MANIK PAL,NORTH 24 PARGANAS V. ITO, WARD 33(2), KOLKATA

ITA 1968/KOL/2024

AI Insights

The case involves an appeal by Manik Pal against the order of the Ld. Commissioner of Income Tax (Appeals)-NFAC, Delhi, which was passed under section 250 of the Income Tax Act, 1961, for the assessment year 2018-19. The appeal was primarily against the reopening of the assessment by the Income Tax Officer (ITO) under sections 147/144/144B of the Act, alleging that the assessee had sold shares of AMMLTD & EML, which were considered penny stocks, without any substantial evidence of income escapement. The CIT(A) dismissed the appeal due to non-compliance by the assessee in submitting required evidences, leading to a decision based solely on the assessment order. The Tribunal found that the CIT(A) did not adequately address the merits of the case and failed to provide a reasoned decision as mandated by the Act.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 36256 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2018-2019
• Other Referred Cases: Ajji Basha Vs. CIT (2019) 111 taxmann.com 348 (Madras), Commissioner of Income-tax (Central) Nagpur v. Premkumar Arjundas Luthra (HUF) [2016] 69 taxmann.com 407 (Bombay)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside; Opportunity of being heard; Assessment record; Tangible material
• Section: 148; 250; 251; 69A; 246A

