2023 (7) TMI 396 - AT - Income Tax

Validity of re-assessment was completed on the basis of the loose sheet and the report received from the Central Bureau of Investigation - HELD THAT - The books of accounts which is impounded by the CBI was not verified by any of the revenue authorities during passing the order. It is a fit case that the assessee has not got a reasonable opportunity to substantiate its fact before the revenue authorities. Only on basis of the loose papers and report of CBI, the assessment order was passed by the revenue without considering the Books of accounts of the assessee which is violation of natural justice. The assessee placed the Affidavits U/R 29 of the Rule before the bench which were never be filed before any of the lower authorities. So, we remit back the cases to the ld. AO for further adjudication - AO shall provide proper and adequate opportunity of being heard to the assessee in set aside proceedings. The evidence/explanations submitted by assessee in its defence shall be admitted by the ld. AO, and adjudicated by the ld. AO on merits in accordance with law.

Issues Involved:
1. Validity of notice u/s 148 and reasons recorded u/s 148 along with approval u/s 151.
2. Legality of assessment/addition based on CBI report and loose papers without considering the books of accounts.
3. Incorrect attribution of bank accounts and subsequent additions.
4. Request for setting aside/denovo assessment.

Summary:

Issue 1: Validity of Notice u/s 148 and Approval u/s 151
The appellant challenged the jurisdiction of the assessment due to the absence of notice u/s 148 and reasons recorded u/s 148, along with the approval u/s 151 from the Additional Commissioner of Income Tax. However, during the hearing, the appellant withdrew this ground.

Issue 2: Legality of Assessment based on CBI Report and Loose Papers
The assessment was based on the CBI report and certain loose papers, ignoring the appellant's request to consider the impounded books of accounts. The appellant argued that the assessment was completed without proper verification and application of mind, making it bad in law. The Tribunal noted that the books of accounts were not verified by the revenue authorities and that the assessment based solely on loose papers and the CBI report violated natural justice. Consequently, the Tribunal remitted the case back to the AO for further adjudication, ensuring that the appellant is given a proper opportunity to present their case with the books of accounts.

Issue 3: Incorrect Attribution of Bank Accounts and Additions
The appellant contended that the AO wrongly attributed certain bank accounts and made additions in the hands of individuals instead of the appellant company, leading to double additions. The Tribunal acknowledged that the additions were arbitrary and not related to the individual assessee. The Tribunal directed the AO to reassess the case after proper verification of the bank accounts and related documents.

Issue 4: Request for Setting Aside/Denovo Assessment
The appellant requested that the matter be set aside and reassessed after considering the books of accounts and other relevant documents. The Tribunal agreed, remitting the case back to the AO with instructions to provide the appellant with a proper opportunity to present their case and to consider all relevant documents.

Conclusion:
The Tribunal allowed the appeals for statistical purposes, remitting the cases back to the AO for further adjudication, ensuring that the appellant is given a proper and adequate opportunity to present their case, and that the AO considers all relevant documents and explanations provided by the appellant. The decision in ITA No. 697/Asr/2019 for AY 2005-06 applies mutatis mutandis to the other appeals.

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