CIT(A) referenced wrong facts and findings: ITAT directs Fresh Adjudication

Raythara Sahakari Sangha Ltd. Vs ITO (ITAT Bangalore)

In a recent ruling, the Income Tax Appellate Tribunal (ITAT) Bangalore addressed the appeals filed by Raythara Sahakari Sangha Ltd. against orders from the National Faceless Assessment Centre (NFAC), Delhi. The appeals pertain to assessments for the assessment years 2018-19 and 2020-21, with orders dated June 10, 2024, and June 3, 2024, respectively.

The assessment for the year 2018-19 was framed under section 143(3) of the Income Tax Act, incorporating provisions from sections 143(3A) and 143(3B). The Assessing Officer (AO) made significant additions to the returned income, initially reported at ₹2,84,330. The major adjustments included a disallowed deduction under section 80P amounting to ₹68,16,732 and unexplained investments totaling ₹93,01,770. Consequently, the total income was reassessed at ₹1,64,02,832.

Upon receiving the assessment order, the assessee appealed to the Commissioner of Income Tax (Appeals) (CIT(A)). However, the CIT(A) inadvertently referenced facts and findings not present in the assessment order, leading to discrepancies in the appellate review.

During the proceedings, the Authorized Representative (AR) for the assessee argued that the case should be restored to the CIT(A) for a fresh adjudication, taking into account the accurate findings from the assessment order. The AR emphasized that the misrecording by the CIT(A) had impeded a fair assessment of the case.

In response, the Departmental Representative (DR) was unable to contradict the arguments presented by the assessee’s counsel. After deliberation, the ITAT acknowledged the necessity for a comprehensive review by the CIT(A) that adhered strictly to the assessment order’s findings.

The ITAT ruled to restore the matter back to the CIT(A), instructing the assessee to prepare the relevant submissions for review. This directive was seen as essential for ensuring that the appeals were handled in accordance with the law and the principles of natural justice.

Turning to ITA No. 1499/Bang/2024 for the assessment year 2020-21, the ITAT noted that the circumstances mirrored those of the previous appeal. Following the same rationale, the Tribunal concluded that the case should also be referred back to the CIT(A) for a renewed assessment.

In both instances, the ITAT underscored its decision to allow the appeals for statistical purposes, indicating that while the substantive issues remained unresolved, procedural rectifications were necessary to uphold the integrity of the appeals process.

The final pronouncement of the ITAT was made on September 19, 2024, when the order was officially declared in court.

The ITAT Bangalore’s ruling in the case of Raythara Sahakari Sangha Ltd. illustrates the importance of accurate record-keeping and adherence to proper legal procedures in tax assessments. By restoring the appeals to the CIT(A), the Tribunal has ensured that the assessee will have an opportunity for a fair reconsideration of the issues raised, thereby reinforcing the principles of justice within the tax framework. The outcomes of these appeals will likely influence similar cases where procedural missteps have occurred, serving as a reminder for both tax authorities and assessees to maintain diligence in the assessment and appeal processes.

FULL TEXT OF THE ORDER OF ITAT BANGALORE

These appeals are filed by the assessee against the orders passed by the NFAC, Delhi dated 10/06/2024 in DIN No. ITBA/NFAC/ S/250/2024-25/1065522327(1) for the assessment year 2018-19 and dated 03/06/2024 in DIN No. ITBA/NFAC/S/250/2024-25/1065358192(1) for the assessment year 2020-21.

2. At the outset, we note that the assessment was framed by the AO u/s 143(3) r.w.s. 143(3A and 143(3B) of the Act after making the following additions:

3. Against the assessment order, the assessee preferred an appeal before the ld. CIT(A) who inadvertently has recorded the facts and findings in his order, which were not emanating from the assessment order. Thus, the ld. AR appearing on behalf of the assessee submitted before us that the matter can be restored to the file of the ld. CIT(A) for fresh adjudication as per the provisions of law in the light of the findings contained in the impugned assessment order.

4. On the other hand, the ld. DR could not controvert the arguments advanced by the ld. AR for the assessee.

5. We have heard the rival contentions of both the parties and perused the materials available on record. In the light of the above stated discussion, we deem it fit to restore the issue to the file of the ld. CIT(A) for fresh adjudication after considering the impugned assessment order. It is also directed to the assessee to prepare the relevant submission for the perusal of the ld. CIT(A). Hence, the ground of appeal of the assessee is allowed for statistical purposes.

6. In the result, the appeal filed by the assessee is allowed for statistical purposes.

Coming to ITA No. 1499/Bang/2024 for the Assessment Year 2020-21

7. The facts of the case on hand are identical to the facts of the case discussed above, therefore, respectfully following the same, we deem it fit to restore the issue to the file of the ld. CIT(A) for fresh adjudication after considering the impugned assessment order. It is also directed to the assessee to prepare the relevant submission for the perusal of the ld. CIT(A). Thus, the appeal filed by the assessee is allowed for statistical purposes.

8. In the result, the appeal filed by the assessee is allowed for statistical purposes.

9. In the combined result, both the appeals filed by the assessee are allowed for statistical purposes.

Order pronounced in court on 19^th day of September, 2024