2019 (10) TMI 930 - HC - Income Tax

Court sets aside assessment order, remits issue of Short Term Capital Gains for reassessment.

Smt. Neetaa Suneel Shah D/o. Ramesh Bhai Doshi Versus The Income Tax Officer Non-Corporate Ward - 5 (2), Chennai

Smt. Neetaa Suneel Shah D/o. Ramesh Bhai Doshi Versus The Income Tax Officer Non-Corporate Ward - 5 (2), Chennai - TMI Issues Involved:1. Jurisdiction of the Assessing Officer post-remand.2. Principles of natural justice.3. Scope of remand order by the Tribunal.4. Reassessment of uncontested issues.5. Change of income head without notice.Issue-wise Detailed Analysis:1. Jurisdiction of the Assessing Officer Post-Remand:The petitioner challenged the assessment order dated 31.12.2018, arguing that the Assessing Officer exceeded his jurisdiction by expanding the scope of the remand order from the Income Tax Appellate Tribunal. Initially, the Tribunal remanded the case to the Assessing Officer solely to re-adjudicate the addition of Rs. 25,05,304/- as Short Term Capital Gains. However, the Assessing Officer not only reconsidered this issue but also reassessed other heads of income, including Short Term Capital Gains under Section 111A and Brought/Forward losses, which were not part of the Tribunal's remand order. The court found that the Assessing Officer exceeded his jurisdiction and acted beyond the scope of the remand order.2. Principles of Natural Justice:The petitioner contended that the Assessing Officer violated the principles of natural justice by not providing a notice or an opportunity for a personal hearing before passing the impugned order. The court agreed, noting that the Assessing Officer changed the head of income from Short Term Capital Gains to Undisclosed Sources under Section 68 without notifying the petitioner. This lack of notice and hearing constituted a violation of natural justice principles, warranting the writ petition's maintainability.3. Scope of Remand Order by the Tribunal:The Tribunal's remand was specifically for re-adjudicating the addition of Rs. 25,05,304/- as Short Term Capital Gains due to client code modifications. The court observed that the Assessing Officer's reconsideration of other issues, such as Short Term Capital Gains under Section 111A and Brought/Forward losses, was beyond the Tribunal's remand scope. The court cited several precedents, including S.P. Kochhar vs. Income Tax Officer and Saheli Synthetics P. Ltd. vs. CIT, to support the principle that the Assessing Officer's jurisdiction post-remand is confined to the subject matter of the appeal before the Tribunal.4. Reassessment of Uncontested Issues:The court found that the Assessing Officer improperly reopened and reassessed issues that were not contested by the petitioner or the Revenue before the appellate authorities. The original assessment had accepted the petitioner's income from Short Term Capital Gains under Section 111A and Brought/Forward losses. By reconsidering these uncontested issues, the Assessing Officer acted beyond his jurisdiction, rendering the reassessment invalid.5. Change of Income Head Without Notice:The petitioner argued that the Assessing Officer changed the classification of Rs. 25,05,304/- from Short Term Capital Gains to income from Undisclosed Sources under Section 68 without providing notice. The court held that this change without notice violated the principles of natural justice. Consequently, the court directed the Assessing Officer to re-adjudicate this specific issue after giving notice and an opportunity for a hearing to the petitioner.Conclusion:The court allowed the writ petition, setting aside the impugned assessment order. The matter was remitted back to the Assessing Officer to redo the assessment solely concerning the issue remanded by the Tribunal, i.e., the addition of Rs. 25,05,304/- as Short Term Capital Gains, after providing notice and a hearing opportunity to the petitioner. The Assessing Officer was instructed to complete this process within six weeks.