Case Law Details
Ganga Suresh Rathod Vs ITO (ITAT Panaji)
Income Tax Appellate Tribunal (ITAT) Panaji set aside the National Faceless Appeal Centre (NFAC) order in the case of Ganga Suresh Rathod vs. ITO. The appellant had filed her income tax return for the assessment year 2015-16, reporting a total income of ₹8,97,453. However, based on information from the Director General of Income Tax (Investigation), her case was reopened under Section 148, suspecting tax evasion. The Assessing Officer (AO) found that she had earned ₹8,29,400 as long-term capital gains (LTCG) from speculative transactions in the stock ‘OJASASSET.’ Since she failed to justify the legitimacy of these gains, the AO deemed them bogus and added the amount to her taxable income. The reassessment was conducted under Section 147 read with Section 144B, and her appeal to the NFAC challenging the reopening and tax addition was dismissed.
Before ITAT, the appellant argued that the NFAC had denied her request for a video conference hearing, which prevented her from adequately presenting her case. The tribunal, comprising Judicial Member Pavan Kumar Gadale and Accountant Member G.D. Padmahshali, emphasized that the right to be heard is a fundamental principle of natural justice. They found that NFAC had rejected the video conferencing request without valid justification, making the proceedings irregular. Consequently, the ITAT remanded the case back to the NFAC, directing that a fresh hearing be conducted through video conferencing and a new order be passed as per Section 250(6) of the Income Tax Act. The appeal was allowed for statistical purposes, reinforcing the importance of fair hearings in tax litigation.
FULL TEXT OF THE ORDER OF ITAT PANAJI
The present appeal is filed by the assessee against the DIN & Order No. ITBA/NFAC/S/250/2024-25/1065632905(1) dt. 13/06/2024 passed u/s 250 of the Income-tax Act, 1961 [for short ‘the Act’] by the National Faceless Appeal Centre, Delhi [for short ‘Ld. CIT(A)/NFAC’] which in turn confirmed the order of assessment passed u/s 147 r.w.s. 144B of the Act by the Income Tax Officer, Ward-1, Gokak [for short ‘Ld. AO’], in relation to the assessment year 2015-16 [for short ‘AY’]
2. Facts of the case briefly stated as;
2.1 The assessee is an individual who filed her original return of income [‘ITR’ hereinafter] on 25/09/2015 declaring total income at ₹8,97,453/-, which was summarily processed u/s 143(1) of the Act.
2.2 The Document from DGIT (Inv) Kolkata explaining the modus-operandi along with list of beneficiaries regarding systematic evasion of taxes was forwarded based upon which the Ld. AO after recording reasons & obtaining prior approval re-opened the case of the assessee for AY 2015-16 by notice dt. 30/03/2021 u/s 148 of the Act.
2.3 The information that the assessee dealt in scrip ‘OJASASSET’ and entered/executed certain speculative transactions through which she had earned a long-term capital gain [‘LTCG’ hereinafter] of ₹8,29,400/- for the year under consideration. Said information during the course of reassessment proceedings was confronted which remained unexplained to the satisfaction of the Ld. AO. In the event of assessee’s effective failure to explain the genuineness of LTCG earned by her and its disclosure in ITR filed u/s 139(1) of the Act, the Ld. AO treated same as BOGUS & added the same as income of the assessee and framed the assessment accordingly u/s 147 r.w.s. 144B of the Act.
2.4 The re-opening, addition and passing of order u/s 147 r.w.s. 144B of the Act was unsuccessfully challenged in an appeal before the Ld. NFAC. Aggrieved by the actions of tax authorities below, the assessee filed the present appeal on following grounds;
(1) That the learned ACIT is not at all justified in issuing notice U/s 148. Since LTCG of Rs. 829500/- has been already admitted in the Original Return itself and rightly claimed exemption U/s 10(38). Hence there is no escapement of any income to invoke Section 147 of the Act. Hence issue of notice U/s 148 is without Jurisdiction is Bad-in-Law and hence needs to be quashed.
(2) That the learned ACIT erred both in law and on facts in denying. The claim of exemption U/s 10 (38) and bringing to tax income as un-explained Credit U/s 69A. Hence additions of Rs. 829500/- made requires to be deleted.
(3) Learned ACIT is not justified in charging interest U/s 234B amounting to Rs. 209844/-. The delay of 7 years in passing Order U/s 147 r.w.s. 144B is not attributable to appellant. Hence Rs. 209844/- interest charged U/s 234B requires to be deleted.
(4) For these and other grounds may be urged at the time of hearing of appeal.
3. Without touching the merits of the case, heard the rival submissions and subject to the provisions of rule 18 of Income Tax Appellate Tribunal Rules, 1963 [for short ‘ITAT, Rules’] perused the material placed on records.
4. We note that, when preliminary submission hindsight adverse perception to the Ld. NFAC, the appellant assessee requested for video conferencing so has make better depreciative explanation against the adversarial understanding. However, the Ld. NFAC brush-aside the request and proceeded on the basis of submission and adjudicated the issue summarily in line with the findings of Ld. AO.
5. An opportunity to be heard is an important facet of natural justice, therefore, before passing an adverse order it is incumbent upon the quasi-judicial authority to afford the assessee with a reasonable opportunity through hearings. In the present case, since the specific request of the appellant for video conferencing is turn-downed without any convincing & supporting reasons hence in our considered view the impugned proceeding is suffered from principle of natural justice, thus making it irregular for all the purpose and in consequence deserving it for setting-aside at the stage of its institution.
6. For aforestated reasons, we set-aside the impugned order and remand the file to Ld. NFAC at the stage of its institution with a direction to grant hearing through video conferring and decide the issue de-novo in accordance with law and pass a speaking order in terms of section 250(6) of the Act. The ground accordingly stands allowed for statistical purposes.
7. In result, the appeal of the assessee is allowed for statistical purposes.
In terms of rule 34 of ITAT Rules, the order pronounced in the open court the date mentioned hereinbefore.
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