Setting aside of Assessment by citing jurisdictional defect is Technical Error: ITAT deletes Penalty [Read Order]

The Income Tax Appellate Tribunal (ITAT), New Delhi Bench deleted penalty and held that setting aside of assessment by citing jurisdictional defect is technical error. The assessee in the present appeal is Gungun Gold Infra Pvt. Ltd.

 As per the revenue the assessment order was the outcome of the return of income of the Assessee declaring total income of Rs. 500 the return was processed u/s 143(1) of the Act.

The reasons specifically mentioned the fact that on 28/3/2017 the information from Investigation wing was received and that CBI also informed that, Tarun Goyal associated with the firm Yogesh Trading Co. & others were found to be providing bogus entries. His firm was apparently in association with the Assessee company, as is exhibited by the fact that all of them shared the same address and in fact more than 35 companies were found to be operating from the said address. The reasons discuss at length the modus operandi used and which was actually under investigation.

However, the CIT(A) concluded that it was a simple case of concluded assessment. It seems he lost sight of fact that it is not a mere case of reopening of assessment due to change of opinion by assessing officer, but a case where Assessing Officer found it to be covered by Proviso to Section 147 of the Act and where the previous Assessing Officer was devoid of actual facts by some overt and clandestine acts of Assessee and only due to some sort of investigation by expert agencies, true and new facts were unearthed and which were informed to the Assessing officer.

The present case is not of wrong inference or failure to draw any inference of the facts by due diligence by the previous assessing officer. So, to consider reopening on basis of mere change of opinion. Rather the modus operandi of assessee company in connivance of its own CA and authorized representative was such that it could be unearthed only on an investigation by independent and specialized agency. The summary assessment proceedings were insufficient.

The Division Bench of the Tribunal consisting of N K Billaiya, Accountant Member and Anubhav Sharma, Judicial Member is of considered opinion that the CIT(A) had fallen an error in setting aside the assessment order merely by citing jurisdictional defect in recording of reasons and issuance of notice u/s 147or 148 of the Act.

“In fact, in the present facts and circumstances, without going on the merits of the impugned assessment, it was not possible for the first appellate authority to give a finding as to if in the previous assessment proceedings, the AO was actually having complete and reasonable opportunity to examine the response of assessee and after having honest response of the Assessee, the then assessing officer concluded the assessment proceedings drawing all reasonable inferences.”

“Thus, the ground raised by revenue in the present appeal questioning the order the First Appellate Authority for deleting the addition merely on the basis of technical ground without discussing the merits of the case deserves to be sustained.”

To Read the full text of the Order CLICK HERE

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