2023 (11) TMI 537 - AT - Income Tax

Eligibility of Form 35-A filled before DRP - dismissing the objection filed in form number 35A verified by the authorized representative holding that as the directions are not verified by the assessee or its agent, the same is required to be dismissed as not maintainable - Whether Form 35-A has duly been filed in person ? HELD THAT - According to us only assessee can verify form number 35A. However in the present case, the form number 35A is verified by the advocate, which was dismissed by the learned dispute resolution panel without giving any opportunity to the eligible assessee confronting the fact that form number 35A is not properly verified, violates the principles of the natural justice. Therefore, we put the assessee back to the stage of filing of objections before the learned dispute resolution panel. Accordingly we direct the Assessee to file objections before LD DRP within 30 days from the date of receipt of this order duly verified in accordance with law. Ld DRP may decide the objection in accordance with the law.

Issues Involved:
1. Eligibility of Form 35-A filed before the Dispute Resolution Panel (DRP).
2. Validity of assessment proceedings under sections 147, 148, and 149 of the Income Tax Act.
3. Determination of unexplained investments and expenditures under sections 69 and 69C.
4. Adherence to principles of natural justice by the DRP.

Summary:

Issue 1: Eligibility of Form 35-A Filed Before the DRP
The assessee contended that the DRP erred in holding Form 35-A as ineligible for directions. The DRP dismissed the objections because the form was signed by the advocate, not the assessee or its agent, as required by Rule 4(1) of the Income Tax (Dispute Resolution Panel) Rules, 2009. The Tribunal noted that Rule 4(1) does not specify who must verify the form, only who must file it. The Tribunal held that the DRP should have given the assessee an opportunity to correct the procedural defect and that the dismissal without such an opportunity violated principles of natural justice.

Issue 2: Validity of Assessment Proceedings
The assessee argued that the assessment proceedings were time-barred and initiated under outdated provisions of the Income Tax Act. The Tribunal noted that the AO had followed the prescribed procedures, including obtaining necessary approvals under section 151(1) and issuing notices under section 148. However, the Tribunal did not adjudicate on these grounds, as the primary issue was the maintainability of Form 35-A.

Issue 3: Determination of Unexplained Investments and Expenditures
The AO had determined that the assessee's transactions in Odyssey Financial Services Ltd. were bogus and added Rs. 157,060,202 as unexplained investment under section 69 and Rs. 4,711,806 as unexplained expenditure under section 69C. The Tribunal noted that the AO had not provided sufficient evidence to substantiate these claims and had not given the assessee an opportunity to rebut the third-party data used in the assessment.

Issue 4: Adherence to Principles of Natural Justice
The Tribunal found that the DRP had violated principles of natural justice by not informing the assessee that the objections were considered non-maintainable due to improper verification. The Tribunal noted that the DRP had issued notices, conducted hearings, and requested submissions from the assessee, giving the impression that the objections were being considered on merit.

Conclusion:
The Tribunal set aside the DRP's directions and directed the assessee to file objections before the DRP within 30 days, duly verified in accordance with the law. The Tribunal allowed the appeals for statistical purposes and dismissed the connected stay applications as infructuous.

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