2019 (1) TMI 1996 - AT - Income Tax

Validity of assessment - assessment completed without considering any of the submissions of the assessee but by taking into consideration the evidences which have been collected behind the back of the assessee and used in the assessment without giving assessee an opportunity of cross examination or rebuttal of the same - HELD THAT - A perusal of the assessment order clearly shows that the Assessing Officer has collected various evidences and the same have not been put for the assessee for its rebuttal. Further perusal of the assessment order clearly shows that the Assessing Officer has also not done any examination in respect of the advertisement revenues claimed to have been received by the assessee. AO has completed the assessment purely on the basis of presumptions that the transactions are bogus. Thus there is insufficiency of the facts coming out of the assessment order as also there is a clear violation of principle of natural justice in so far as evidences collected against the assessee have not been given to the assessee for his rebuttal. In the interest of natural justice to both the sides the assessment Order is set aside and the issues are restored to the file of ld. AO for re-adjudication denovo. AO shall provide the assessee all evidences collected by him and which he proposes to use in the course of assessment against the assessee. AO shall also be at liberty to call for any documents which he feels is necessary for the completion of the assessment.

Summary

Issues:
Appeal against the order of the Commissioner of Income Tax for the assessment year 2011-12, related to a Stay Petition, insufficiency of facts in the assessment order, violation of natural justice, examination of advertisement revenues, restoration of issues to the Assessing Officer for re-adjudication.

Analysis:
The judgment involves a cross appeal filed by the Assessee and the Revenue against the order of the Commissioner of Income Tax for the assessment year 2011-12. A Miscellaneous Petition filed by the Revenue regarding a Stay Petition by the Assessee in a related matter was also considered. The appeals and the Miscellaneous Petition were inter-connected and disposed of by a common order. Both parties were represented by their respective advocates during the proceedings.

In the Assessee's appeal, it was argued that the Assessing Officer had relied on various documents and investigation reports without providing them to the Assessee for rebuttal. The Assessee raised concerns about the lack of details regarding the investigation conducted and the information gathered under section 133(6) of the Income Tax Act, 1961. The Assessee contended that the assessment was completed without considering their submissions and without giving them an opportunity for cross-examination or rebuttal. The Assessee requested the issues to be restored to the Assessing Officer for re-adjudication.

The Standing Counsel for the Revenue acknowledged that the genuineness of the claim of advertisement revenues was not examined by the Assessing Officer. The Revenue did not object to the assessment being redone denovo. However, it was argued that since the First Appellate Authority upheld the assessment order, the Tribunal should also uphold it.

Upon considering the submissions, the Tribunal found that the Assessing Officer had not provided the Assessee with an opportunity for rebuttal and had not examined the advertisement revenues claimed. The assessment was based on presumptions without sufficient facts and violated the principle of natural justice. In the interest of natural justice, the Tribunal set aside the assessment order and restored the issues to the Assessing Officer for re-adjudication denovo. The Assessing Officer was directed to provide all collected evidence to the Assessee and call for any necessary documents for the assessment.

As a result, the appeal of both the Assessee and the Revenue was partly allowed for statistical purposes, and the Miscellaneous Petition filed by the Revenue was dismissed. The order was pronounced in an open court after the conclusion of the hearing on January 9, 2019, in Chennai.