Tribunal remands case for fresh adjudication, emphasizes comprehensive review

The Tribunal remanded the case back to the Ld. CIT(A) for fresh adjudication after considering the subsequent search and seizure operation and the assessment order passed under section 144 r.w.s. 153A. The Tribunal emphasized the need for a comprehensive review of findings from both assessments and granting the assessee a reasonable opportunity to be heard. The appeals of the revenue were allowed for statistical purposes, with the matter being remanded for further examination in light of the Tribunal's observations.

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Issues involved:
- Appeal against deletion of addition to business income
- Jurisdiction issue due to search conducted in Kwality Group
- Assessment order passed by ITO, Ward-49(2), New Delhi
- Appeal before Ld. CIT(A) in New Delhi
- Subsequent search and seizure operation on the assessee
- Assessment order passed u/s. 144 r.w.s. 153A of the Act
- Remand of the case back to Ld. CIT(A) for fresh adjudication

Analysis of the Judgment:
1. The appeals arose from the order of Ld. CIT(A)-17, New Delhi against the assessment order passed by ITO, Ward-49(2), New Delhi under section 143(3) of the Income Tax Act, 1961. The appeals were centralized in the Kolkata Zone jurisdiction of ITAT due to a search conducted in the Kwality Group, which included the assessees. The common issue in all three appeals was the addition of income earned through providing accommodation entries to Kwality Limited.

2. The department contended that the Ld. CIT(A) erred in deleting the addition to the business income of the assessee without examining the facts and evidence. The department also argued that the Ld. CIT(A) failed to call for a report on the evidence provided by the assessee and to allow the AO to corroborate with the evidence gathered during the search in Kwality Group.

3. The assessee, engaged in wholesale milk supply, declared a total income of Rs. 11,63,440/-. The Ld. AO assessed the income generated by the assessee through alleged sham transactions by estimating net profit at 1% of total receipts. The Ld. CIT(A) deleted the addition, leading to the department's appeal before the Tribunal.

4. During the hearing, the assessee's counsel argued that subsequent search and seizure operations on the assessee had rendered the present appeals infructuous. However, the Tribunal noted that pending appeals do not abate due to search operations, as per CBDT Circular No. 7/2003. The Tribunal observed discrepancies regarding the business premise of the assessee.

5. Considering the subsequent search and seizure operation and the assessment order passed under section 144 r.w.s. 153A, the Tribunal remitted the case back to the Ld. CIT(A) for fresh adjudication. The Tribunal emphasized the need for a comprehensive review of findings from both assessments and granting the assessee a reasonable opportunity to be heard.

6. The Tribunal allowed the appeals for statistical purposes, as identical issues were involved in all three appeals. The matter was remanded to the Ld. CIT(A) for further examination in light of the observations made by the Tribunal.

7. The appeals of the revenue were allowed for statistical purposes, and the order was pronounced on 27.04.2022.

This detailed analysis covers the issues involved in the judgment, the arguments presented by both parties, and the Tribunal's decision to remand the case back to the Ld. CIT(A) for fresh adjudication.

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