2021 (12) TMI 920 - AT - Income Tax

Reopening of assessment u/s 147 - assessee has made transactions in commodities exchange during the impugned assessment year and had not filed its return of income - assessee neither responded to the notice issued under section 148 nor responded to the notice issued under section 142(1) therefore, the A.O. estimated the profit @ 0.5% and added an amount to the total income of the assessee under section 69 - As submission of Assessee that no reasonable opportunity was given to the assessee to explain the source of margin money and notice was never served on the assessee from the side of the A.O. for which there was no compliance and the A.O. had passed the order under section 144- HELD THAT - In the totality of the facts and circumstances of the case and in the interest of justice, we deem it proper to restore the issue to the file of A.O. with a direction to give one more opportunity to the assessee to substantiate its case and decide the issue as per fact and Law. The assessee is also hereby directed to appear before the A.O. and substantiate its case without seeking any adjournment under any pretext, failing which, the A.O. is at liberty to pass appropriate order as per Law. The grounds raised by the assessee are accordingly allowed for statistical purposes.

Issues:
1. Validity of reassessment proceedings under section 147 of the Income Tax Act.
2. Addition made by the CIT(A) on grounds other than those stated under section 147/148.
3. Nexus between primary facts and belief for reopening.
4. Compliance with natural justice principles in assessment proceedings.

Issue 1: Validity of reassessment proceedings under section 147:
The case involved an HUF assessee who did not file its return of income despite engaging in commodity transactions worth a significant amount. The Assessing Officer (A.O.) initiated reassessment under section 147 due to non-filing of returns. The A.O. estimated profits and made additions to the total income. The CIT(A) upheld the A.O.'s actions, leading to an appeal before the Tribunal challenging the validity of the assessment due to lack of notice to the assessee. The Tribunal found that the assessee was not given a reasonable opportunity to explain the source of margin money and directed the issue to be restored to the A.O. for proper consideration, emphasizing compliance with natural justice principles.

Issue 2: Addition made by CIT(A) on grounds other than those stated under section 147/148:
The assessee contested the addition made by the CIT(A) towards margin money, arguing that no reasonable opportunity was provided to explain the source. The Tribunal noted discrepancies in the CIT(A)'s approach and directed the A.O. to give the assessee another opportunity to substantiate its case. The Tribunal emphasized the importance of adhering to procedural fairness and directed the assessee to appear before the A.O. without seeking adjournments.

Issue 3: Nexus between primary facts and belief for reopening:
The assessee raised concerns regarding the nexus between primary facts and the belief for reopening the assessment. The Tribunal acknowledged the lack of compliance by the assessee with notices issued under sections 148 and 142(1) of the Income Tax Act. The Tribunal emphasized the need for the A.O. to provide a reasonable opportunity to the assessee to present its case and make decisions based on facts and law, ensuring procedural fairness.

Issue 4: Compliance with natural justice principles in assessment proceedings:
The Tribunal highlighted the importance of compliance with natural justice principles in assessment proceedings. It directed the A.O. to give the assessee a fair opportunity to substantiate its case and make decisions based on facts and law. The Tribunal allowed the appeal for statistical purposes, emphasizing the significance of procedural fairness and adherence to legal principles in assessment proceedings.

In conclusion, the Tribunal's judgment focused on ensuring procedural fairness, providing reasonable opportunities to the assessee, and emphasizing compliance with legal requirements in assessment proceedings under the Income Tax Act.

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