Judgement Text

"आयकर अपीलीय अधिकरण कोलकाता 'एसएमसी' पीठ, कोलकाता में IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘SMC’ BENCH, KOLKATA श्री संजय शमाा, न्याधयक सदस्य एवं श्री राक ेश धमश्रा, लेखा सदस्य क े समक्ष Before SONJOY SARMA, JUDICIAL MEMBER & SRI RAKESH MISHRA, ACCOUNTANT MEMBER I.T.A. No.: 1968/KOL/2024 Assessment Year: 2018-19 Manik Pal Vs. ITO, Ward-33(2), Kolkata (Appellant) (Respondent) PAN: AQCPP4551B Appearances: Assessee represented by : P. Himmatsinghka, AR Department represented by : S.B. Chakraborthy, Addl. CIT, Sr. DR and Somnath Das Biswas, Sr. DR. Date of concluding the hearing : December 18th, 2024 Date of pronouncing the order : January 7th, 2025 ORDER PER RAKESH MISHRA, ACCOUNTANT MEMBER: This appeal filed by the assessee is against the order of the Ld. Commissioner of Income Tax (Appeals)-NFAC, Delhi [hereinafter referred to as “the Ld. CIT(A)”] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for AY 2018-19 dated 29.08.2024, which has been passed against the assessment order u/s 147/144/144B of the Act, dated 14.03.2023. Page | 2 I.T.A. No.: 1968/KOL/2024 Assessment Year: 2018-19 Manik Pal. Page 2 of 8 2. The assessee is in appeal before the Tribunal raising the following grounds of appeal: “(1) That under the facts & circumstances of the case, Ld AO initiated the reopening proceedings by issuing notice u/s 148A on the purported allegation that assessee had sold shares of AMMLTD & EML to the tune of Rs. 12,55,870/- which is a penny stock without having any information which suggests that assessee income had escaped assessment. The initiation of reopening proceedings is arbitrary, unlawful, without application of mind, devoid of any tangible materials and liable to be quashed. (2) That the reopening proceeding has been initiated by passing order u/s 148A(d) arbitrarily without finding any escapement of income from impugned sale of shares. The notice consequently issued u/s 148 is illegal, bad in law and liable to be quashed. (3) That the approval granted u/s 151 by the specified higher authority is mechanical and without any application mind. (4) That the Ld CIT(A) dismissed the appeal without considering the merit of the case, the order is illegal and bad in law. (5) That under the facts & circumstances of the case, Ld AO initiated the re- opening proceeding without bringing any tangible material on record which could provide live nexus between information and escapement of income, without any application of mind. The re-opening is therefore vague, arbitrary, suspicious and liable to be quashed. (6) That the notice u/s 148 dated 31-03-2022 issued by JAO is illegal, bad in law and the consequent proceeding connected with illegal notice is also void-ab-intio and liable to be annulled. (7) That the Ld AO erred in adding Rs. 12,55,870/- the entire impugned sale proceeds of the shares without deducting the corresponding cost despite the assessee had suffered short term loss Rs. 7,93,763 from the said impugned transactions and the said loss was not claimed. The addition made u/s 69A is therefore vague, arbitrary and devoid of any material. (8) That the appellant craves to add or amend any grounds of appeal on or before the date of hearing.” 3. The appeal of the assessee was dismissed on account of non- compliance to five notices issued to the assessee for submission of Page | 3 I.T.A. No.: 1968/KOL/2024 Assessment Year: 2018-19 Manik Pal. Page 3 of 8 evidences in support of its contentions. The relevant paragraphs of the impugned order are reproduced as under: “5.4.3 During the appellate proceeding, five notices were issued to the appellant for submission of arguments/evidences in support of its contentions made in the aforesaid grounds of appeal. But the appellant has not complied to any of the five notices issued during the appellate proceedings. The consistent non-compliance of the appellant may be because the appellant has no evidence/argument in support of the issues raised in the grounds of appeal or the appellant does not want to pursue the appeal. The statement of fact and grounds of appeal are very brief and do not give any arguments/evidences in support of contentions made in grounds of appeal. In absence of any arguments/evidence the claim of the appellant remained unverified. Therefore, no infirmity can be found in the order appealed against. 5.4.4 Thus, the first four grounds of appeal are dismissed. ……………………………………. 5.5.2 During the appellate proceeding, five notices were issued to the appellant for submission of arguments/evidences in support of its contentions made in the aforesaid grounds of appeal. But the appellant has not complied to any of the five notices issued during the appellate proceedings. The consistent non-compliance of the appellant may be because the appellant has no evidence/argument in support of the issues raised in the grounds of appeal or the appellant does not want to pursue the appeal. The statement of fact and grounds of appeal are very brief and do not give any arguments/evidences in support of contentions made in grounds of appeal. In absence of any documentary evidences, the assessee’s claims have remained unverified. In this situation, there is no option left with the undersigned but to go along with the findings of AO in the Assessment Order and upheld the addition of the sale of share of Rs. 12,55,870/- u/s 69A of the Income Tax Act on account of unexplained money. 5.5.3 Accordingly, fifth, sixth and seventh grounds of appeal are dismissed.” 4. Rival contentions were heard and the record and the submissions made were examined. We also note that while the Ld. CIT(A) has Page | 4 I.T.A. No.: 1968/KOL/2024 Assessment Year: 2018-19 Manik Pal. Page 4 of 8 discussed non-compliance on the part of the assessee as the notices sent by e-mail were not complied with but has not discussed the merits of the case and has only affirmed the order of the Ld. AO. In this respect, it is relevant to examine the provisions of section 250(6) which are reproduced as under: “250(6) – The order of the Commissioner (Appeals) disposing of the appeal shall be in writing and shall state the points for determination, the decision thereon and the reason for the decision.” 4.1. We note that Section 250(6) casts a duty on the Ld. CIT(A) to pass an order in appeal which should state the points for determination and a decision as well as the reason for arriving at such decision. In the present case before us, even though the assessee had made its submissions along with supporting documents before the Ld. AO which are on record, compliance has not been made by the Ld. CIT(A) by not mentioning the reasons after examining the assessment records while disposing of the appeal, as is required u/s 250(6) of the Act. We further note that in Ajji Basha Vs. CIT (2019) 111 taxmann.com 348 (Madras) it has been held that a speaking order on merits with reasons and findings is to be passed by Commissioner (Appeals) on basis of ground raised in assessee's appeal; he cannot dispose of the assessee's appeal merely by holding that Assessing Officer's order is a self- speaking order which requires no interference. The relevant extract from the order is as under: “6. … The first respondent is the appellate authority. Needless to state that the Appellate Authority is also a fact finding authority and therefore, he has to consider the order of assessment on the grounds raised in the appeal and thereafter, pass a speaking order on merits and in accordance with law by giving his own reasons and findings as to whether the order of assessment can be sustained or not. In other words, the order passed by the Appellate Authority should explicitly exhibit his application of mind to the facts and Page | 5 I.T.A. No.: 1968/KOL/2024 Assessment Year: 2018-19 Manik Pal. Page 5 of 8 circumstances and the objections raised in the grounds of appeal, also by expressing his reasons and findings in support of his conclusion. 