2012 (7) TMI 46 - AT - Income Tax

Violation of principle of natural justice - exparte order passed by CIT confirming order of AO - rejection of application under Rule 46A to admit additional evidences - assessee contended prevention by sufficient cause from producing the books of accounts before the AO - Held that - It is observed that CIT(A) noted that a notice dated 26.08.2010 has been issued u/s 250 to the assessee for the date of hearing on 07.09.2010 but we are unable to observe this finding in the impugned order that despite due and proper service of the notice (upon the assessee) neither the assessee nor his representative attended the hearing. Accordingly, finding of the CIT(A) that the appellant was not interested in pursuing the appeal before him cannot be upheld. On the contrary, CIT(A) violated the principles of natural justice in passing an ex-parte order which disallowed the appeal of the assessee as the notice of hearing cannot be said to be served for the date of hearing and accordingly assessee was prevented to pursue his appeal before CIT(A) due to sufficient cause. Matter restored to the file of CIT(A) to adjudicate the matter afresh - Decided in favor of assessee for the statistical purposes.

Summary

Issues:
Appeal against disallowance of loss claimed by the assessee, rejection of evidences under Rule 46A, passing of ex-parte order without proper hearing.

Analysis:
The appellant challenged the order disallowing the claimed loss of Rs. 258,23,43,910, arguing that the CIT(A) erred in not admitting evidences under Rule 46A and passing an ex-parte order without a proper hearing. During assessment proceedings, the assessee, a Public Sector Undertaking, faced difficulties in producing complete books of accounts due to staff retirements and VRS. The AO ignored the claimed loss, assessing the income at NIL. The CIT(A) upheld this decision, noting the appellant's lack of cooperation in attending hearings and providing evidence. The appellant contended that the CIT(A) violated principles of natural justice by passing an ex-parte order without sufficient notice. The Tribunal observed discrepancies in the service of notices for hearings and concluded that the appellant was prevented from pursuing the appeal due to sufficient cause.

The Tribunal found that the CIT(A) had erred in passing an ex-parte order without ensuring proper notice and opportunity for the appellant to be heard. Therefore, the impugned order was set aside, and the matter was remanded to the CIT(A) for fresh adjudication with reasonable opportunity for the appellant to present their case. The Tribunal allowed the appeal of the assessee for statistical purposes, emphasizing the importance of procedural fairness and the right to be heard in tax assessment matters.

In conclusion, the Tribunal's decision highlighted the significance of adhering to principles of natural justice, ensuring fair hearings, and providing opportunities for parties to present their case in tax disputes. The judgment underscored the need for procedural regularity and proper application of rules to uphold the integrity of assessment proceedings and protect the rights of taxpayers.