STAR AGRO FARMS,PANIPAT V. ITO, WARD 4, PANIPAT

ITA 2380/DEL/2023

AI Insights

The case involves Star Agro Farms appealing against an assessment order passed by the Income Tax Officer (ITO) under sections 144 and 147 of the Income Tax Act, which added Rs. 53,30,000 as income from undisclosed sources under section 69. The primary contention was the validity of the jurisdiction and the procedural correctness of the assessment, including the lack of tangible material and proper reasoning for the belief that income had escaped assessment. The CIT(A) upheld the ITO's decision, leading to the appeal before the Tribunal. The Tribunal found significant procedural errors, including incorrect facts and lack of application of mind in the assessment process, leading to the quashing of the assessment.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 31023 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2012-2013
• Other Referred Cases: Keshav Saran vs. ACIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAHIL KUMAR BANSAL
• Assessee Lawyers: SHANTANU JAIN
• Keywords: Onus to prove; Principle of natural justice; Tangible material
• Section: 147; 148; 144; 131; 69

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH ‘G’’ : NEW DELHI) BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI ANUBHAV SHARMA, JUDICIAL MEMBER ITA No. 2380/Del/2023 Asstt. Year : 2012-13 STAR AGRO FARMS, VS. ITO, WARD 4, B-36, YAMUNA ENCLAVE, PANIPAT PANIPAT HARYANA-132103 (PAN: ACDFS0549P) (Appellant) (Respondent) Appellant by : Shri Shantanu Jain, Adv. Respondent by : Shri Sahil Kumar Bansal, Sr. D.R. Date of Hearing 28.01.2025 Date of Pronouncement 12.02.2025 ORDER PER SHAMIM YAHYA, AM : This appeal has been filed by the Assessee against the order dated 09.08.2023 passed by the Ld. CIT(A)/NFAC, Delhi on the following grounds:- 1. That the action taken u/s 144 read with Section 147 of the Income Tax Act and consequent assessment trained, as upheld by the Ld. C1T(A) is vitiated, without jurisdiction and contrary to law. 2 That having regard to the facts and circumstances of the case, the Ld. CIT( A) has erred in law and on facts in upholding the action of Ld. Assessing Officer in framing the impugned assessment order u/s 144 r.w. 147 2 | P a g e of the Act and that too without assuming jurisdiction as per law and without complying with mandatory condition of Section 147 to 151 of the Income Tax Act. 1961. 3. That the assessment order passed u/s 144 r.w. Section 147 of the Act is bad in law as no tangible material has come to the knowledge of the Assessing Officer. The Ld. Assessing Officer has merely relied upon the information received from the office of Income Tax Officer Ward-2, Panipat. 4. That the Ld. Assessing Officer has not recorded any reason by applying his independent application of mind to show that he has a “reason to believe” that the income has escaped assessment and as such the same are not valid in the eyes of law. 5. That reasons recorded are based upon the presumption and guess work and these are not more than reason to suspect and thus are not valid in the eyes of law as no belief can be formed on the basis of such reasons recorded. 6. That the re-opening of the assessment us bad in law for the reason that the sanction granted u/s 151 of the Act is not valid in the eyes of law and the same is mechanical and has been done without independent reasoning and application of mind by the sanctioning authority. 7. That the Notice issued u/s 148 of the Act is invalid in law as no DIN was generated while issuing notice by the Department for the AY 2012-13. 8. That having regard to-the facts and circumstances of the case, the Ld. C1T(A) has erred in law and on facts in upholding the action of Ld Assessing Officer in making an addition of Rs. 53,30,000/- on account of unexplained investment u/s 69 of the Act and that too recording incorrect fact- and findings and without observing the principles of natural justice. 9. That in any case and in any view of (he matter, action of Ld. CIT(A) in upholding the action of Id Assessing Officer in making an addition of Rs. 53,30,000/- on account of unexplained investment, is bad in law and against the facts and circumstances of the case. 10. That the Ld CIT(A) had grossly erred in upholding the action of the Ld. AO in making the addition u/s 69 of the Act as unexplained investment when the same is recorded in the books of the accounts of the Assessee during the year under onsideration and the action of the department is contrary to the provision of Section 69 of the Act, 3 | P a g e 11. That the Ld. CIT(A) erred in upholding the order of the Assessment framed u/s 144 r.w. Section 147 of the Act without appreciating the evidences on record vis-a-vis ITR. Balance Sheet of the Appellant, PAN, ITRS of the Partner’s Creditors, Bank Statement of the creditors etc which could substantiate the credit worthiness of the partners and the genuineness of the transaction. 