Case Law Details
Mohammad Rajiv Hakeem Vs ITO (ITAT Lucknow)
Assessing officer has mentioned two sections framing the assessment i.e., 144/147. For proceeding ahead to frame an assessment under section 147, the assessing officer is bound to issue notice under section 148 of the Act. As per the available record, no such notice was issued and this fact is accepted by the Revenue also. We further observe that as per the provisions of section 163(2) of the Act, which deals with the procedure to examine as to who may be regarded as an agent in relation to a non-resident and the provision specifically mentions that “no person shall be treated as the agent of a non-resident unless he has had an opportunity of being heard by the assessing officer as to his liability to be treated as such”. It contemplates that in the case of a non-resident, if a person is having an authority to receive any income directly or indirectly, which in this case is sale consideration, then the assessing officer before proceeding ahead to make any assessment has to first give an opportunity to that person before treating him as an agent of non-resident and to examine as to whether this person can uphold liability to pay tax on behalf of the non-resident. From a perusal of the record we observe that since the beginning of the proceeding on 28-1-2015 nothing has been brought on record to prove that any such opportunity of being heard was provided to Shri Muzarraf Shah and Shri Akram Shah who were holding power of attorney on behalf of the assessee. This is a clear non-compliance with section 163(2) of the Act. We also observe that the assessing officer has made protective addition in the hands of both the agents namely Shri Muzarraf Shah and Shri Akram Shah at Rs. 16,63,000 and no substantive addition has been made. For a protective addition to stand for, there has to be a substantive addition. From going through all the above series of events which clearly shows that the assessing officer has proceeded in this matter in a haste and without complying with the necessary provisions of law and not providing any opportunity of being heard by merely observing that he had no other option except to pass the order under section 144 as the matter was getting time barred. We are of the considered opinion that limitation of time in the hands of the assessing officer to frame the assessment cannot give him the power to make high pitched assessment without providing proper opportunity of being heard and not complying with the necessary provisions of the Act. We are therefore, of the view that the order passed under section 144/147 is not valid and needs to be quashed.
Full Text of the ITAT Order is as follows:-
These two appeals of the same assessee (assessed in the name of different agents) relating to the assessment year 2007-08 are directed against separate orders of the Commissioner (Appeals), Bareilly of the even date 27-9-2016 arising out of the order passed under section 144/147 of the Income Tax Act framed by the Income Tax Officer, Ward-1(3), both dated 3-3-2015.
2. As the issues raised in both the appeals are common therefore, they are being heard together and are disposed of by this common order for the sake of convenience and brevity.
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