2018 (3) TMI 1929 - AT - Income Tax

Stay Application seeking stay of outstanding demand - Ex-parte best judgment order passed - HELD THAT - As noticed from the orders passed by the tax authorities that the assessee did not appear before both the tax authorities and hence they were constrained to pass the orders ex-parte, without hearing the assessee. The assessee now claims that it would be in a position to explain the sources, if an opportunity is given to it. Learned AR also submitted that the assessee was constrained to close down its business as it has incurred heavy losses in earlier years. To substantiate this submission, the assessee has also filed copies of ITRs in the paper book. Considering these peculiar facts, with the consent of both the parties, we took the appeal for hearing. After hearing the case, we are of the view that, in the interest of natural justice, the assessee may be provided with an opportunity to present its case before the Assessing Officer. However, since the assessee has failed to appear before the tax authorities in the original proceedings, we are of the view that the assessee should be imposed a cost for being negligent.

Summary

Issues:
Stay of outstanding demand in AY 2011-12, Reopening of assessment, Assessment u/s. 144 of the Act, Non-appearance before tax authorities, Imposition of cost on the assessee, Cooperation with the Assessing Officer, Revocation of order u/s. 230 of the Act.

Stay of Outstanding Demand:
The assessee filed a Stay Application seeking stay of outstanding demand raised in AY 2011-12 due to heavy losses incurred in preceding years. The Assessing Officer assessed deposits with HDFC Bank as income, leading to interest assessment as well. The appeal before CIT(A) was dismissed as notices were sent to the wrong address. The assessee requested complete stay of demand, emphasizing proper sources for deposits.

Non-Appearance Before Tax Authorities:
The Assessing Officer passed orders ex-parte due to the assessee's non-appearance. The initial onus to prove sources for deposits was on the assessee, which it failed to discharge. The AR argued that the assessee was not given a chance to explain the sources and requested an opportunity to do so before the Assessing Officer.

Imposition of Cost on the Assessee:
The Tribunal, in the interest of natural justice, provided the assessee with an opportunity to present its case before the Assessing Officer. However, a cost of ?25,000 was imposed on the assessee for negligence, to be paid by a specified date. The order passed by CIT(A) was set aside, and all issues were restored to the file of the Assessing Officer for assessment de-novo, with directions for cooperation.

Revocation of Order u/s. 230 of the Act:
The assessee requested revocation of the order passed u/s. 230 of the Act, but the Tribunal deemed this request beyond the scope of the present appeal. The assessee was advised to file an appropriate petition before the relevant authorities, with a suggestion for a liberal consideration of the petition in light of the Tribunal's order.

Conclusion:
The appeal filed by the assessee was treated as allowed, and the Stay Application was dismissed. The Tribunal emphasized cooperation with the Assessing Officer for the expeditious completion of the assessment, setting a cost for negligence by the assessee. The order was pronounced on 9.03.2018, concluding the legal proceedings.