2018 (10) TMI 1666 - AT - Income Tax

Reassessment after order u/s 263 - proper opportunity before the AO during reassessment proceedings - AO has received the records on 18.03.2015 and passed the impugned assessment order on 31.03.2015 i.e. within a period of 12 days - saddle the entire share application money as the income of the assessee - HELD THAT In the light of the Hon ble Supreme Court s decision in Tin Box Company 2001 (2) TMI 13 - SUPREME COURT and Jansampark Advertising Marketing Pvt. Ltd. 2015 (3) TMI 410 - DELHI HIGH COURT and the DR accepted that assessee did not get proper opportunity before the AO during reassessment proceedings, we set aside the order of the CIT(A) and remand the matter back to the file of AO for de novo assessment and to decide the matter in accordance to law after giving opportunity of being heard to the assessee. - Appeal of assessee is allowed for statistical purposes.

Summary

Issues:
1. Proper opportunity given to the assessee during reassessment proceedings.

Analysis:
The appeal before the Appellate Tribunal was against the order of the Ld. CIT(A)-5, Kolkata for AY 2009-10. The case involved the reassessment of the assessee company's income due to an omission in the initial return. The AO reopened the case under section 148 of the Income Tax Act and passed an order under section 143(3)/147 raising a demand. Subsequently, proceedings under section 263 were initiated, and the Ld. CIT set aside the AO's order, directing a detailed inquiry into the share capital introduced by the company. The AO, however, completed the assessment ex parte, treating the entire share capital as unexplained cash credit. The assessee contended that insufficient time was given for proper assessment, citing a violation of natural justice. The Tribunal noted the lack of opportunity given to the assessee during reassessment proceedings, referencing the Tin Box Company case where the Supreme Court emphasized the importance of a fair hearing before assessment.

In a similar case, the Tribunal highlighted the need for a thorough investigation into the source of funds, following guidelines set by the Ld. CIT to determine the identity, genuineness, and creditworthiness of share subscribers. The Tribunal referred to the Tin Box case, where lack of opportunity led to a fresh assessment. Additionally, the Delhi High Court's ruling in CIT Vs. Jansampark Advertising & Marketing Pvt. Ltd. emphasized the obligation of authorities to conduct proper inquiries before finalizing assessments. Considering these precedents and acknowledging the lack of opportunity for the assessee in the present case, the Tribunal set aside the Ld. CIT(A)'s order and remanded the matter to the AO for a fresh assessment with proper opportunity for the assessee to be heard.

Therefore, the Tribunal allowed the appeal for statistical purposes, emphasizing the importance of providing a fair opportunity to the assessee during reassessment proceedings to ensure a just and lawful assessment in accordance with established legal principles.