2018 (10) TMI 1353 - AT - Income Tax

Assessment framed without serving notice u/s 143(2) - denial of natural justice - assessment of agricultural income - Held that - Though the assessee ultimately did not appear before CIT(A) and CIT(A) decided the appeal of assessee ex-parte, the Ld.CIT(A) recorded in his findings that appeal is decided on merits on the basis of documents on record. However, the Ld. CIT(A) without considering the documents on record passed the order in summary manner dismissing the appeal of the assessee without giving reasons for decision in the appellate order as required by section 250(6) of the Act. The assessee in the Paper Book has filed copies of the submissions and the documents from pages 6 to 82, which were filed before the AO. Despite the documents were part of the record, the Ld. CIT(A) without giving findings on the same documents dismissed the appeal of the assessee without giving reasons for decision on the same. The assessee also filed affidavit in the Paper Book in which it is affirmed that for the last date of hearing on 13.03.2018, no notice has been served upon assessee or his Counsel. Therefore, it appears to me that principle of natural justice have been violated in the matter. No findings have also been given by the authorities below as to whether the gross agricultural income is to be taxed or the net agricultural income to be taxed for the purpose of higher rate of tax. Therefore, order of the Ld. CIT(A) cannot be sustained in law. The matter requires reconsideration at the level of the Ld. CIT(A). Set aside the impugned order and restore the appeal of the assessee to the file of Ld.CIT(A) with direction to re-decide appeal of the assessee strictly on merits giving reasons for decision in the order by referring to all documentary evidences on record of assessment. Ld. CIT(A) shall give reasonable sufficient opportunity of being heard to the assessee and the AO.

Summary

Issues:
1. Addition of agricultural income as income from other sources.
2. Adequate opportunity of being heard not provided by Ld. CIT(A).
3. Jurisdictional issue regarding transfer of the case.
4. Assessment framed without serving notice u/s 143(2) of the Act.

Analysis:

Issue 1: Addition of agricultural income as income from other sources
The assessee declared net agricultural income but failed to provide adequate documentation to support the claim during assessment proceedings. The AO noted discrepancies in the documents submitted, lack of original documents, and inconsistencies in the information provided. Consequently, the AO treated the declared agricultural income as income from other sources and made the addition.

Issue 2: Adequate opportunity of being heard
The assessee challenged the Ld. CIT(A)'s decision on the grounds of not being provided with a proper opportunity to present their case. The Ld. CIT(A) decided the appeal based on the documents on record as the assessee did not appear for the appellate proceedings. However, the Ld. CIT(A) failed to provide reasons for the decision in the appellate order, which is required by law. The matter was deemed to require reconsideration at the level of the Ld. CIT(A) due to the violation of principles of natural justice.

Issue 3: Jurisdictional issue regarding transfer of the case
The assessee raised a jurisdictional issue regarding the transfer of the case from one Assessing Officer to another without proper communication of reasons as required by section 127 of the Act. This issue was raised as a ground of appeal challenging the jurisdiction of the AO.

Issue 4: Assessment framed without serving notice u/s 143(2) of the Act
The assessee also contended that the assessment was framed without serving the notice u/s 143(2) of the Act, which is a procedural requirement. This additional ground of appeal highlighted a procedural irregularity in the assessment process.

In conclusion, the ITAT Delhi set aside the Ld. CIT(A)'s order and directed a re-decision of the appeal, emphasizing the need for providing reasons for the decision based on all documentary evidence on record. The Ld. CIT(A) was instructed to grant the assessee a reasonable and sufficient opportunity to be heard, ensuring compliance with principles of natural justice. The appeal of the assessee was allowed for statistical purposes, indicating a successful challenge to the initial decision.