Varsha Prafulla Zende, Ahmednagar V. The Assistant Commissioner of Income Tax, Circle, Ahmednagar

ITA 735/PUN/2023

AI Insights

The case involves cross appeals and cross objections related to reassessment orders under sections 143(3) and 147 of the Income Tax Act for the Assessment Year 2010-11. The primary contention revolves around the validity of the reassessment orders issued by the Assessing Officer (AO), which were challenged by the assessee, Vidya Pradip Zende, and Varsha Prafulla Zende. The Income Tax Appellate Tribunal (ITAT) Pune, after considering the submissions and the legal precedents, decided to remand the matter back to the CIT(A) for a comprehensive re-evaluation, particularly addressing the issues raised by the assessee that were not previously adjudicated.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 138145 (ITAT-PUNE)
• Duration Of Justice: 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 22-08-2023
• Assessment Year: 2010-2011
• Appeal Filed On: 22-06-2023
• Other Referred Cases: Prashant S. Joshi v. ITO [2010] 189 Taxman 01 (Bom.)
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Accommodation entries; Reason to believe; Set aside
• Section: 148; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE „B‟ BENCHES :: PUNE BEFORE SHRI R.S. SYAL, HON. VICE-PRESIDENT & SHRI PARTHA SARATHI CHAUDHURY, HON. JUDICIAL MEMBER ITA Nos.734 & 735/PUN/2023 (A.Y. 2010-11) And C.O.No.24 & 25/PUN/2022 (Arising out of ITA Nos.176 & 177/PUN/2020) 1. 2. Vidya Pradip Zende PAN: AACPZ 8013 E Varsha Prafulla Zende PAN: AABPZ 2541 C vs ACIT, Ahmednagar Circle, Ahmednagar. Both are residents of 3113, Shrirampur Housing Society, College Road, Opp. Saint Luke Hospital, Gopal Nagar, Ward No.1, Tq-Shrirampur, Ahmednagar. Appellants Respondent ITA Nos.176 & 177/PUN/2020 (A.Y. 2010-11) DCIT, Ahmednagar Circle, Ahmednagar. vs 1. Vidya Pradip Zende PAN: AACPZ 8013 E 2. Varsha Prafulla Zende PAN: AABPZ 2541 C Both are residents of 3113, Shrirampur Housing Society, College Road, Opp. Saint Luke Hospital, Gopal Nagar, Ward No.1, Tq-Shrirampur, Ahmednagar. Appellant Respondent ITA Nos.176 & 177/PUN/2020 & ITA Nos.734 & 735/PUN/2023 C.O.Nos. 24 & 25/PUN/2022 Vidya Pradip Zende & Another 2 Assessee by : Shri Neelesh Khandelwal, CA Revenue by : Shri M.G. Jasnani, DR Date of hearing : 23/08/2023 Date of pronouncement : 24/08/2023 O R D E R Per Bench: These cross appeals preferred by the Revenue and assessee as well as Cross Objections (CO) by the assessee emanates from the separate orders of Commissioner of Income Tax [Appeals]-2, Pune, both dated 14.11.2019 for A.Y.2010-11 as per the grounds of appeal on record. 2. At the outset, both the parties conceded that the facts and circumstances and the issues involved in all these six appeals are identical and having heard the parties, all these matters are heard together and disposed of vide this consolidated order. 3. Having gone through the grounds of appeal in appeal memo for the cross appeals and the Cos, we find that the parties herein have taken grounds both on merits as well as on legal grounds. Before going into the adjudication part, the ld.AR for the assessee submitted that they are not pressing their cross appeals in ITA No.734 & 735/PUN/23. Having heard his submissions, both these cross appeals of the assessee are dismissed as not pressed. 4. Now, we would adjudicate the Revenue‟s appeal in ITA ITA Nos.176 & 177/PUN/2020 & ITA Nos.734 & 735/PUN/2023 C.O.Nos. 24 & 25/PUN/2022 Vidya Pradip Zende & Another 3 No.176/PUN/2020 taking the same as the lead case for A.Y. 2010-11 and we would address the legal issue raised by the Department first. The Department is aggrieved by the decision of the ld. CIT(A) in allowing the ground of appeal before him in favour of the assessee by holding that reassessment order passed by the AO u/sec. 143(3) r.w.s. 147 of the Act was incorrect and bad in law. The reasons for this decision by the ld. CIT(A) can be verified from the copy of reasons recorded by the AO, wherein the AO states that for invoking the jurisdiction u/sec. 147/148 of the Act, he has reason to believe that income of the assessee has escaped assessment for the present A.Y. 2010-11 because some bogus companies run by one Mr. Anand Sharma and Group has provided bogus commission entries to Prachi Enterprises, in which the proprietor is the assessee i.e. Vidya Pradip Zende during the F.Y. 2009-10 to the tune of Rs. 2,57,479/-. Later on, as evident from the assessment order at para 8.21, the AO writes that the unsecured