2014 (1) TMI 1661 - AT - Income Tax

Deduction u/s 54F - Addition on account of undisclosed sources - Addition on account of non agricultural land - audi alteram partem - Breach of principles of natural justice - CIT(A) admitted the additional evidences - Held that - In the present case, it appears that the AO had not provided due and adequate opportunity of being heard to the assessee that s why Ld. CIT(A) admitted the additional evidences. It is also noticed that the Ld. CIT(A) while confirming the additions has not discussed whatwere the submissions of the assessee. It therefore, appears that an appropriate opportunity of being heard was not given to the assessee, which is against the principles of natural justice as embodied in the dictum audi alteram partem . We, therefore, deem it appropriate to set aside this case to the file of the AO to be adjudicated afresh in accordance with law after providing due and reasonable opportunity of being heard to the assessee. - Decided in favour of the assessee for statistical purpose.

Summary

Issues:
1. Addition of Long Term Capital Gain and disallowance of deduction u/s 54F.
2. Addition of undisclosed sources.
3. Addition of Long Term Capital Gain for agricultural land beyond 8 KM from municipal limit.
4. Fair opportunity of being heard to explain and defend additions made by the AO.

Analysis:
1. The appeal involved challenges to the additions made by the Assessing Officer (AO) in the assessment order. The AO added Long Term Capital Gain of Rs. 3,04,24,409/- and disallowed deduction u/s 54F. Additionally, an amount of Rs. 46,99,000/- was treated as undisclosed sources. The AO also considered Long Term Capital Gain on the sale of agricultural land situated beyond 8 KM from municipal limits. The appellant raised these issues in the appeal before the Appellate Tribunal.

2. The facts of the case revealed that the AO issued a notice under section 148 of the Income Tax Act to the assessee for not filing the return of income. The AO found that the assessee had sold land jointly with others and received a substantial amount. Various additions were made by the AO, including the Long Term Capital Gain and undisclosed sources. The AO also noted interest income earned by the assessee. The total income assessed was Rs. 3,52,29,339/-.

3. The assessee appealed to the Ld. CIT(A) and submitted additional evidence under Rule 46A of the Income Tax Rules, including sale deeds, valuation reports, and bank statements. Despite admitting the additional evidence, the Ld. CIT(A) upheld the additions made by the AO. The appellant contended that proper opportunity to explain and defend the additions was not provided by the AO or the Ld. CIT(A.

4. The Appellate Tribunal observed that the AO did not afford the assessee a fair opportunity to be heard, leading to a violation of the principles of natural justice. The Ld. CIT(A) also did not adequately discuss the submissions of the assessee while confirming the additions. Therefore, the Tribunal set aside the case to the file of the AO for a fresh adjudication in compliance with the law and ensuring a reasonable opportunity for the assessee to be heard. Consequently, the appeal of the assessee was allowed for statistical purposes.

This detailed analysis highlights the issues raised in the appeal, the facts of the case, the arguments presented by both parties, and the decision of the Appellate Tribunal to provide a fair opportunity for the assessee to defend the additions made by the AO.