2017 (11) TMI 1785 - AT - Income Tax

Revision u/s 263 - no notice was duly served - HELD THAT - CIT(A) has mentioned in its order that notice was duly served on the assessee and despite that the neither the assessee nor the authorized representative appeared before him on the date of hearing. CIT(A) has not referred to any document to show that the notice was duly served and despite the service of notice assessee failed to appear before him. On the other hand the contention of the counsel is that no notice was received by the assessee. Admittedly the impugned order has been passed by the CIT(A) without hearing the assessee. Under these circumstances we are of the considered view that the assessee should be given an opportunity to present its case before the CIT(A). Hence in the interest of justice we set-aside the impugned order and remit the file back to the CIT(A) for passing order afresh - Appeal of the assessee is allowed for statistical purposes.

Summary

Issues:
1. Validity of order passed under Section 263 of the Income Tax Act, 1961.
2. Opportunity of being heard and principles of natural justice.
3. Verification of genuineness of share capital and share premium.
4. Condonation of delay in filing the appeal.

Analysis:

Issue 1: Validity of order under Section 263
The appeal was filed against the order passed by the Ld. Principal Commissioner of Income Tax under Section 263 of the Income Tax Act, setting aside the assessment order for the assessment year 2009-10. The Commissioner observed that the assessee had obtained accommodation entries, which were not properly verified during reassessment proceedings. The Ld. Commissioner issued a notice under Section 263, setting aside the assessment order and directing the Assessing Officer to verify the genuineness of the share capital premium.

Issue 2: Opportunity of being heard and principles of natural justice
The assessee contended that the impugned order was passed without giving them an opportunity to be heard, violating the principles of natural justice. The Tribunal found that although the notice was claimed to be duly served, the assessee disputed receiving it. As a result, the Tribunal set aside the impugned order and remitted the file back to the Ld. CIT(A) for fresh adjudication after hearing the assessee.

Issue 3: Verification of genuineness of share capital and share premium
The Ld. Commissioner directed the Assessing Officer to verify the genuineness of the share capital and share premium without affording the assessee an opportunity to be heard. The assessee raised grounds of appeal citing errors in law and ignoring precedents. The Tribunal acknowledged the need for the assessee to present its case and directed the Ld. CIT(A) to pass a fresh order after hearing the assessee, emphasizing the importance of natural justice and fair procedure.

Issue 4: Condonation of delay in filing the appeal
The assessee filed an application for condonation of delay in filing the appeal, citing reasons related to a writ petition filed in the Hon'ble High Court. The Tribunal, after considering the circumstances, allowed the application and condoned the delay of 87 days, emphasizing the requirement of sufficient cause for condonation of delay as per the provisions of the Act.

In conclusion, the Tribunal allowed the appeal for statistical purposes, emphasizing the importance of adherence to procedural fairness, principles of natural justice, and the need for proper verification and hearing in tax assessment proceedings.