Aashka Hospitality Pvt. Ltd. Vs ITO (ITAT Ahmedabad)
Jurisdiction Objection Barred by Sec.124(3); No Rebuttal Opportunity Against Remand Report — LTCG Addition of ₹5.80 Cr Remanded for Fresh Hearing
This appeal by Aashka Hospitality Pvt. Ltd. arose from an ex-parte reassessment u/s 144 r.w.s. 143(3) wherein the Assessing Officer added ₹5,80,85,164/- as Long-Term Capital Gain. The Assessee had filed its return declaring income of ₹1.71 crore. However, during scrutiny, despite several notices u/s 143(2), 142(1) & even a final notice u/s 274, no response was furnished, compelling the AO to complete the assessment ex-parte.
Before the CIT(A), the Assessee filed voluminous additional documents claiming that additions to fixed assets and construction-related payments were genuine. The CIT(A) sought a detailed remand report from the AO, who pointed out several discrepancies including absence of bills, vouchers, bank statements & mismatch of dates & figures. Relying heavily on the AO’s remand findings, the CIT(A) upheld the entire addition, concluding that the Assessee failed to establish any nexus between documents produced & the fixed asset additions claimed.
Before Tribunal, the Assessee raised an additional ground that the assessment was void due to lack of jurisdiction per CBDT Instruction 1/2011. Tribunal held that such objection was legally barred. Since the Assessee had itself filed the return before ITO Ward–1(1)(1), and the first notice u/s 143(2) was validly served on 03.08.2016, section 124(3)(a) prohibited any jurisdiction challenge beyond one month of such service. The Assessee had never objected before the AO or before the CIT(A); therefore, the jurisdiction plea raised for the first time before Tribunal was rejected outright.
However, Tribunal accepted the grievance that the CIT(A) relied on the AO’s remand report without giving the Assessee an opportunity to rebut it. Since denial of opportunity violates natural justice, Tribunal found merit in remanding the matter. It held that the Assessee must be allowed one final chance to substantiate the LTCG computation with complete supporting documents for fixed asset additions and construction expenditure.
Accordingly, Tribunal restored the issue of the LTCG addition of ₹5.80 crore to the file of the Jurisdictional AO for fresh adjudication after granting due opportunity. The Assessee was directed to fully cooperate & furnish all evidence, and the AO was directed to pass a reasoned order.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