7. In this case, the Appellate Authority, after extracting the order of the Assessing Officer in full, has not given any other reason or finding to dismiss the appeal except by stating that he is of the considered view that the Assessing Officer's order is a self speaking order and does not call for any interference. In my considered view, such single line finding of the Appellate Authority, cannot be sustained as a proper exercise of the Appellate Authority, while disposing the appeal. Therefore, it is apparent that the order impugned in this writ petition is an outcome of total non-application of mind. Consequently, the impugned order cannot be sustained. It is further contended that before passing the order, the petitioner was not heard.” 4.2. It has also been held in the case of Commissioner of Income-tax (Central) Nagpur v. Premkumar Arjundas Luthra (HUF) [2016] 69 taxmann.com 407 (Bombay) that the law does not empower the CIT(A) to dismiss the appeal for non-prosecution as is evident from the provisions of the Act. The relevant extract is as under: “7. An appeal is filed with the CIT(A) from appealable orders listed in Section 246A of the Act. We find that the procedure in appeal before the CIT(A) and the powers of the CIT(A) are governed by Sections 250 and 251 of the Act respectively. The relevant provisions for consideration are as under:— 'Procedure in appeal 250 (1) . . . . . . . . . . . . . (2) . . . . . . . . . . . . . . . . . (3) . . . . . . . . . . . . . . . . . . (4) The Commissioner (Appeals) may, before disposing of any appeal, make such further inquiry as he thinks fit, or may direct the Assessing Officer to make further inquiry and report the result of the same to the Commissioner (Appeals). (5) . . . . . . . . . . . . . . . . . . (6) The order of the Commissioner (Appeals) disposing of the appeal shall be in writing and shall state the points for determination, the decision thereon and the reason for the decision. (6A) . . . . . . . . . . . . . . . . . . (7) . . . . . . . . . . . . . . . . . . Page | 6 I.T.A. No.: 1968/KOL/2024 Assessment Year: 2018-19 Manik Pal. Page 6 of 8 Powers of the Commissioner (Appeals) \"Section 251(1) In disposing of an appeal, the Commissioner (Appeals) shall have the following powers — (a) in an appeal against an order of assessment, he may confirm, reduce, enhance or annul the assessment. (aa) . . . . . . . . . . . . . . . . . . (b) in an appeal against an order imposing a penalty, he may confirm or cancel such order or vary it so as either to enhance or to reduce the penalty.\" (c) . . . . . . . . . . . . . . . . . . (2) The Commissioner (Appeals) shall not enhance an assessment or a penalty or reduce the amount of refund unless the appellant has had a reasonable opportunity of showing cause against such enhancement or reduction. Explanation. - In disposing of an appeal, the Commissioner (Appeals) may consider and decide any matter arising out of the proceedings in which the order appealed against was passed, notwithstanding that such matter was not raised before the Commissioner (Appeals) by the appellant.' 8. From the aforesaid provisions, it is very clear once an appeal is preferred before the CIT(A), then in disposing of the appeal, he is obliged to make such further inquiry that he thinks fit or direct the Assessing Officer to make further inquiry and report the result of the same to him as found in Section 250(4) of the Act. Further Section 250(6) of the Act obliges the CIT(A) to dispose of an appeal in writing after stating the points for determination and then render a decision on each of the points which arise for consideration with reasons in support. Section 251(1)(a) and (b) of the Act provide that while disposing of appeal the CIT(A) would have the power to confirm, reduce, enhance or annul an assessment and/or penalty. Besides Explanation to sub-section (2) of Section 251 of the Act also makes it clear that while considering the appeal, the CIT(A) would be entitled to consider and decide any issue arising in the proceedings before him in appeal filed for its consideration, even if the issue is not raised by the appellant in its appeal before the CIT(A). Thus once an assessee files an appeal under Section 246A of the Act, it is not open to him as of right to withdraw or not press the appeal. In fact the CIT(A) is obliged to dispose of the appeal on merits. In fact with effect from 1st June, 2001 the power of the CIT(A) to set aside the order of the Assessing Officer and restore it to the Assessing Officer for passing a fresh order stands withdrawn. Therefore, it would be noticed that the powers of the CIT(A) is co-terminus with that of the Assessing Officer i.e. he can do all that Assessing Officer could do. Therefore just as it is not open to the Assessing Officer to not complete the assessment Page | 7 I.T.A. No.: 1968/KOL/2024 Assessment Year: 2018-19 Manik Pal. Page 7 of 8 by allowing the assessee to withdraw its return of income, it is not open to the assessee in appeal to withdraw and/or the CIT(A) to dismiss the appeal on account of non-prosecution of the appeal by the assessee. This is amply clear from the Section 251(1)(a) and (b) and Explanation to Section 251(2) of the Act which requires the CIT(A) to apply his mind to all the issues which arise from the impugned order before him whether or not the same has been raised by the appellant before him. Accordingly, the law does not empower the CIT(A) to dismiss the appeal for non-prosecution as is evident from the provisions of the Act.” 5. Accordingly, we deem it appropriate to set aside the order of the Ld. CIT(A) and remit the matter back to the file of Ld. CIT(A) for disposal of the grounds taken by the assessee on merits, by passing a speaking order. Since the appeal has been remitted back to the file of Ld. CIT(A), he shall also decide this appeal on legal grounds raised before us on which we are expressing our opinion. Needless to say, the assessee shall be given a reasonable opportunity of being heard to make any further submission it wants to make in support of its grounds of appeal. Accordingly, the grounds taken by the assessee in his appeal are allowed for statistical purposes. 6. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open Court on 7th January, 2025. Sd/- Sd/- [Sonjoy Sarma] [Rakesh Mishra] Judicial Member Accountant Member Dated: 07.01.2025 Bidhan (P.S.) Page | 8 I.T.A. No.: 1968/KOL/2024 Assessment Year: 2018-19 Manik Pal. Page 8 of 8 Copy of the order forwarded to: 1. Manik Pal, C/o. P.K. Himmatsinghka & Co., 41, B.B. Ganguly Street, Central Plaza, 2nd floor, Kolkata, West Bengal, 700012. 2. ITO, Ward-33(2), Kolkata. 3. CIT(A)-NFAC, Delhi. 4. CIT- 5. CIT(DR), Kolkata Benches, Kolkata. 6. Guard File. //True copy // By order Assistant Registrar ITAT, Kolkata Benches Kolkata "