loans amounting to Rs. 2,50,00,000/- including loan from Chandraghanta Dealers Pvt. Ltd., Maradona Wholesale Pvt. Ltd. and Chinpurni Sales Pvt. Ltd. were not genuine. Further, total income expenses claimed amounting to Rs. 8,65,754/- also includes Rs. 2,57,479/- and this is the same amount which finds place in the reasons recorded by the AO. The ld. CIT(A), thereafter, reversed the order of AO following the decision of the Hon'ble jurisdictional High Court in the case of Prashant S. Joshi v. ITO [2010] 189 Taxman 01 ITA Nos.176 & 177/PUN/2020 & ITA Nos.734 & 735/PUN/2023 C.O.Nos. 24 & 25/PUN/2022 Vidya Pradip Zende & Another 4 (Bom.) wherein it was held that the principle of law is well settled that the question as to whether there was reason to believe, within the meaning of sec.147 that income has escaped assessment, must be determined with reference to the reasons recorded by the AO. Here, in this case, the reasons itself were incorrect by the AO and, therefore, it cannot be said that he had reason to believe within the meaning of sec.147 of the Act that the income of the assessee had escaped assessment. Therefore, at the threshold itself, the AO was battling on wrong premise and accordingly at para 5.1 of the ld. CIT(A)‟s order, he holds that the notice issued u/sec. 148 of the Act, which was based on incorrect reasons, was bad in law. Thereafter, the ld.AR demonstrating from the paper book filed assailed that otherwise also, the reassessment order u/sec. 143(3) r.w.s. 147 was bad in law and invalid, since there was no valid sanction taken by the AO from the appropriate authority. Further, though in the reasons recorded by the AO, he alleges that he had received information from ACIT, Kolkata regarding the bogus accommodation entries provided, but in reality, at the time of issuance of notice, actually there were no such information with the AO at all. However, these issues were not dealt with by the ld. CIT(A) and therefore, ld.AR prayed that these matters may be remanded back to the file of the ld.CIT(A) for adjudication as per law after due verification. Ld.DR did not raise any objection, if the matter would be remanded back to the file of the ld. CIT(A). Therefore, in the ITA Nos.176 & 177/PUN/2020 & ITA Nos.734 & 735/PUN/2023 C.O.Nos. 24 & 25/PUN/2022 Vidya Pradip Zende & Another 5 given facts and circumstances when the ld.AR has come out with a submission that certain issues were not brought up before the ld.CIT(A) and resultantly were left un-adjudicated, in view thereof, in the interest of justice, even without going into the merits of the case, we set aside the order of the ld. CIT(A) and remand the matter back to his file with a direction to adjudicate the matter within a period of three months from the date of receipt of copy of this order complying with the principles of natural justice in accordance with our observations in the aforesaid paras. The grounds of appeal are allowed for statistical purposes. 5. In the result, appeal of the Revenue in ITA No.176/PUN/2020 is allowed for statistical purposes. 6. At the outset itself, the parties herein have submitted that the facts and circumstances and the issues in all these matters are identical and, therefore, our decision in ITA No.176/PUN/2020 shall apply mutatis mutandis to ITA No.177/PUN/2020 also. Therefore, the appeal of the Revenue in ITA No.177/PUN/2020 is also allowed for statistical purposes. 7. That, for the sake of completeness, the COs preferred by the assessee, at this stage, would be appropriate to remand them also back to the file of the ld. CIT(A), so that while adjudicating the ITA Nos.176 & 177/PUN/2020 & ITA Nos.734 & 735/PUN/2023 C.O.Nos. 24 & 25/PUN/2022 Vidya Pradip Zende & Another 6 common issue, there would not be any disturbances caused through partial remanding of the matters. In view thereof, both the COs of the assessee are also remanded back to the file of the ld. CIT(A). We order accordingly. COs of the assessee stands allowed for statistical purposes. 8. In the combined result, the cross appeals of the assessee are dismissed as not pressed. The appeals by the Revenue and the COs by the assessee are allowed for statistical purposes. Order pronounced in open Court on 24 th August, 2023. Sd/- Sd/- (R.S. SYAL) (PARTHA SARATHI CHAUDHURY) VICE-PRESIDENT JUDICIAL MEMBER Dated : 25 th August, 2023 vr/- Copy to : 1. The Appellant. 2. The Respondent. 3. The Pr. CIT concerned. 5. The DR, ITAT, “B” Bench Pune. 6. Guard File. By Order // TRUE COPY // Senior Private Secretary ITAT, Pune.