Gauhati HC Sets aside ITAT Order passed Ignoring  Provisions of S. 292B of Income Tax Act [Read Order]

In a recent ruling , the Gauhati High Court sets aside the Income Tax Appellate Tribunal  (ITAT) Order passed Ignoring  Provisions of S. 292B  of Income Tax Act

Shankar Lall Goenka, the respondent/ assessee had e-filed his return of income in ITR for the assessment showing total income of Rs.20,03,070/- (Rupees Twenty Lakhs Three Thousand Seventy). The case of the assessee was selected for limited scrutiny under the CASS and the Income Tax Officer issued a notice under Section 143(2) of the Income Tax Act  on 20.09.2016 to the assessee.

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Later on, the Income Tax Officer had transferred the case to the DCIT and in turn, the DCIT has issued a notice under Section 142(1) of the Income Tax Act  to the assessee and has passed the assessment order under Section 143(3) of the Income Tax Act  on 27.12.2017 and added unsecured loan aggregating to Rs.4,30,00,000/- (Rupees Four Crores 30 Lakhs) in the income and computed the total income of the assessee as Rs.4,52,10,840/- (Rupees Four Crores Fifty Two Lakhs Ten Thousand Eight Hundred Forty).

Aggrieved by the assessment order dated 27.12.2017, the assessee preferred an appeal before the CIT (Appeals), which came to be dismissed on 30.07.2019, whereby the CIT (Appeals) upheld the order of the Assessing Officer and has also directed the Assessing Officer to take necessary and requisite action against the assessee as per other laws, i.e. the provisions contained in the Prohibition of Benami Property Transaction Act, 1988 (as amended till 2016) and the Prevention of Money Laundering Act, 2002 after following due procedure as per the Instructions and Rules.

 The court comprising the Chief Justice Mr. Vijay Bishnoi and Justice N. Unni Krishnan Nair observed that the ITAT has altogether ignored the provisions of Section 292B as well as the provisions of Section 292BB of the Income Tax Act , which limits the right of an assessee of challenging a notice issued under the provisions of the Income Tax Act.

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Section 292B provides that notice as well as return of income, assessment, summons, etc., issued under the provisions of the Income Tax Act  cannot be treated as invalid merely by reason of any mistake, defect or omission in such notice, etc., if the same is in substance and effect in conformity with or according to the intent and purpose of the Income Tax Act .

The ITAT has interfered with the order passed by the CIT (Appeals) and the assessment order mainly on the ground that there is omission on the part of the DCIT in not issuing notice under Section 143(2) of the Income Tax Act  to the assessee. The ITAT has not concluded that the notice issued to the assessee by the Income Tax Officer under Section 143(2) of the Income Tax Act  is not in substance or not in conformity with the intent and purpose of the Income Tax Act . In the absence of such finding, the ITAT cannot interfere with the notice or the assessment order issued against the assessee.

Section 292BB of the Income Tax Act  clearly provides that where an assessee has appeared in the proceedings relating to assessment or reassessment before the authority concerned without raising any objection before completion of assessment or reassessment, it is not open for him to raise such objection after passing of the assessment order.

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The court viewed that as per law, the respondent/assessee was not within his right to raise the objection regarding issuance of notice by the Income Tax Officer under Section 143(2) of the Income Tax Act  or questioning the authority of the DCIT in passing the assessment order while exercising powers under Section 143(3) of the Income Tax Act  before the ITAT.

In the light of the provisions of Section 292B as well as Section 292BB of the Income Tax Act , the right of the assessee has been restricted to challenge the validity of a notice issued by the Income Tax Officer or the assessment order passed by the DCIT and in such circumstances, the ITAT has illegally passed the impugned order ignoring the said provisions, which restricts the right of the assessee.

While allowing the appeal, the court set aside the matter and remanded it to the ITAT for deciding the appeal preferred by the assessee afresh on other grounds raised by the assessee in the appeal preferred before it.

To Read the full text of the Order CLICK HERE

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