GURJANT SINGH, MANSA V. THE INCOME TAX OFFICER, WARD-1(4), MANSA, MANSA

ITA 128/ASR/2024

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 1223 (ITAT-AMRITSAR)
• Duration Of Justice: 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-07-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 05-05-2024
• Assessment Year: 2011-2012
• Appeal Filed On: 15-03-2024
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRIYANKA PATEL
• Keywords: Principle of natural justice; Fair market value; Reason to believe; Set aside; Capital Gains
• Section: 147; 148; 144; 250; 69A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR. BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. UDAYAN DAS GUPTA, JUDICIAL MEMBER I.T.A. No.128/Asr/2024 Assessment Year: 2016-17 Gurjant Singh, Jawahrke Road, Ward No. 15, Mansa,Punjab. [PAN:JOHPS2626C] (Appellant) Vs. ITO-Ward 1(4), Mansa. (Respondent) Appellant by Sh. Sudhir Sehgal, Adv Respondent by Smt. Priyanka Patel, Sr. DR Date of Hearing 06.05.2024 Date of Pronouncement 03.07.2024 ORDER Per: Udayan Das Gupta, JM This appeal is filed by the assessee against the order of the Ld. CIT (A) NFAC dated 18/01/2024, passed u/s 250 of the Act ’61, which has arisen out of the order of the AO/ Ward -1(4)/ Mansa passed u/s 147/ 144 of the Act 61, dated 28/12/2018. 2. The grounds of appeal of the assessee are as follows: “1. The Ld. CIT(A), NFAC has erred on facts and law, vide order u/s 250 of the Act Dt. 18.01.2024, in confirming the I.T.A. No.128/Asr/2024 Assessment Year: 2016-17 2 action of the AO of framing the assessment of the assessee at Rs. 39,79,150/- vide order u/s 147/144 of the Act by making the addition of Rs. 36,42,226/- on account of alleged unexplained investment in purchase of property of Rs. 3,36,927/- on account of alleged LTCG arising out of sale of two properties without considering the request of the assessee to provide the documents for filing the submissions on legal grounds of appeal. 2. The Ld. CIT(A), NFAC has erred on facts and law in dismissing the appeal of the assessee, vide order u/s 250 of the Act Dt. 18.01.2024, as the remand report by the AO on the issue of appeal filed against u/s 271 (1 )(b) of the Act has been relied upon while passing the order against the quantum appeal filed against order u/s 147/144 of the Act Dt. 28.12.2018. Hence the order passed by the Ld. CIT(A), NFAC is defective and deserves to be quashed. 3. The Ld. CIT(A), NFAC has erred on facts and law, vide order u/s 250 of the Act Dt. 18.01.2024, in dismissing the appeal of the assessee filed against the order of the AO passed u/s 147/144 of the Act Dt. 28.12.2018 without providing any proper opportunity of hearing. 4. That the Proceedings initiated u/s 147/148 are void ab- initio because there was no reason to believe that the income of the assessee had escaped assessment and further, there was no cogent material with the Assessing Officer for forming the I.T.A. No.128/Asr/2024 Assessment Year: 2016-17 3 belief for the purpose of reopening of the case under section 148. 5. That the Proceedings initiated u/s 147/148 are void ab- initio because the reasons in itself as recorded by the Assessing Officer are vague and without any substance for the purpose of taking recourse to section 148 of the Income-tax Act, 1961. 6. That the Proceedings initiated u/s 147/148 are void ab- initio because there was mechanical approval of the Pr. CIT with regard to reopening of the case u/s 148 and, as such, proceedings u/s 148 are liable to be quashed in view of the judgement of the Hon’ble Apex Court in the case of CIT vs Goyanka Lime and Chemical Ltd. as reported in [2015] 237 Taxman 378(SC). 7. The Ld. CIT(A), NFAC erred on facts and law in confirming the action of AO, vide order u/s 250 of the Act Dt.18.01.2024, for adopting Fair Market value of the properties as on 1-4 -1981, vide order u/s 147/144 of the Act Dt. 28.12.2018 on which the capital gain of Rs. 3,36,927/- has been computed, without bringing any evidence on record. 8. That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed of.” 3. The brief facts of the case are that the assessee an individual, has made investment in purchase of immovable property amounting to Rs. 28,43,040/- I.T.A. No.128/Asr/2024 Assessment Year: 2016-17 4 during the FY 2010-11, and in absence of any return being filed for the year under appeal, the AO initiated proceedings u/s 147 of the Act 61. In course of assessment proceedings, further investment in properties by the assessee, was discovered and apart from above, sales of immovable property within the year, within the municipal area locality was also discovered, resulting in undisclosed capital gains. Though no return has been filed by the assessee, he appeared in person before the AO and deposed on oath that none of the investments in the property has been made by him and he has not made any sale of any immovable property, as alleged. The entire investments of purchase and sales, in his name, are probably made by one Sri Surinder Kumar, who happened to be the employer of the assessee at that particular period of time. 3.1 Since, the registration papers of the property are in the name of the assessee , purchase as well as sales , and, in the absence of any explanations regarding the source , the AO was left with no option but to assess the total investments during the year amounting to Rs.36,42,226/- u/s 69A of the Act 61, and the sale of property during the year , as long term capital gains u/s 45 of the Act 61, as per computation reflected in the assessment order, u/s 144/ 147, and the total income determined at Rs.39,79,150/-. I.T.A. No.128/Asr/2024 Assessment Year: 2016-17 5 4. The matter was carried in first appeal, where the assessee has challenged the initiation of proceedings u/s 147/148 of the Act 61 on various grounds contained in Form 35. 