Najma Vs PCIT (ITAT Lucknow)
Reopening U/s 148 Quashed – Order U/s 148A(d) Passed Before Expiry of Reply Time & Without Considering Assessee’s Reply – ITAT Lucknow
The assessee’s case was reopened based on information from the Insight Portal alleging large bitcoin trading and unexplained investment of ₹88.55 lakh. AO completed reassessment u/s 147 r.w.s.144 and made addition u/s 69, which was confirmed by CIT(A).
Before ITAT, the assessee raised additional legal grounds challenging validity of reopening. It was demonstrated that notice u/s 148A(b) granted time till 31.03.2022 for reply, yet AO passed order u/s 148A(d) on 29.03.2022, i.e., before expiry of statutory time. Further, the assessee had already filed reply on 26.03.2022 but the AO recorded that no reply was received and passed the order without considering it.
The Tribunal held that section 148A mandates giving proper opportunity and mandatory consideration of assessee’s reply. Passing order before expiry of response period and ignoring reply violated section 148A(b) & (c) and principles of natural justice. Consequently, the 148A(d) order was held invalid, and since reopening itself was vitiated, the entire reassessment proceedings were declared void ab initio. All other grounds became infructuous.
FULL TEXT OF THE ORDER OF ITAT LUCKNOW
This is an appeal filed by the assessee against the order of the ld. PCIT, Bareilly under section 263 of the Income Tax Act on 22.03.2021 revising the order of the Assessing Officer passed under section 147 r.w.s. 143(3) of the Income Tax Act, 1961 on 30.06.2017. The grounds of appeal are as under:-
“Grounds No.1 The Learned PCIT, Bareilly has erred in initiating and completing the revisionary proceedings u/s 263 of the Act in the hands of the assessee, and setting aside the case to the Assessing officer, with total disregard to the facts and circumstances of the case, and is untenable under the law.
Grounds No. 2 The Learned PCIT, Bareilly erred in setting aside the assessment made vide order under section 143(3)/147 dated 30/06/2017 and passing an order under section 263 of the Act on the grounds that the original assessment order passed under section 143(3)/147 was erroneous and prejudicial to the interest of the revenue and directing AO to frame fresh assessment order (de novo) after giving reasonable opportunity of hearing to the appellants.
Grounds No. 3 The Learned PCIT, Bareilly has further failed to appreciate that the original assessment order was passed by the Assessing officer after considering all the issues mentioned in his show cause notice and after making due enquiries, and thus the case was not the one of lack of enquiry by the Assessing officer.
Grounds No. 4 The Learned PCIT, Bareilly erred in law as well as on the facts of the case in wrongly setting aside the assessment order dated 30/06/2017 despite there being complete application of mind by the AO on the subjected issues and it was nothing but a case of change of opinion, based on which, assumption of jurisdiction u/s 263 is not permissible. The impugned order dated 22/03/2022 therefore, lacks valid jurisdiction u/s 263 of the Act and hence, the same kindly be quashed.
Grounds No. 5 The Learned PCIT, Bareilly further failed to appreciate that where there were two possible views and a logical view had been taken by the Assessing officer in the original assessment proceedings, the revisionary proceedings could not be initiated to substitute his own view.
Grounds No. 6 That the finding of Learned PCIT, Bareilly that order of the learned Assessing Officer is erroneous and prejudicial to the interest of revenue is factually incorrect, legally misconceived, contrary to evidence on record; and in any case is vague, based on surmiseful considerations; and therefore unsustainable.
Grounds No. 7 That the Learned PCIT, Bareilly has erred in holding that it is a case of “lack of enquiry” and, further failing to appreciate that alleged inadequate enquiry in the manner suggested without any independent evidence and, without any further enquiries by him cannot be a basis for assumption of jurisdiction u/s 263 of the Act.
Grounds No. 8 The Learned PCIT, Bareilly has without conducting any independent enquiries has held the order to be erroneous and prejudicial to the interest of the revenue, has set aside the assessment back to the file of the Assessing officer with total disregard to the facts and circumstances of the case. The CIT has failed to appreciate that powers of revision u/s 263 cannot be exercised for redoing the investigation, rather the CIT ought to have done the investigation himself before restoring the matter to the AO.
Grounds No. 9 The Learned PCIT, Bareilly has further ignored that in view of the provisions of explanation 2 of section 263, it is incumbent to point out what more enquiries would the AO ought to have conducted.
Grounds No. 10 That the Learned PCIT, Bareilly has also failed to appreciate that, u/s 263 of the Act, an order of assessment cannot be set-aside to simply to make further enquiries and thereafter pass fresh order of assessment and as such, impugned order is contrary to law and hence, unsustainable. The learned Principal Commissioner of Income Tax has failed to appreciate that surmises, conjecture and suspicion could not be a basis much less a valid basis to invoke section 263 of the Act.
Grounds No. 11 That the Learned PCIT, Bareilly has framed the impugned order without granting sufficient opportunity to the appellant and therefore the order made is illegal, invalid and, vitiated order Prayer It is therefore prayed that, impugned order dated 22.3.2022 under section 263 of the Act be held to be without jurisdiction and, therefore be quashed and appeal of the appellant be allowed.
Grounds No. 12 The assessee’s case does not fall within the mischief of section 263 and as such the order is bad in law and the same is liable to be cancelled.
Grounds No. 13 That the Appellant craves leave to amend alters, add or forego any of the above grounds.”
2. The facts of the case are that the Assessing Officer receives an information from the Income Tax Officer (I&CI) that the assessee, Smt. Najma wife of Sh. Jabbar had deposited cash of Rs. 12,99,000/- in her savings bank account in the F.Y. 2011-12 relevant to the A.Y. 2012-13. A query was made to the assessee but because the assessee did not respond, the ld. AO derived reasons to believe that income chargeable to tax had escaped assessment for the A.Y. 2012-13 and accordingly, a notice under section 148 was issued. In compliance to the said notice, the assessee filed her return of income for the F.Y. 2012-13 showing an income of Rs.1,87,240/-. The ld. AO records that the action under section 148 was taken because of AIR information with relation to deposit of Rs. 12,99,000/- in cash and that in compliance to the various notices issued by him, the assessee’s counsel had attended and furnished a reply which was not found to be acceptable. On consideration of the facts and circumstances of the case, he deemed it fit to make an addition of Rs. 30,000/- to the returned income of the assessee. He held that such an enhancement would be deemed to take care of trading as well as household expenses.
