore, this ground was not upheld.

Conclusion:

The tribunal partly allowed the appeal for statistical purposes, specifically on the ground of CIT(A) exceeding his powers. All other grounds raised by the appellant were found to be baseless and were rejected. The tribunal directed the CIT(A) to call for a remand report from the AO and adjudicate the matter afresh. The order was pronounced in the open court on 7th October 2024.

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