SHRI. SANNAPPA RAMAPPA,DAVANGERE V. INCOME TAX OFFICER, WARD-1(3), DAVANGERE

ITA 50/BANG/2025

AI Insights

This case involves an appeal by Shri Sannappa Ramappa against the orders of the Income Tax Officer and the National Faceless Appeal Centre (NFAC) concerning the reassessment of his income for the Assessment Year 2012-13. The primary contention revolves around the legality of the reassessment notice and the subsequent additions made to the assessee's income. The assessee argued that the reassessment was based on an invalid foundation as no original assessment order was passed, and the reassessment proceedings violated principles of natural justice. The Tribunal found merit in the assessee's arguments, particularly noting the procedural lapses and the need for a fair hearing, leading to the decision to remand the case back to the Ld.CIT(A).

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 312235 (ITAT-BANGALORE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUBRAMANIAN S
• Assessee Lawyers: RICHA BAKIWALA
• Keywords: Set aside; Opportunity of being heard; Reassessment proceedings; Unexplained investment; Tax effect; Principle of natural justice; Procedural lapse
• Section: 147; 148; 143(3); 133(6); 133A

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH : BANGALORE BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI SOUNDARARAJAN K., JUDICIAL MEMBER ITA No. 50/Bang/2025 Assessment Year : 2012-13 Shri Sannappa Ramappa, R S B Bricks, Mahajenahalli Shimoga Road, Mahajenahalli, Davangere – 577 601. PAN: ANBPR5185M Vs. The Income Tax Officer, Ward – 1(3), Davangere. APPELLANT RESPONDENT Assessee by : Ms. Richa Bakiwala, CA Revenue by : Shri Subramanian .S, JCIT-DR Date of Hearing : 27-02-2025 Date of Pronouncement : 30-04-2025 ORDER PER SOUNDARARAJAN K., JUDICIAL MEMBER This is an appeal filed by the assessee challenging the order of the Ld.CIT(A), Davangere dated 17/01/2018 in respect of the A.Y. 2012-13 and raised the following grounds: Page 2 of 8 ITA No. 50/Bang/2025 Grounds of Appeal Tax effect relating to each Ground of appeal I The order of the learned National Faceless Appeal Centre (\"NFAC\") dated 22-Jun-2024 passed under section 250 of the Income-tax Act, 1961 (\"the Act\") and the order of the learned Assessing Officer dated 30-Mar-2015 passed under section 147 read with section 143(3) of the Act insofar it is against the Appellant, is opposed to the law, weight of evidence, facts and circumstance of the Appellant's case. II The issuance of the notice for reassessment is legally untenable as no valid assessment order was passed in the first instance. In the absence of an assessment order, the very foundation for initiating reassessment proceedings is lacking, rendering the reassessment notice invalid and unsustainable. III The learned NFAC passed the order against the principles of natural justice i.e. the order was passed in haste without providing a reasonable opportunity of being heard to the Appellant and thus, is liable to be quashed. IV The learned NFAC, in its capacity as a quasi-judicial authority, erred in passing an ex parte order without properly considering the materials and documents available on record. This failure to assess all relevant evidence constitutes a serious procedural lapse, undermining the principles of natural justice, fair adjudication, and due process. It is imperative for a quasi-judicial body to consider all pertinent materials before rendering a decision. Page 3 of 8 ITA No. 50/Bang/2025 V The learned Assessing Officer erred in not appreciating that if no addition is made based on the reasons for reopening the assessment, any subsequent additions made during the reassessment proceedings are legally unsustainable. Consequently, the order passed is invalid in law, as it fails to establish a valid link between the reasons for reopening and the additions made. VI The learned Assessing Officer erred in relying on information obtained during the survey proceedings, which is distinct from the information based on which the notice under section 148 of the Act was issued. This fundamental deviation renders the reassessment proceedings invalid and unsustainable in law. VII The learned Assessing Officer erred in initiating assessment proceedings under Section 148 of the Act, though the time limit for conducting scrutiny proceedings under Section 143 of the Act has not yet expired. VIII The learned Assessing Officer erred in making a highly pitched addition of Rs. 1,29,50,000/- to the total income of the Appellant without specifying the relevant provisions of the Act that apply to the matter at hand. This omission constitutes a violation of the principles of legality and due process under Article 265 of the Constitution, as no clear legal basis was provided for the addition. Page 4 of 8 ITA No. 50/Bang/2025 IX The learned Assessing Officer and the learned NFAC erred in not appreciating that the Appellant acted solely as an agent of the seller in the sale of the properties. Due to unavoidable circumstances, the Appellant was unable to collect the relevant documents earlier; however, the same have now been obtained by the Appellant. X The learned Assessing Officer erred in solely relying on the information obtained during the summons to make the addition. The Assessing Officer failed to exercise the statutory powers under section 133(6) of the Act to cross-verify the information before concluding the assessment proceedings, thereby vitiating the assessment. XI The learned Assessing Officer erred in disregarding the Appellant's submission that they acted solely as an agent in the property sales. The addition should have been limited to the commission of Rs. 10,000/- per site, totalling Rs. 3,40,000/-, as no sale deed was executed in the Appellant's favor, and the Appellant did not hold ownership. XII Without prejudice to the above, the learned Assessing Officer