Mrs. Namita Nagesh Shirodkar, Bardez V. ACIT, Circle - (2) 1, Panaji

ITA 219/PAN/2018

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 0386 (ITAT-PANAJI)
• Duration Of Justice: 4 year(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: WT(D)
• Assessment Year: 2011-2012
• Appeal Filed On: 24-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: C. KAMAT
• Keywords: Rectification of order; Opportunity of being heard; Principle of natural justice; Set aside
• Section: 154; 48

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI C.M. GARG, JUDICIAL MEMBER AND SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER I.T.A. No.219/PAN/2018 Assessment Year: 2011-12 Mrs. Namita Nagesh Shirodkar, Hudo Wado, Anjuna, Bardez – Goa 403509 PAN: AMKPS7529N Vs. ACIT, Circle-(2)1, Panaji, Goa Appellant Respondent Date of Hearing 16.06.2022 Date of Pronouncement 16.06.2022 Assessee by Shri C. Kamat, CA Department by Shri Mayur Kamble, Sr. DR ORDER PER C.M. GARG, JM: This appeal has been filed by the assessee against the order of the CIT(A)-2, Panaji, dated 19.03.2018 for assessment year 2011-12. 2. The assessee has raised the following grounds of appeal:- “A. The learned first appellate authority has erred in concluding that the appellant, who was alleging Non-issuance of notice u/s 154, failed in proving such non -issuance of notice , while in law it was for the respondent to prove issuance and service of such notice. 2 ITA No.219/PAN/2018 Mrs. Namita Nagesh Shirodkar vs. ACIT B. The learned first appellate authority has erred in upholding the order u/s 154, which was passed without issuing any notice to the appellant and without providing any opportunity to the appellant. C. The learned first appellate authority has erred in not deciding the case of the appellant on merits and instead, holding that 50% of the income assessed in the case of the appellant's spouse has to be included in the hands of the appellant, the details of which addition were not available in the order u/s 154.” 3. The learned counsel of the assessee, placing reliance on the judgement of the Hon'ble Supreme Court in the case of Chockalingam & Meyyappan vs. CIT, 48 ITR 34, and the order of the ITAT Delhi Bench dated 29.09.2017 in the case of Aparna Ashram vs. ADIT, vide ITA No.382/Del/2015, submitted that the Assessing Officer has not issued any notice u/s 154 of the Act and has passed order u/s 154 of the Act enhancing the addition and tax liability thereon in the hands of the assessee, therefore, the enhancement and tax liability fastened by the Assessing Officer on the assessee by way of the impugned order passed u/s 154 of the Act, which is a clear case of breach of principles of natural justice, therefore, the order of the Assessing Officer may be quashed. 4. Replying to the above, the learned Sr. DR, in all fairness, submitted that he has called the relevant assessment records but was unable to find any notice to the assessee prior to initiating the proceedings u/s 154 of the Act. The learned Sr. DR submitted that the Assessing Officer has also reported that no notice u/s 154 of the Act has been issued to the assessee prior to passing the impugned order on 27.10.2016. 3 ITA No.219/PAN/2018 Mrs. Namita Nagesh Shirodkar vs. ACIT 5. On careful consideration of the above submissions, we are of the considered view that the ITAT Delhi Bench in the case of Aparna Ashram (supra), referring to the judgment of the Hon'ble Supreme Court in the case of Chockalingam & Meyyappan (supra) has held as follows:- “7. The Ld. DR submitted that the Assessing Officer as well as the CIT(A) rightly passed the orders. The Assessing Officer has rectified the order as there was error in the Original Assessment Order about calculation and charging of interest which is allowed under the relevant provisions of the Act. The Ld. DR relied upon the order of Apex Court in case of M/s Deepak Agro Food Vs. State of Rajasthan and Ors. (Civil Appeal Nos. 4327- 28/2008 order dated 11th July 2008) wherein it is held that the irregularities committed by the Assessing Officer, during the course of assessment proceedings will not make assessment orders null and void. 8. We have heard both the parties and perused the material available on record. The principle of natural justice was not followed by the Assessing Officer while rectifying the original assessment order and the said fact was admitted by the CIT(A). It is not proper to improve the Assessing Officer's defect by the CIT(A) which is not permissible under the Income-Tax statute wherein the notice has to be given to the assessee when there is an increase in tax liability on the assessee. The reliance upon the Apex Court judgment in case of Chockalingam & Meyyappan Vs. CIT (1963) 48 ITR 34 by the Ld. AR is precisely holding that principle of natural justice has to be followed by the authorities. In case of M/s. Deepak Agro Food (Supra), the Hon'ble Apex Court dealt with Sec.29(8)(b) of the Act which is not having similar wordings like that of Sec. 154 (3) of the Act under which it is mandatory to issue notice. As per Section 154(3) of the Act amendment/rectification which has effect of enhancement of an assessment or reducing a refund or otherwise increasing the liability of the assessee shall not be made unless the authority concerned gives notice to the assessee of its intention to do so. Therefore, it is obligatory under the statute to issue notice by the Assessing Officer to give a reasonable opportunity of being heard to the Assessee. This is clearly set out u/s 154 of the Income Tax Act and it has to be followed by the tax authorities at the initial stages. If this procedure is not followed of issuing the notice and giving reasonable opportunity of being heard, further exercise will be non est. Therefore, the assessment order itself becomes void ab initio. The 4 ITA No.219/PAN/2018 Mrs. Namita Nagesh Shirodkar vs. ACIT order u/s 154/254 of the Act is set aside. In all the Assessment Years the issue is identical; hence all the appeals of the assessee are allowed. 6. In the present case also it has been clearly accepted by the Revenue that no notice has been issued to the assessee prior to passing order u/s 154 of the Act. In the similar facts and circumstances, Their Lordships is speaking for the Hon'ble Supreme Court in the case of Chockalingam & Meyyappan (supra) held that the rectification of mistakes u/s 35 of the Income-tax Act, 1922 and Rule 48 of the Income-tax Rules, 1922 to which corresponding sections of the present Act are section 154 r.w.s. 270, then it is incumbent and required by the Assessing Officer to issue notice u/s 154 of the Act before proceeding to rectify the mistake in the assessment order. Without issuing such notice of hearing to the assessee as contemplated in section 154 of the Act and in the corresponding previous provisions i.e., proviso to section 35 of the Act of 1922, it would amount to breach of principles of natural justice, therefore, the order of the Assessing Officer has to be quashed only on this count. The said order of the Hon'ble Supreme Court has been respectfully followed by the ITAT Delhi Bench in the case of Aparna Ashram (supra). In our considered opinion, the legal ground/the issue agitated by the assessee in the present appeal is squarely covered by the judgement of the Hon'ble Supreme Court in the case of Chockalingam & Meyyappan (supra) and the order of the ITAT Delhi in the case of Aparna Ashram (Supra). Therefore, respectfully following the same, impugned rectification order u/s 154 of the Act dated 27.10.2016 (supra) is hereby quashed. The appeal of the assessee is allowed and the Assessing Officer is directed to delete the addition. 5 ITA No.219/PAN/2018 Mrs. Namita Nagesh Shirodkar vs. ACIT 7. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on 16 th June, 2022. Sd/- Sd/- (Girish Agrawal) (C.M. Garg) Accountant Member Judicial Member Dated:16.06.2022 dk Copy of the order forwarded to: 1. Appellant 2. Respondent 3. CIT(A) 4. Pr. CIT 5. DR, ITAT, Panaji, Goa. 6. Guard File True Copy By Order Sr. Private Secretary, ITAT Panaji Bench, Panaji (On Tour)