5. Before the Ld. CIT ( A ) it was contended that various letters were addressed to the AO , on 8 th October 2021, 18 th Oct, and on 28 th Oct, 2021 and thereafter again on 14 th March , 2024 and again on 15 th March, 2024, asking for copies of various legal documents along with coping fees for the same so that proper reply can be filed by the assessee on legal grounds , on defense of the assessee , but unfortunately, the AO has not given the required documents , enabling the assessee to file the requisite reply , even though the assessment has been based on the documents gathered behind the back of the assessee , thereby clearly violating the principles of natural justice, and the chance of rebuttal . 6. The Ld. AR of the assessee argued , that request letters were also filed before the first appellate authority on 29 th October, 2021, but unfortunately, the said request has been brushed aside with the remark that “ the written submissions filed by the appellant during the appellate proceedings are either irrelevant or not supported with documentary proof / explanation, as per paragraph 5.6 of the appeal order, and the Ld CIT ( A ) proceeded to dismiss the appeal , due to reasons contained in the appellate order. I.T.A. No.128/Asr/2024 Assessment Year: 2016-17 6 6.1 The AR further pointed out that the appeal order is passed on 18/01/2024 (which is under appeal before the Tribunal) and all necessary documents, so long prayed for by the assessee has been furnished by the jurisdictional AO on 18 th March, 2014 (after the appeal order is already passed), and had these documents been furnished earlier, it would have enabled the assessee to file his reply properly and defend his case and put forth his arguments. He prays that this is a clear case of violation of natural justice where assessment has been framed on the basis of documents gathered by the AO behind the back of the assessee, without serving copies of the same, to rebut the materials so gathered, and even before the first appellate authority the said opportunity has been denied, which is clearly against the principles of natural justice and good conscious. 6.2 The assessee in his synopsis, has requested the matter to be remanded to the first appellate authority, and since all necessary documents has now been received from the AO (post appellate order), he requests for an opportunity to place his case with full supporting documents before the Ld. CIT (A) for decision on merits. Relevant portion is reproduced for ready reference: “16. Hence, it is hereby submitted that in the case of the assessee, the assessee has placed various requests before the Ld. Jurisdictional AO and Worthy CIT-(A) to provide the assessee with the relevant documents in the form of copy of the reasons recorded, copy of the approval u/s 151 of the Act, copy I.T.A. No.128/Asr/2024 Assessment Year: 2016-17 7 of document on which reliance has been placed while recording the reasons u/s 148 of the Act. However, none of such document was ever served upon the assessee till the conclusion of appellate proceedings. It is submitted that all such documents were served to the assessee on 18.03.2024 i.e. approximately 2 months from the order of Worthy CIT(A). Hence, in such circumstances, the assessee was unable to file his detailed submissions before the Worthy CIT(A) as a result of which, Worthy CIT(A) confirmed the order of the AO and dismissed the appeal filed by the assessee without considering the fact that the assessee was prevented by sufficient cause for filing the detailed submissions and the CIT(A) has passed the order without providing the assessee proper opportunity of hearing to the assessee which is in violation of principles of natural justice. 17. In light of the our above submissions, it is very humbly submitted before your goodself that the case of the assessee may kindly be set aside to the file of Worthy CIT(A) to decide the matter denovo and we assure your goodself that due compliance shall be made during the course of appellate proceedings.” 7. The Ld. DR relied on the order of the Ld. CIT (A), and prayed for sustaining the additions. I.T.A. No.128/Asr/2024 Assessment Year: 2016-17 8 8. We have considered the arguments of both the counsels, and considered all the materials on record, and the contents of the materials in the paper book and submissions in the synopsis. 8.1 We are of the opinion that from the very beginning in appellate proceedings, the assessee has been praying for copies of documents, from the jurisdictional AO, which has been gathered by the AO and has formed the basis of assessment and the assessee has also requested the first appellate authority, for the said documents, for framing a proper reply in appellate proceedings. Moreover, the assessee has already paid the copying fees for the said documents long back, and there was no reason as to why the copies of the said documents was not issued to the assessee, before completion of appellate proceedings, enabling him to file a proper reply and explain his case before first appellate authority, when the very same documents have been supplied after completion of appellate proceedings on 18 th March, 2024. 8.2 We are of the opinion that principles of natural justice has been violated in this case because the assessee should always get proper and sufficient opportunity to rebut the materials gathered behind his back, specially, when the assessment itself has been framed on such materials and prejudice has been caused to the assessee. 8.3 As such we consider it fit and proper to remand the matter back to the file of the Ld. CIT (A), to decide the appeal on merits in respect of the grounds contained I.T.A. No.128/Asr/2024 Assessment Year: 2016-17 9 in the memorandum of appeal and after allowing proper opportunity of hearing to the appellant and we also direct the assessee to file all documentary evidences and submissions as necessary in support of his case and to fully cooperate in the appellate proceedings , so that the matter may be disposed off on merits after considering all arguments. 9. In the result, the appeal of the assessee bearing ITA No. 128/Asr/2024 is allowed for statistical purposes. Order pronounced in the open court on 03.07.2024 Sd/- Sd/ (Dr. M. L. Meena) (UDAYAN DAS GUPTA) Accountant Member Judicial Member AKV Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy By order