Case Number: ITA 596/DEL/2019
Appellant: Naresh Kapoor, New Delhi
Respondent: ITO, Ward-34(2), New Delhi
Assessment Year: 2010-11
Date of Order: 2017-01-19
Pronounced On: 2017-01-27
Case Filed On: 2019-01-28
Order Type: Final Tribunal Order
The case of Naresh Kapoor vs ITO, Ward-34(2), New Delhi, ITA No. 596/DEL/2019, pertains to the assessment year 2010-11. The case was filed on 28th January 2019 and involves an issue related to an unsecured loan discrepancy. The final order was pronounced on 27th January 2017.
This case is one of five appeals involving different assessees for the same assessment year. The appeals challenge the order passed by the Commissioner of Income Tax (Appeals) – 12, New Delhi, dated 27th July 2018.
On 6th March 2017, the Deputy Director (Investigation) provided information indicating that Naresh Kapoor had given an unsecured loan of Rs. 5,000,000 to Shri Vijay Shandilya during the financial year 2009-10. The return of income filed by the assessee on 30th March 2011 declared an income of Rs. 161,300. Based on this information, the case was reopened under Section 147 of the Income Tax Act, and a notice under Section 148 was issued on 31st March 2017.
In response, Naresh Kapoor submitted a reply on 15th May 2017, including the Income Tax Return for the assessment year 2010-11. The Assessing Officer (AO) found that the assessee had given an unsecured loan of Rs. 1,500,000 to Mr. Vijay Shandilya. Despite the assessee denying this, the AO issued a notice under Section 133(6) to Mr. Shandilya’s bankers, revealing that the cheque was indeed linked to the assessee’s account. Consequently, an addition of Rs. 1,500,000 was made to the assessee’s income.
Aggrieved by the AO’s order, Naresh Kapoor appealed to the CIT(A), who upheld the AO’s decision. Subsequently, Naresh Kapoor filed an appeal before the Income Tax Appellate Tribunal (ITAT).
The representative for the appellant argued that the reasons for reopening the assessment were not provided despite repeated requests, violating the principles of natural justice. The Departmental Representative contended that the omission could be rectified by providing the reasons, and the matter should be remanded to the AO for this purpose.
The ITAT considered the rival submissions and the orders of the lower authorities. The tribunal noted that it is a fundamental right of the assessee to be informed of the reasons for reopening the assessment. Not providing these reasons hampers the assessee’s ability to challenge the reopening on jurisdictional grounds.
The tribunal referred to the case of Surendra Kumar Jain vs. Principal Commissioner of Income Tax (Central)-III, New Delhi & ANR., where the Delhi High Court set aside the matter to correct the principles of natural justice violated during the assessment proceedings.
In light of this, the tribunal directed the AO to provide the reasons for reopening the assessment to the assessee and allow a reasonable period for objections. The AO was then instructed to pass an order addressing these objections and proceed in accordance with the law, ensuring a fair hearing.
In conclusion, the ITAT set aside all five appeals, including that of Naresh Kapoor, back to the AO with specific directions to provide the recorded reasons for reopening the assessment. The tribunal’s decision underscores the importance of adhering to principles of natural justice and transparency in tax proceedings.
Order pronounced in the open court on 16th October 2019.
Members:
K.N. Chary, Judicial Member
Prashant Maharishi, Accountant Member
Dated: 16th October 2019
Copy forwarded to:
Assistant Registrar
ITAT, New Delhi
Naresh Kapoor vs ITO, Ward-34(2), New Delhi – Case Filed Due to Unsecured Loan Discrepancy
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