2016 (1) TMI 353 - AT - Income Tax

Revision u/s 263 - due and reasonable opportunity of being heard was not afforded to the assessee - Held that - In the present case, it is an admitted fact that the ld. Counsel for the assessee was ill and could not represent the case of the assessee on 25.02.2015 when the ld. CIT asked the assessee to furnish its submission vide letter dated 20.02.2015. It is also noticed that the ld. CIT himself admitted that the original notice of hearing dated 20.02.2015 was served on the assessee on 27.02.2015. Therefore, it is not clear how the ld. CIT fixed the case for hearing on 25.02.2015 when the notice of hearing itself was served on the assessee after two days i.e. on 27.02.2015. It is well settled that nobody should be condemned unheard as per the maxim Audi Alteram Partem , we therefore, keeping in view the peculiar facts of the present case, are of the view that a due and reasonable opportunity of being heard was not afforded to the assessee by the ld. CIT. In that view of the matter the impugned order is set aside and the ld. CIT is directed to decide the issue afresh in accordance with law after providing due and reasonable opportunity of being heard to the assessee. - Decided in favour of assessee for statistical purposes.

Issues Involved:
Appeal against ex-parte order due to illness of counsel, validity of notice u/s 263, denial of natural justice, assessment order under section 14A, opportunity of being heard.

Analysis:

Issue 1: Appeal against ex-parte order due to illness of counsel
The assessee challenged the ex-parte order passed by the ld. CIT due to the rejection of the adjournment application on the grounds of the counsel's illness. The assessee's counsel was hospitalized and unable to represent the case, leading to a lack of opportunity to be heard. The ld. CIT set aside the assessment order without considering the genuine hardship faced by the counsel. The Tribunal observed that the assessee was not given a fair chance to present its case and set aside the impugned order, directing a fresh decision with proper opportunity for the assessee to be heard.

Issue 2: Validity of notice u/s 263
The assessee contended that the notice u/s 263 was not valid as it was signed and issued by the ld. CIT when he was not present at the office. Additionally, the notice was served after the fixed hearing date, raising concerns about procedural compliance. The Tribunal noted discrepancies in the notice issuance and service dates, emphasizing the importance of adhering to legal requirements. The lack of proper notice procedures affected the assessee's right to a fair hearing, highlighting the need for compliance with statutory provisions.

Issue 3: Denial of natural justice
The assessee argued that the ld. CIT's actions, including rejecting adjournment requests and passing orders without proper hearings, amounted to a denial of natural justice. The Tribunal acknowledged the principle of audi alteram partem, emphasizing the fundamental right to be heard before decisions are made. By setting aside the impugned order and directing a fresh decision with due opportunity for the assessee to present its case, the Tribunal upheld the importance of natural justice in legal proceedings.

Issue 4: Assessment order under section 14A
The assessee contended that the assessment order under section 14A was not erroneous, as the assessing officer had considered relevant details and case laws favoring the assessee. The Tribunal noted that the AO had applied his mind and accepted the disallowance under section 14A based on the information provided by the assessee. This highlighted the importance of a thorough assessment process and the need for proper consideration of all relevant factors before deeming an order as erroneous.

Issue 5: Opportunity of being heard
The Tribunal emphasized the significance of providing a reasonable opportunity of being heard to the assessee before making decisions that could impact their case. By setting aside the ex-parte order and directing a fresh decision with proper opportunity for the assessee to present its case, the Tribunal upheld the principles of natural justice and procedural fairness in the assessment process.

In conclusion, the Tribunal allowed both appeals of the assessee for statistical purposes, highlighting the importance of procedural compliance, natural justice, and fair opportunities for parties to present their cases in legal proceedings.

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