ITAT Agra Upholds Assessee's Rights, Department's Appeal Dismissed

The ITAT Agra upheld the Assessee's Cross-objection, canceling the assessment order due to the violation of the Assessee's rights and dismissed the Department's appeal as infructuous. The Department's appeal against the deletion of addition of Rs. 64,80,000 by the CIT(A) was unsuccessful, as the CIT(A) granted relief to the assessee based on merits, leading to the Department's appeal being dismissed.

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Issues:
1. Department's appeal against deletion of addition of Rs. 64,80,000 by CIT(A).
2. Assessee's Cross-objection challenging reopening of the case.

Analysis:

Issue 1: Department's Appeal
The Department contested the deletion of the addition of Rs. 64,80,000 by the CIT(A), arguing that the cheques issued by the assessee to co-owners were designed to save from allegations of acquiring property without consideration. The Department emphasized the timing of cheque realization, failure to substantiate nexus between promised consideration and subsequent payments, and filing of ITRs after verification proceedings initiated. The Department also alleged connivance between the assessee and sellers, questioning the sanctity of the transaction and tax payments by sellers. However, the CIT(A) granted relief to the assessee based on merits, leading to the Department's appeal.

Issue 2: Assessee's Cross-objection
The Assessee filed a Cross-objection, delayed by sixty days, challenging the reopening of the case. The Cross-objection was based on the non-decision of certain grounds by CIT(A), specifically questioning the legality and jurisdiction of proceedings initiated under sections 147 and 148 of the Income Tax Act. The Assessee contended that the assessment was void ab initio due to non-supply of reasons recorded by the AO, depriving the Assessee of the opportunity to file objections. The Assessee highlighted the AO's failure to communicate reasons despite specific requests, leading to a violation of the Assessee's legal rights as per the Supreme Court's ruling in 'GKN Driveshafts'. The AO's argument under section 124(3)(b) was deemed inapplicable, as the issue pertained to notice u/s 148, not territorial jurisdiction. Ultimately, the Cross-objection was allowed, leading to the dismissal of the Department's appeal, as the proceedings were deemed illegal due to the AO's failure to communicate reasons for reassessment.

In conclusion, the ITAT Agra upheld the Cross-objection, canceling the assessment order due to the violation of the Assessee's rights and dismissing the Department's appeal as infructuous.

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