Smt. Bharti Singh Vs ACIT (ITAT Amritsar)
In the case of Smt. Bharti Singh Vs ACIT, ITAT Amritsar, a significant legal issue revolves around the reassessment of tax filings when the grounds for issuing a reassessment notice are found to be lacking. This article delves into the details of the case and the implications of the ITAT Amritsar’s order.
Detailed Analysis
The appeal was filed by the assessee against separate orders of the ld. CIT(A) National Faceless Appeal Centre (NFAC), Delhi for the Assessment Years 2011-12, 2012-13, and 2013-14. The appellant raised inter-linked identical grounds of appeal, primarily challenging the validity of the reassessment.
The key contentions made by the appellant included:
- The Assessing Officer (A.O) wrongly recorded reasons for reopening the case without substantial evidence, relying on hypothetical figures.
- The approval/sanction of PCIT-1 for reopening the case was considered mechanical and lacked proper scrutiny.
- No books of accounts were rejected before making the addition, and the AO’s actions were deemed unlawful.
- The AO made additions that were not in line with the reasons recorded for reopening.
The appellant argued that since the additions were not based on the reasons initially recorded for reopening, they should not be sustained. They cited a precedent (Gaurav Joshi vs. Income Tax Officer) to support their claim, emphasizing the importance of maintaining consistency between the reasons and the subsequent additions.
The Additional CIT (DR) supported the impugned order but failed to counter the appellant’s contentions effectively.
Conclusion
The ITAT Amritsar ruled in favor of the appellant, quashing the reassessment, as the additions made were not aligned with the reasons initially recorded for reopening. The order emphasized that for a reassessment to be valid, it must be based on the grounds mentioned in the reasons recorded by the Assessing Officer. This decision reaffirms the principle that the jurisdiction to make a reassessment does not exist when the grounds for the reassessment notice are found to be lacking.
This case serves as a precedent for ensuring the consistency between reasons recorded and subsequent additions in tax reassessment proceedings. It highlights the significance of upholding jurisdictional integrity in taxation matters.
FULL TEXT OF THE ORDER OF ITAT AMRITSAR
These captioned appeals have been filed by the assessees against the separate orders of the ld. CIT(A) National Faceless Appeal Centre (NFAC), Delhi dated 28.06.2023& 19.07.2023 in respect of Assessment Years 2011-12, 2012-13, &2013-14.
2. The assessee has raised the inter- linked identical grounds of appeal except variation in amount of addition and therefore, these three appeals were heard together and disposed off by this consolidated order for the sake of brevity.
3. The grounds are extracted from ITA No. 211/Asr/2023 as under-
“1. That the Ld. A.O wrongly recorded reasons u/s 148 dtd. 27-03-19 and reopened the case u/s 148 by treating Rs. 4062760-/- (Expenses) out of total expenses of Rs. 1,13,48,078, by calculating thru a hypothetical figures of expenses and ratio = 25.19% as allowable expenses for A.Y. 2012-13 and balance 100%-25.19% = 74.81% disallowable as bogus and in genuine expenses and this disallowance based only on hypothetical figures of expenses and ratio for the A.Y. 2015-16, without bringing any relevant material, independent evidence, independent verification against the same on record for AY 2012-13 and no reasons to believe arises, no record to show escapement, is a case of borrowed satisfaction and without jurisdiction, further CBDT circular on standard procedure u/s 147 not followed by A.O and proceedings of A.Y. 15-16 have not yet got finality.
2. That the approval / sanction of PCIT-1 dtd. 28-03-19 u/s 151 is mechanical in nature, void-ab-initio being not even iota of record was before him, before sanction indicating that the 100- 25.19=74.81% expenses are in – genuine and bogus for A.Y 2012-13, except the reasons so recorded, which are based on hypothetical theory of A.O of in genuine expenses for A.Y 2015-16 and which have not yet got finality and is bad-in-law.
3. That the Ld. A.O has erred in facts, as well as, in law, as no books of accounts have been rejected, as produced before AO in assessment proceedings u/s 148, before making the addition and is bad- in- law and CIT(A) admitted this fact but gave part relief and still is bad-in-law.
4. That the Ld. A.O wrongly ignored that it is necessary to make addition, as per reasons recorded u/s 148 and before making addition on other grounds, since no addition made on the ground of reasons recorded, then the other additions will not sustain.
5. That Ld. A.O imbalanced the Balance-Sheet as filed u/s 148 by making addition of Rs. 8220496/-under the head Sundry Creditors on liability side and further not gave second effect in Balance-Sheet on assets side and created a superfluous difference between figures of return as filed u/s 148 and old return filed u/s 139(1) dtd. 29-09-2012 and made the addition as under and is bad in law, but accepted all other assets & liabilities of Balance-Sheet ,as well as net profit as filed u/s 148:-
