2013 (12) TMI 529 - AT - Income Tax

Reasonable opportunity not provided to assessee - Held that - Due to paucity of time and bonafide belief, the Ld.AR was not in a position to file the relevant materials before the - When the assessee has relied upon the additional evidence in the first appellate proceedings, the same ought to have been admitted when the Ld.CIT(A) has been relying on remand report on the additional evidence filed by the assessee The issue was restored for de novo assessment after giving reasonable opportunity of hearing and placing all the evidence on record which can support the case of the assessee.

Summary

Issues:
1. Addition of commission difference and TDS certificate discrepancy.
2. Treatment of short-term capital gain as business income.
3. Acceptance of Circular no. 4/2007 regarding Portfolio Management Scheme.
4. Violation of natural justice principles in assessment proceedings.
5. Rejection of additional evidence by Ld.CIT(A).

Analysis:
1. The appellant contested the addition of Rs.17,34,482 due to a discrepancy between commission in Profit & Loss Account and TDS certificate. The Ld.CIT(A) upheld the addition, stating the appellant failed to pass on a major portion of the commission to clients. The appellant argued for lesser TDS deduction under section 197(1) and industry practices. The Tribunal directed a de novo assessment by AO, emphasizing the need for a reasonable opportunity for the appellant to present evidence.

2. The Ld.CIT(A) treated a short-term capital gain of Rs.20,23,004 as business income, contrary to the appellant's declaration. The appellant challenged this treatment, highlighting differences in income categorization. The Tribunal did not adjudicate on this issue separately but directed a fresh assessment, allowing the appellant a fair chance to present all relevant evidence.

3. Discrepancy arose regarding the applicability of Circular no. 4/2007 on investment through Portfolio Management Scheme (PMS). The appellant contended that the short-term capital gains were not generated through PMS, contrary to the Circular. The Tribunal did not provide a specific ruling on this issue but ordered a de novo assessment, indicating a need for a comprehensive review of all evidence.

4. The appellant raised concerns about the violation of natural justice principles during the assessment proceedings. The Tribunal acknowledged the lack of opportunity for the appellant to present the case adequately. Citing the NTPC case, the Tribunal admitted additional legal grounds (7-9) related to the violation of natural justice, emphasizing the importance of fair proceedings in tax assessments.

5. The Ld.CIT(A) rejected additional evidence submitted by the appellant after obtaining a remand report from the AO. The appellant argued for the admission of additional evidence, citing precedents and procedural fairness. The Tribunal agreed with the appellant, directing a fresh assessment by the AO to consider all evidence presented by the appellant. The appeal was treated as allowed for statistical purposes, indicating a procedural victory for the appellant in securing a fair reassessment process.