2020 (3) TMI 785 - AT - Income Tax

ITAT Bangalore emphasizes Assessee's right to pursue Cross Objection independently

The ITAT Bangalore allowed the Assessee's petition, recalling the order dismissing the Cross Objection (CO) and directing that the CO be heard and decided ... Restoration of cross objection appeal - Dismissal of appeal of the revenue on low tax effect - consequently cross objections filed by the assessee were also dismissed - HELD THAT:- As rightly contended on behalf of the Assessee, the grounds raised in the CO are independent of the appeal filed by the Revenue and therefore such a cross objection cannot be dismissed simply on the ground of dismissal of the appeal by the revenue involving low tax effect. The residential premises of the Assessee was searched u/s. 132 of the Act on 26.10.2007. An order of assessment dated 31.12.2017 was passed by the AO. The Assessee had filed return of income in response to notice u/s.153A of the Act declaring income of ₹ 24,06,380/-. In the assessment order, the AO computed by making addition of ₹ 94,105 as income from House Property not declared, ₹ 56,17,005 being unexplained investment in purchase of jewellery as per seized document and ₹ 25,52,000 being unexplained cash remittances to bank account u/s.69. In respect of addition of ₹ 56,17,005, the CIT(A) sustained the addition made by the AO against which the Assessee has filed cross objection before the Tribunal. The addition of ₹ 25,52,000 was deleted by the CIT(A) against which the revenue filed appeal before the Tribunal but that appeal was dismissed for low tax effect. Therefore the issue to be decided in the CO was an issue independent of the appeal filed by the Revenue. In such cases, the CO cannot be dismissed simply on the ground of dismissal of the appeal by the revenue involving low tax effect. The decision of the ITAT Delhi Bench in the case of Ajay Kalia [ 2016 (2) TMI 165 - ITAT DELHI] supports the plea of the Assessee. We therefore recall the orde in so far as it relates to dismissal of CO as infructuous and direct that the said CO will be heard and decided on merits. - Decided in favour of assessee Issues:1. Recall of order dismissing Cross Objection in ITA appeal.2. Validity of assessment under section 153A of the Income Tax Act.3. Challenge to addition of unexplained investment in jewelry.4. Interpretation of the scope of Cross Objection (CO) in relation to dismissed appeal.5. Application of legal precedent regarding the disposal of CO independent of the appeal.Issue 1: Recall of order dismissing Cross ObjectionThe Assessee filed a petition under section 254(2) of the Income Tax Act seeking to recall the order dated 28.8.2019, which dismissed the Cross Objection (CO) in ITA No.1904/Bang/2018 for AY 2007-08. The Assessee requested the hearing and decision of the CO on its merits.Issue 2: Validity of assessment under section 153AFollowing a search operation under section 132 of the Act, an assessment order was passed for AY 2007-08, including an addition of Rs. 63,27,500 as unexplained investment in jewelry. The Assessee challenged this addition before the CIT(A), who confirmed a reduced amount. The Assessee raised concerns about the validity of the assessment under section 153A of the Act.Issue 3: Challenge to addition of unexplained investment in jewelryThe Assessee contested the addition of Rs. 56,71,005 out of the total investment made in jewelry, arguing that the CIT(A) erred in upholding this addition. The CO raised issues regarding the assessment and the validity of the addition made by the Assessing Officer.Issue 4: Interpretation of the scope of Cross ObjectionThe Assessee argued that the CO should be decided independently of the appeal filed by the revenue, emphasizing that the CO raised distinct grounds not covered by the revenue's appeal. Legal precedents were cited to support the contention that a CO can address issues beyond those raised in the main appeal.Issue 5: Application of legal precedent regarding the disposal of COCiting relevant legal precedents, the Assessee highlighted the obligation to consider and decide on a CO's merits independently, even if the main appeal is dismissed. The ITAT Delhi Bench's decision in a similar case supported the Assessee's position that a CO should not be dismissed solely due to the dismissal of the revenue's appeal.In the final judgment, the ITAT Bangalore allowed the Assessee's petition, recalling the order dismissing the CO and directing that the CO be heard and decided on its merits. The decision emphasized the independence of the CO from the revenue's appeal and the right of the Assessee to pursue the CO even if the revenue's appeal was dismissed for low tax effect. The judgment underscored the importance of considering each issue raised in the CO separately and providing an opportunity for a fair hearing.