2015 (8) TMI 1020 - AT - Income Tax

Validity of assessment framed u/s 153A/153C r.w.s. 144 - non affording reasonable opportunity to the appellant - Held that - In the present case it is an admitted fact that the assessee was in the Police custody and the notice was sent to him through the Superintendent, Central Jail, Ambala. The assessee requested for adjournment for the reason that he was unable to represent the proceedings because he was in the Police custody and was unable to come out. It is also noticed that the AO framed the assessment ex-parte by stating that the special Audit Report u/s 142(2A) of the Act was served upon the assessee on 21.06.2010 in the Central Jail, Jaipur and Ambala, So, it is clear that the special Audit Report which was obtained by the AO at the back of the assessee and another notices were served to the assessee when he was lodged in the Jail either at Jaipur or at Ambala. It, therefore, clear that the personal hearing was not afforded to the assessee. Moreover, it is not clear as to whether the assessee being in Jail was in a position to contact any legal person who was convergent with the Income Tax matters. It is well settled that nobody should be condemned unheard as per the maxim audi alteram partem . We thus set aside the impugned order and deem it appropriate to remand the case back 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. We also direct the assessee to cooperate and not to seek unwarranted or unreasonable adjournments. - Decided in favour of assessee for statistical purposes.

Summary

Issues:
Appeal against CIT(A) orders confirming additions made in assessment under sections 153A/153C r.w.s. 144 without reasonable opportunity, addition of unexplained cheque deposits, addition based on application before Settlement Commission without proper opportunity.

Analysis:
1. The appeals by the assessee were directed against separate consolidated orders of CIT(A), Central, Gurgaon, dated 15.10.2012. Since issues were similar and appeals were heard together, disposed off by a common order for convenience.
2. The first appeal (ITA No. 6207/Del/2012) raised grounds related to additions totaling to Rs. 8,72,465 made under sections 153A/153C r.w.s. 144 without affording a reasonable opportunity, addition of Rs. 15,754 for unexplained cheque deposits, and addition of Rs. 8,51,711 based on an application before the Settlement Commission without proper explanation.
3. The assessee, a Doctor, filed income return declaring Rs. 1,20,210. A survey operation was conducted at M/s Liberty Health Care (P) Ltd., where the assessee was the Managing Director. The assessee voluntarily offered Rs. 15 crore for taxation, later retracted the surrender due to coercion, and filed an application before the Income Tax Settlement Commission offering additional income for various assessment years.
4. As no proceedings were pending before the Settlement Commission, the AO framed assessment under section 144 based on a search conducted under section 132, leading to ex-parte decision by CIT(A) due to the assessee's unavailability.
5. The CIT(A) confirmed the AO's action ex-parte. The assessee argued lack of reasonable opportunity, requesting a remand to the AO for a fair hearing.
6. The CIT DR argued the assessee's non-cooperation necessitated the decision based on available material, opposing remand.
7. Considering the facts, the Tribunal found the assessee was in police custody during proceedings, special audit report served without proper opportunity, and notices sent while the assessee was in jail, concluding lack of fair hearing. The order was set aside, remanding the case to the AO for fresh adjudication with proper opportunity.
8. Similar appeals related to the company M/s Liberty Health Care (P) Ltd. were also remanded for the same reasons.
9. The appeals filed by the assessee were allowed for statistical purposes, setting aside CIT(A) orders and remanding cases to the AO for fair hearings.