2024 (11) TMI 627 - AT - Income Tax

Reopening of assessment u/s 147 - unexplained investment in purchase of property and assessee has also not filed her return of income - Eligibility of reasons to believe - HELD THAT - The procedures and way of approval and satisfaction is not proper. Here, the AO initiated proceedings under section 147 read with section 148 on basis of borrowed information received from the Sub Registrar for valuation of the immovable property, without verifying the correctness of the information and CIT gave approval without applying his mind in slipshod manner. As approval/sanction given by CIT was without recording his own independent satisfaction as noted above, therefore, the reopening was not sustainable as per above judicial pronouncements and irregularities noted. Thus, in that eventuality, issuance of notice under section 148 of the IT Act and all the consequent proceedings and assessment order passed was not in accordance with law. Thus, quash the proceedings under section 147 of the Act. Procedural irregularities by the CIT(A) regarding the Vivad Se Vishwas Scheme - Order of the ld. CIT (A) is also dismissed as he has passed a wrong order in quantum appeal because the assessee has not applied for any immunity under Vivad Se Vishwas Scheme/Act, 2020 in quantum appeal - HELD THAT - From the order of the ld. CIT (A), it is clear that the order relates to penalty under section 271(1)(b) and 271F. Therefore, the order passed by ld. CIT (A) is quashed. AO while making the addition has not invoked or applied any provisions of law. AO has not stated under what provision of law he has made the addition and under what head whether, under business or trading income, agriculture income, capital gain or under section 48, 56 or under section 68 or 69. Thus the addition so made without any provision of Act is also against the law and liable to be deleted on this ground alone. Without invoking the provision of Act/law, the AO cannot make the addition. For each and every offence, specific provisions are given in the law/Act to hold any person as victim defaulter, therefore, without applying any provision for that a person cannot be taxed and penalized. As the AO himself has not stated under what provision the assessee is liable to be taxed or penalized or under that provision his offence falls, therefore, addition cannot be made against the assessee. Hon ble Supreme Court in the case of Oryx Fisheries Pvt. Ltd. Vs. UOI 2010 (10) TMI 660 - SUPREME COURT as observed that the show cause notice should give the noticee a reasonable opportunity of making objections against proposed charges indicated in the notice and the person proceeded against must be told the charges against him so that he can make his defense and prove his innocence. In the entire course of the proceeding, at no stage the Petitioner is made aware of the provisions of law which have been contravened and/or under which the additions are sought to be made which is in gross violation of the principles of natural justice and the procedure adopted by the Department is not fair or proper. In the case of New Delhi Television Ltd. 2020 (4) TMI 133 - SUPREME COURT it is held by the Hon'ble Apex Court that the Assessee must be put to notice of all the provisions on which the Department relies. As the recorded reason/impugned assessment order is silent under which provision of the Act the addition is sought to be made. It is well settled that the reasons cannot be supplemented by assessment order or affidavit. Unless the assessee is put to the notice as to the exact contravention or provisions of law under which assessment or additions are sought to be made, the assessee cannot defend his case. We, set aside the findings of the revenue authorities and the addition made and sustained by the lower authorities deserves to be deleted. Therefore, allow the present appeal.

Summary

Issues Involved:

1. Validity of the notice under Section 148 and subsequent proceedings under Section 147/148 of the Income Tax Act, 1961.
2. Legality of the ex-parte assessment order under Section 144 read with Section 147.
3. Allegations of procedural irregularities by the CIT(A) regarding the Vivad Se Vishwas Scheme.
4. Addition of Rs. 28,02,415/- as income from undisclosed sources.
5. Charging of interest under Section 234A, B, C.
6. Condonation of delay in filing the appeal.

Issue-wise Analysis:

1. Validity of the Notice under Section 148 and Subsequent Proceedings:

The assessee challenged the validity of the notice issued under Section 148, claiming it was not served properly, rendering the subsequent proceedings under Section 147/148 invalid. The Tribunal noted that the assessment order did not provide evidence of the notice being served, only stating it was issued. The Tribunal referenced various legal precedents emphasizing that proper service of notice is a jurisdictional requirement, without which the proceedings are void. The Tribunal found merit in the assessee's contention, noting the absence of evidence of service and the procedural lapses, thus quashing the proceedings under Section 147.

2. Legality of the Ex-parte Assessment Order:

The assessee argued that the ex-parte order under Section 144 was passed without providing an adequate opportunity to be heard, violating the principles of natural justice. The Tribunal observed that the assessment was conducted without serving the requisite notices, which were not evidenced in the records. The Tribunal held that the absence of proper service of notice and the lack of opportunity to present the case rendered the ex-parte assessment invalid.

3. Procedural Irregularities by the CIT(A):

The assessee contended that the CIT(A) erroneously dismissed the appeal on the grounds of the assessee opting for the Vivad Se Vishwas Scheme, which was not applicable to the quantum appeal. The Tribunal found that the CIT(A) had indeed passed the order without considering the correct facts, as the scheme was applied only to penalty appeals. Furthermore, the order was passed before the due date for the assessee to submit a response, violating the principles of natural justice. The Tribunal quashed the CIT(A)'s order.

4. Addition of Rs. 28,02,415/- as Income from Undisclosed Sources:

The assessee challenged the addition made by the AO, arguing that no provision of law was invoked for the addition. The Tribunal noted that the AO failed to specify under which section the addition was made, which is essential for a valid assessment. The Tribunal cited legal precedents emphasizing the necessity of invoking specific provisions for additions. The Tribunal found the addition unsustainable due to the lack of legal basis and set it aside.

5. Charging of Interest under Section 234A, B, C:

The assessee argued that the interest charged under these sections was contrary to law. However, the Tribunal's decision primarily focused on the procedural lapses and did not specifically address the interest issue, given the quashing of the assessment proceedings.

6. Condonation of Delay in Filing the Appeal:

The Tribunal considered the application for condonation of delay, supported by an affidavit explaining the reasons for the delay. The Tribunal, taking a lenient view and considering the principles laid down in relevant case law, condoned the delay, allowing the appeal to be heard on merits.

Conclusion:

The Tribunal allowed the appeal, quashing the assessment proceedings under Section 147 and the order of the CIT(A) due to procedural irregularities, lack of proper service of notice, and failure to specify legal provisions for the addition. The decision emphasized adherence to procedural requirements and the principles of natural justice in tax proceedings.