2012 (10) TMI 535 - AT - Income Tax

No reasonable and proper opportunity of hearing allowed - addition to income - Held that - As per the affidavit filled by the assessee for non-appearance on 16.12.2008 as case was to be attended by the assessee s CA & that however, the said CA neither attended the proceedings before the AO, nor informed the assessee that he would not be appearing on 16.12.2008 as if the assessee had been informed in this regard, he would have surely attended the proceedings. As before the CIT (A), the assessee s new counsel inspected the appeal record in the office of the CIT (A), where from, it came to knowledge that the first notice dated 10.02.2010 for 10.03.2010 was sent by speed post on 12.02.2010 and the same was received back unserved in the office of the CIT (A) and that the second and final notice dated 09.04.2010 for 23.04.2010 was sent by speed post on 10.04.2010 and the same had also been received back in the office of the CIT (A) on 21.04.2010, as available from the appeal record, thus, both the notices issued from the office of the CIT (A) remained unserved and the assessee did not at all come to know of the dates of hearing before the Ld. CIT (A). Thus it can be concluded that the assessee was prevented by reasonable cause from attending the proceedings, both before the AO as well as before the CIT (A) - remit this matter to the file of the AO to be decided afresh - in favour of assessee for statistical purposes.

Issues:
1. Lack of reasonable opportunity of hearing before passing the assessment order.
2. Lack of reasonable opportunity of hearing before disposing of the appeal.
3. Ad-hoc addition of trade/special discount.
4. Ad-hoc disallowance of various business expenses.
5. Disallowance of show room display charges.
6. Addition for expenses shown as payable in the balance sheet.

Analysis:
1. The appellant contested that no reasonable opportunity of hearing was provided during the assessment for the year under consideration. The Assessing Officer proceeded ex parte due to non-appearance, citing time constraints. The appellant's CA failed to attend the proceedings, leading to the assessment being completed based on available records. The appellant argued that if informed, they would have attended. The CIT (A) also issued notices, but they were returned unserved, depriving the appellant of a fair hearing. Considering these circumstances, the Tribunal decided to remit the matter back to the Assessing Officer for a fresh decision with proper hearing opportunities.

2. The grounds of appeal also included challenges regarding the ad-hoc additions and disallowances made by the authorities. The appellant objected to the ad-hoc addition of trade/special discount, ad-hoc disallowance of business expenses, and disallowance of show room display charges. The Tribunal, however, did not delve into the merits of these issues as the case was being remitted for a fresh assessment. The Tribunal emphasized the importance of affording adequate hearing opportunities to the appellant before making any decisions on these contentious matters.

3. The Tribunal highlighted the significance of due process and fair hearing in tax assessments. It noted the appellant's contentions regarding the lack of opportunities to present their case before the authorities. The Tribunal's decision to remit the matter back to the Assessing Officer underscores the fundamental principle of natural justice and the right of the appellant to be heard before adverse determinations are made. The order, treating the appeal as allowed for statistical purposes, reflects the Tribunal's commitment to upholding procedural fairness in tax matters.

By prioritizing the appellant's right to a fair hearing and setting aside the previous decisions due to procedural irregularities, the Tribunal's judgment exemplifies the core principles of justice and due process in tax assessments.

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