erred in treating the future payments specified in the Agreement to Sell as unexplained investments. The learned NFAC further erred in upholding this addition without conducting a proper verification of the facts on record. The future payments are merely contingent liabilities under the Agreement to Sell and do not constitute unexplained investments, as incorrectly concluded by the authorities. Page 5 of 8 ITA No. 50/Bang/2025 XIII The Appellant craves leave to add, alter, substitute, and delete any or all the grounds of appeal urged above. Total tax effect Rs. 56,42,409/- 2. The assessee, an individual engaged in the business of manufacturing and sale of mud bricks and real estate, filed his return of income for Assessment Year 2012-13 on 26.11.2012 declaring an income of Rs.6,34,680/- . The return was processed u/s 143(1) of the Income Tax Act, 1961 (in short ‘the Act’). Subsequently, on the basis of information received, the Assessing Officer (AO) initiated proceedings u/s 147 of the Act as he had found reasons to believe that income of the assessee exigible to tax amounting to Rs.37.64 lakhs had escaped assessment and after recording reasons in this regard, issued notice u/s 148 of the Act to the assessee on 22.07.2013. In response thereto, the assessee requested the AO to treat the original return of income filed on 26.11.2012 as return filed in response to the notice issued u/s 148 of the Act. On 13.02.2015, a survey u/s 133A of the Act was conducted at the assessee’s premises and in continuation of the proceedings thereof, the assessee admitted and declared an additional income amounting to Rs.10,05,110/-(as listed on page 4 of the order of assessment). The AO, however, after further examination of the assessee’s case, concluded the assessment u/s 143(3) r.w.s. 147 of the Act vide order dated 30.03.2015 and determined the assessee’s income at Rs.1,42,49,790/-. 3. Aggrieved by the said order of the assessment, the assessee preferred an appeal before the Ld.CIT(A), Davangere. The said appeal was dismissed by the Ld.CIT(A) for non-prosecution vide order dated 17/01/2018. Subsequently, the assessee challenged the said ex-parte order before this Tribunal and the Tribunal also took a lenient view and remitted the matter to the file of the Ld.CIT(A) for adjudicating the issues afresh. At the time of the remand, the assessee had not responded to the various notices issued by the Ld.CIT(A) and therefore the Ld.CIT(A) had again dismissed the appeal Page 6 of 8 ITA No. 50/Bang/2025 for non-prosecution. As against the said order, the assessee is in appeal before this Tribunal. 4. The assessee filed this appeal with a delay of 141 days and he also filed an application to condone the said delay and also explained the reasons for the said delay. In the said delay condonation application, the assessee brought to our notice that the assessee had sought for adjournment to the two notices issued on 12/01/2024 and 18/04/2024 but unfortunately the then Ld.AR fell sick and therefore he was not able to follow up the appeal. The assessee also submitted that the then authorised representative also passed away on 21/08/2024 and therefore the assessee is having valid reasons for not filing the appeal within the statutory period. The assessee submitted that the delay has been occurred because of the above said reasons and prayed to condone the said delay. 5. We have considered the submissions made by the assessee as well as by the Ld.DR and also considered the fact that the then Ld.AR passed away on 21/08/2024 and satisfied ourself that the assessee is having valid reasons for not filing the appeal in time before this Tribunal. Therefore we are condoning the said delay of 141 days in filing this appeal and proceeded to take up the main appeal. 6. At the time of hearing, the Ld.AR submitted that the appeal was migrated to NFAC and thereafter notices were issued on 12/01/2024 and 18/04/2024 for which the assessee sought for an adjournment since the records are of old records. Further, the then authorised representative also fell ill and therefore an adjournment was sought for. The Ld.AR further submitted that the NFAC without considering the said reasons, had dismissed the appeal. The Ld.AR further submitted that the then authorised representative passed away on 21/08/2024 and thereafter the assessee took various steps to know about the status of the appeal and finally the present appeal was filed before this Tribunal. The Ld.AR, Page 7 of 8 ITA No. 50/Bang/2025 therefore, prayed to grant one more opportunity to appear before the Ld.CIT(A). 7. The Ld.DR relied on the orders of the lower authorities and prayed to dismiss the appeal. 8. We have heard the arguments of both sides and perused the materials available on record. 9. We have considered the submissions made by the Ld.AR and the reasons for not appearing before the Ld.CIT(A) and also considered the demise of the then authorised representative and we are satisfied that the explanations given by the assessee for the non-appearance before the Ld.CIT(A) are genuine one. We have also considered the fact that the then Ld.AR also passed away on 21/08/2024. By considering the facts and circumstances, we are inclined to grant one more opportunity to the assessee to appear before the Ld.CIT(A). We therefore set aside the order of the Ld.CIT(A) and restore the issue to the file of the Ld.CIT(A) with the direction to decide the issue on merits and in accordance with law, after hearing the assessee in person. 10. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open court on 30th April, 2025. Sd/- Sd/- (WASEEM AHMED) (SOUNDARARAJAN K.) Accountant Member Judicial Member Bangalore, Dated, the 30th April, 2025. /MS / Page 8 of 8 ITA No. 50/Bang/2025 Copy to: 1. Appellant 2. Respondent 3. CIT 4. DR, ITAT, Bangalore 5. Guard file 6. CIT(A) By order Assistant Registrar, ITAT, Bangalore "