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2025 Supreme(Online)(ITAT) 993
INCOME TAX APPELLATE TRIBUNAL (KOLKATA BENCH)
SONJOY SARMA, J, SRI RAKESH MISHRA, ACJ
MANIK PAL NORTH 24 PARGANAS – Appellant
Versus
ITO WARD 33(2) KOLKATA – Respondent
ITA 1968/KOL/2024
P. Himmatsinghka, AR; S.B. Chakraborthy, Addl. CIT, Sr. DR; Somnath Das Biswas, Sr. DR
The CIT(A) must provide a reasoned decision on merits and cannot dismiss appeals solely for non-compliance; reopening assessments requires tangible evidence of income escapement.
Headnote:(A) Income Tax Act, 1961 - Sections 147, 144, 144B, 148, 148A, 151, 250 - Appeal against order of CIT(A) - Assessee's appeal dismissed due to non-compliance with notices for evidence submission - CIT(A) failed to provide a speaking order with reasoning as required under Section 250(6) - Appeal remitted back for proper consideration. (Paras 3, 4.1, 5)
(B) Reopening of assessment - Grounds for reopening must be based on tangible materials suggesting income escapement - Approval granted under Section 151 must involve application of mind. (Paras 2, 5.5.2)
Facts of the case:
The assessee contested the reopening of assessment alleging arbitrary actions by the Assessing Officer regarding share transactions amounting to Rs. 12,55,870/- without tangible evidence of income escapement. The appeal was dismissed for lack of compliance with evidentiary requests. (Paras 2, 3)
Findings of Court:
The CIT(A) did not adequately address the merits of the case, leading to a failure in fulfilling statutory obligations under Section 250(6). The appeal must be reconsidered on its merits. (Paras 4.1, 5.5.3)
Issues: Whether the CIT(A) can dismiss an appeal for non-compliance without addressing the merits of the case? Whether the reopening of assessment was justified based on the evidence presented? (Paras 4.1, 5.5.2)
Ratio Decidendi: The court held that the CIT(A) is required to provide a reasoned decision on the merits of the appeal and cannot dismiss it merely for non-compliance. The reopening of assessment must be based on substantial evidence of income escapement. (Paras 4.1, 5.5.2)
Result: Appeal allowed for statistical purposes.
ORDER
PER RAKESH MISHRA, ACCOUNTANT MEMBER:
This appeal filed by the assessee is against the order of the Ld. Commissioner of Income Tax (Appeals)-NFAC, Delhi [hereinafter referred to as “the Ld. CIT(A)”] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for AY 2018-19 dated 29.08.2024, which has been passed against the assessment order u/s 147/144/144B of the Act, dated 14.03.2023.
2. The assessee is in appeal before the Tribunal raising the following grounds of appeal:
“(1) That under the facts & circumstances of the case, Ld AO initiated the reopening proceedings by issuing notice u/s 148A on the purported allegation that assessee had sold shares of AMMLTD & EML to the tune of Rs. 12,55,870/- which is a penny stock without having any information which suggests that assessee income had escaped assessment. The initiation of reopening proceedings is arbitrary, unlawful, without application of mind, devoid of any tangible materials and liable to be quashed.
(2) That the reopening proceeding has been initiated by passing order u/s 148A(d) arbitrarily without finding any escapement of income from impugned sale of shares. The notice consequently issued u/s 148 is illegal, bad in law and liable to be quashed.
(3) That the approval granted u/s 151 by the specified higher authority is mechanical and without any application mind.
(4) That the Ld CIT(A) dismissed the appeal without considering the merit of the case, the order is illegal and bad in law.
(5) That under the facts & circumstances of the case, Ld AO initiated the re- opening proceeding without bringing any tangible material on record which could provide live nexus between information and escapement of income, without any application of mind. The re-opening is therefore vague, arbitrary, suspicious and liable to be quashed.
(6) That the notice u/s 148 dated 31-03-2022 issued by JAO is illegal, bad in law and the consequent proceeding connected with illegal notice is also void-ab-intio and liable to be annulled.
(7) That the Ld AO erred in adding Rs. 12,55,870/- the entire impugned sale proceeds of the shares without deducting the corresponding cost despite the assessee had suffered short term loss Rs. 7,93,763 from the said impugned transactions and the said loss was not claimed. The addition made u/s 69A is therefore vague, arbitrary and devoid of any material.
(8) That the appellant craves to add or amend any grounds of appeal on or before the date of hearing.”
3. The appeal of the assessee was dismissed on account of non- compliance to five notices issued to the assessee for submission of evidences in support of its contentions. The relevant paragraphs of the impugned order are reproduced as under:
“5.4.3 During the appellate proceeding, five notices were issued to the appellant for submission of arguments/evidences in support of its contentions made in the aforesaid grounds of appeal. But the appellant has not complied to any of the five notices issued during the appellate proceedings. The consistent non-compliance of the appellant may be because the appellant has no evidence/argument in support of the issues raised in the grounds of appeal or the appellant does not want to pursue the appeal. The statement of fact and grounds of appeal are very brief and do not give any arguments/evidences in support of contentions made in grounds of appeal.
In absence of any arguments/evidence the claim of the appellant remained unverified. Therefore, no infirmity can be found in the order appealed against.
5.4.4 Thus, the first four grounds of appeal are dismissed.
5.5.2 During the appellate proceeding, five notices were issued to the appellant for submission of arguments/evidences in support of its contentions made in the aforesaid grounds of appeal. But the appellant has not complied to any of the five notices issued during the appellate proceedings. The consistent non-compliance of the appellant may be because the appellant has no evidence/argument in support of the
