2017 (11) TMI 2027 - AT - Income Tax

Ex-parte order passed by CIT(A) - order making huge additions as the assessee has not co- operated in the proceedings - HELD THAT - AO as well as the ld. CIT(A), has not considered the issues properly on merits. All the additions/disallowances were made on an ad-hoc basis without reference to any material on record. It is well settled that even a best judgment, assessment should be judicious. In fact and addition has been made u/s 69 for expenses which are already recorded in the books, which is not correct in law. Such disallowance has to be deleted. The assessee has demonstrated that he was prevented by sufficient cause from appearing before the lower authorities on the dates of posting. Thus on the ground of natural justice, set aside this assessment to the file of the AO for fresh adjudication, in accordance with law. Appeal of the assessee is allowed for statistical purposes.

Summary

Issues: Delay in filing appeal, assessment of total income, additions/disallowances made, best judgment assessment, expenses recorded in books, natural justice, setting aside assessment for fresh adjudication, cooperation in assessment proceedings.

In this case, the primary issue was the delay of 83 days in filing the appeal, for which the assessee sought condonation. The Tribunal, after being convinced that there was a sufficient cause for the delay, condoned the delay and admitted the appeal. Moving on to the assessment of total income, it was noted that the Assessing Officer had determined the total income at Rs. 5,84,528, making significant additions due to the assessee's alleged non-cooperation, as postal notices were returned undelivered. The ld. CIT(A) also passed an ex-parte order in this regard.

Upon detailed examination, it was found that both the Assessing Officer and the ld. CIT(A) had not properly considered the issues on their merits. The additions and disallowances were made on an ad-hoc basis without proper reference to the available material on record. The Tribunal emphasized the principle that even in a best judgment assessment, there should be judicious consideration. Specifically, an addition made under section 69 of the Act for expenses already recorded in the books was deemed incorrect in law, warranting its deletion. The assessee successfully demonstrated sufficient cause for their non-appearance before the lower authorities on the relevant dates.

Consequently, in the interest of natural justice, the Tribunal decided to set aside the assessment and remand it back to the Assessing Officer for a fresh adjudication in accordance with the law. The appeal of the assessee was allowed for statistical purposes, with a directive for the assessee to cooperate in the assessment proceedings. The judgment was delivered on the 8th day of November 2017 in Kolkata.