Facts of the Case

The assessee, Rajkumari Dhanuka, filed her return of income for Assessment Year 2012-13 on 01.08.2012 declaring total income of ₹13,71,975, including short-term capital gain of ₹7,03,927. The return was processed under Section 143(1). Subsequently, based on information received from the DIT (Investigation), Mumbai alleging that shares of Devine Multimedia (India) Ltd. were used for generating bogus capital gains, the Assessing Officer initiated reassessment proceedings under Section 147 and issued notice under Section 148. The assessee had purchased 1,48,930 shares of the said company and sold 50,000 shares on 27.03.2012, earning STCG of ₹6,96,196 which was duly offered to tax. The Assessing Officer treated the sale consideration of ₹23,45,000 as unexplained cash credit under Section 68 and, after adjusting the STCG already taxed, added ₹16,84,804 to the income. The CIT(A) dismissed the appeal without considering the written submissions filed by the assessee, leading to the present appeal before the Tribunal.

Issues Involved

Whether the CIT(A) was justified in dismissing the appeal without considering the written submissions filed by the assessee, whether the reassessment under Section 147 was validly initiated on the basis of investigation wing information, and whether the addition under Section 68 in respect of alleged bogus share transaction was sustainable without proper appellate adjudication.

Petitioner’s Arguments

The assessee contended that detailed written submissions were filed before the CIT(A) challenging both the validity of reopening under Section 147 and the merits of the addition under Section 68. It was argued that the appellate authority erroneously recorded that no written explanation was filed, which was factually incorrect. The assessee submitted that the reopening was based on vague and half-baked information and that the Assessing Officer had not independently established escapement of income. It was prayed that the matter be remanded to the CIT(A) for fresh adjudication after considering the submissions on record.

Respondent’s Arguments

The Revenue did not object to the remand of the matter and submitted that the issue could be restored to the file of the CIT(A) for fresh consideration in accordance with law.

Court Order / Findings

The ITAT Kolkata observed that the CIT(A) had incorrectly stated that no written submissions were filed by the assessee, whereas in fact submissions were available on record. The Tribunal held that non-consideration of such submissions amounted to violation of principles of natural justice. Without expressing any opinion on the merits of the addition under Section 68 or the validity of reopening under Section 147, the Tribunal set aside the appellate order and remanded the matter to the file of the CIT(A) with a direction to re-examine the issues afresh after affording reasonable opportunity of hearing to the assessee.

Important Clarification

The Tribunal clarified that appellate authorities are duty-bound to consider submissions and material placed on record by the assessee. Orders passed without considering such submissions are unsustainable in law and must be set aside to uphold principles of natural justice and fair play.

Final Outcome

The appeal filed by the assessee was partly allowed for statistical purposes. The order passed by the CIT(A) was set aside, and the matter was restored to the file of the CIT(A) for fresh adjudication on merits after considering the assessee’s submissions and providing reasonable opportunity of hearing.

Source Link- https://itat.gov.in/public/files/upload/1767354222-vzQU4J-1-TO.pdf

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