2022 (7) TMI 1291 - AT - Income Tax

Validity of assessment u/s 147 - Non-issuance of the notice u/s 143(2) - Whether curable defect u/s 292BB or not? - HELD THAT - This additional ground is first time taken by the assessee before the ITAT. Considering the gravity of the fact, this issue should be reconsidered by the Ld. CIT(A) for adjudication. The respectful observation of apex court in the case of Commissioner of Income Tax v. Laxman Das Khandelwal 2019 (8) TMI 660 - SUPREME COURT the non-issuance of the notice u/s 143(2) of the Act is not curable u/s 292BB of the Act. We directed for further adjudication of the issue before the Ld. CIT(A). Accordingly, we accept the additional ground of the assessee. The Additional Ground numbers 10 11 are setting aside before the Ld. CIT(A) for further adjudication related to issuance of notice u/s 143(2) of the Act. The assessee, in turn, is directed to substantiate its case. Assessee made payments in cash to use the unaccounted money for business transactions - As from the record of the assessee, M/s Shivam Communication is dubious in nature. As per the Ld. counsel, the assessee had not entered anything of all the transaction with the party during the financial year. In fact, any of the Revenue Authorities had not made any cross examination in between the assessee and the party. The documents relied on the Ld. AO was not properly verified through the cross examination. The reasonable opportunity of the assessee should not be denied. We decide that the matter should be returned back to the CIT(A) for further adjudication. Accordingly, we are setting aside the ground of appeal before the Ld. CIT(A) for further adjudication. On the other hand, the assessee should get a reasonable opportunity for redressal the grievance.

Summary

Issues Involved:
Assessment Year 2008-09 - Appeal against order passed by CIT(A) - Addition of expenditure from undisclosed sources - Application of Section 40A(3) and 44AF - Validity of notice u/s 143(2) - Additional grounds raised before ITAT - Approval of reopening u/s 148 - Verification of transactions with M/s Shivam Communication - Cross-examination of documents - Adequate opportunity for redressal - Judicial review of AO and CIT(A) decisions.

Analysis:

1. Grounds of Appeal by Assessee:
The appellant raised multiple grounds challenging the additions and disallowances made by the AO and upheld by the CIT(A). Issues included the legality and justification of the additions, lack of proper opportunity for the appellant, errors in invoking specific provisions like Section 40A(3) and 44AF, and objections to interest charges and penalties imposed. The appellant emphasized that the assessments were made without due application of mind and proper consideration of evidence, seeking judicial review of the decisions.

2. Validity of Notice u/s 143(2):
The appellant introduced additional grounds related to the legality of the notice issued under Section 148 and the reassessment order passed under Section 143(3) r.w.s. 147. The argument focused on the absence of a notice u/s 143(2) during the assessment proceedings, citing relevant legal precedents to support the contention that such absence is not curable under Section 292BB. The ITAT allowed these additional grounds for further adjudication by the CIT(A), emphasizing the importance of procedural compliance.

3. Verification of Transactions with M/s Shivam Communication:
The case involved transactions with M/s Shivam Communication, where the appellant disputed the authenticity and legality of certain purchases. The appellant highlighted discrepancies in the AO's verification process, pointing out the lack of proper investigation and cross-examination of documents. The ITAT directed for further adjudication on this issue by the CIT(A), emphasizing the need for a reasonable opportunity for the appellant to address the concerns raised.

4. Approval of Reopening u/s 148:
The appellant contested the mechanical approval of the reopening under Section 148 by the JCIT, arguing that the approval lacked detailed scrutiny and was merely a formality. The ITAT considered the gravity of the issue and directed for a reconsideration by the CIT(A), stressing the importance of a thorough review before initiating reassessment proceedings.

5. Judicial Review and Redressal:
Throughout the proceedings, the appellant sought judicial review of the AO and CIT(A) decisions, highlighting procedural lapses, lack of proper consideration of evidence, and the need for a fair opportunity to present their case. The ITAT upheld the appellant's right to redressal, allowing certain grounds for statistical purposes and emphasizing the importance of adequate opportunity for the appellant to address the issues raised.

In conclusion, the ITAT's judgment addressed various legal and procedural issues raised by the appellant, emphasizing the importance of fair assessment procedures, proper verification of transactions, and judicial review of decisions to ensure a just outcome. The detailed analysis and directions provided by the ITAT aimed at facilitating a thorough reconsideration of the issues by the CIT(A) while upholding the principles of natural justice and procedural compliance.