12 That the Ld. C1T(A) has erred in upholding the order of the Assessment framed u/s 144 r.w. ection 147 of the Act in not appreciating the fact that the Assessee had discharge its onus of proving the genuineness of the transaction and the creditworthiness of the partners 13 That the Ld. C!T(A) erred in upholding an addition u/s 69 of the Act on the basis of issuance of notice u/s 131 to the creditors and the creditors failed to appear before the AO, to which the same cannot be a ground for sustaining the addition as it is well settled law that merely issuing notice u/s 131 of the Act to the creditors, which could not be served or they failed to appear before the AO, the loan taken from the creditors could not be treated as non-genuine. 14 That the Ld. CIT(A) has erred both in law and on facts in upholding the levy of interest under the Act which are not leviable on the facts and circumstances of the case of the Appellant. 15. That the appellant waves leave for adducing necessary evidence, amendments and explanation including written one to the aforesaid grounds and also raise additional grounds in the course of hearing of the appellate proceedings. It is therefore, prayed that addition so upheld by the CIT(A) alongwith interest levied be deleted and appeal of the appellant be allowed.” 2. In this case assessment was completed by the AO u/s. 144 read with section 147 of the Act on 19.12.2019 at an assessed income of Rs. 53,30,000/- by adding the same in the hands of the assessee u/s. 69 of the Act as income from undisclosed sources. Upon assessee’s appeal, Ld. CIT(A) noted that since 4 | P a g e the assessee has failed to discharge its primary onus to prove genuineness of the transaction, hence, he affirmed the action of the AO. 3. Against the above order, assessee is in appeal before us. 4. We have heard both the parties and perused the records. At the outset, Ld. Counsel for the assessee assailed the jurisdiction assumed by the Assessing Officer on the basis of reasons recorded. He referred Page no. 8 of the Paper Book wherein, it was mentioned that in the reasons recorded no PAN and no status of the assessee was mentioned and the assessment year in which the notice u/s. 148 was issued has a mention of Assessment year 2015-16 and also in the approval granted by the PCIT, there is a mention of assessment year 2015-16. Referring to these anomalies assessee submitted that assessment assumed is not valid, hence, the assessment is liable to be quashed. He further submitted that in the reason recorded there is a mention that return has not been filed, but actually return was filed by the assessee and thus assessment was completed on wrong facts of the case and without application of mind by the authorities below, which needs to be quashed. 5. Ld. DR on the other hand submitted that AO has attached an Annexure wherein, assessment year was correctly mentioned i.e. AY 2012-13. 6. We have carefully considered the submissions and perused the records. We find that reasons recorded contains a lot of anomalies and most glaring anomaly is that assessment year is mentioned as 2015-16 and also in the approval granted by the PCIT the assessment year mentioned as AY 2015-16, which are based on incorrect facts and without application of mind. In this 5 | P a g e view of the matter, we find that reasons recorded shows that approval granted by the PCIT did not pertain to the assessment year under consideration i.e. AY 2012-13, hence, assessment assumed by the Assessing Officer is based on incorrect facts and without application of mind. Accordingly, we hold that jurisdiction assumed by the AO is not valid and therefore, the assessment is hereby quashed. This view is supported by the decision of the Coordinate Bench of Delhi Tribunal in the case of Keshav Saran vs. ACIT passed in ITA 382/Del/2019 (AY 2009-10), vide order dated 22.4.2022 the reassessment order has been quashed on the basis of incorrect facts and without application of mind. 7. Since the assessment is quashed in instant case, therefore, the other grounds raised by the assessee need not be adjudicated. 8. In the result, the appeal filed by the assessee is allowed. Order pronounced in the Open Court on 12.02.2025. Sd/- Sd/- (ANUBHAV SHARMA) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER SRBhatnagar Copy forwarded to: - 1. Appellant 2. Respondent 3. DIT 4. CIT (A) 5. DR, ITAT TRUE COPY By Order, Assistant Registrar, ITAT, "