2019 (1) TMI 846 - AT - Income Tax

Demand u/s 201(1A) - Assessee has denied having received any such show cause notice - Held that - . In assessee s appeal before CIT(A), the assessee had taken a ground of appeal to the effect that the AO erred on facts and in law in passing order without giving any opportunity of being heard to the assessee, against the principles of natural law of justice. However, this ground was dismissed by the Ld. CIT(A), merely on the basis of show cause notice mentioned by the AO aforesaid order dated 26.12.2012, despite assessee s contention that no such show cause notice was served on the assessee. We find that the assessee has denied receiving any such show cause notice from the AO and as there is nothing on record to show that the show cause notice issued by the AO was served on the assessee. In view of the above, we direct the AO to pass a fresh order, after giving reasonable opportunity of being heard to the assessee - Appeal of the assessee is partly allowed for statistical purposes.

Summary

Issues:
Violation of principles of natural justice in passing order under section 201(1)/201(1A) of the Income-tax Act, 1961 without providing an opportunity to be heard, and imposition of interest under section 201(1A) of the Act without proper justification.

Analysis:

Issue 1: Violation of principles of natural justice
The Assessee contended that the order passed by the Assessing Officer under section 201(1)/201(1A) of the Income Tax Act was in violation of principles of natural justice as no opportunity of being heard was provided. The Assessee argued that the show cause notice was not served, preventing the Assessee from responding or filing any correction statement. The Assessee emphasized the importance of the justification report, which was not provided along with the order. The Appellate Tribunal found merit in the Assessee's argument, noting that the Assessee denied receiving the show cause notice and there was no evidence of its service. Consequently, the Tribunal directed the Assessing Officer to pass a fresh order after affording a reasonable opportunity of being heard to the Assessee, thereby setting aside the order of the Commissioner of Income Tax (Appeals).

Issue 2: Imposition of interest under section 201(1A) of the Act
The Assessee challenged the imposition of interest amounting to a specific sum under section 201(1A) of the Income Tax Act. The Assessee contended that the Assessing Officer and the Commissioner of Income Tax (Appeals) were incorrect in holding the Assessee liable for interest on interest under the relevant sections of the Act. The Departmental Representative clarified that the interest on interest was charged under a different section of the Income Tax Act. The Tribunal observed that the order of the Assessing Officer did not clearly specify whether the interest on interest was charged under the correct section. The Assessee's Counsel highlighted this ambiguity. Ultimately, the Tribunal partly allowed the Assessee's appeal for statistical purposes, indicating that further clarification and proper assessment were required on the issue of interest imposition.

In conclusion, the Appellate Tribunal's decision addressed the issues of violation of natural justice principles and the imposition of interest under the Income Tax Act. The Tribunal emphasized the importance of providing a fair opportunity to be heard and directed the Assessing Officer to reevaluate the matter after considering the Assessee's submissions. The judgment highlighted the significance of procedural fairness and accurate application of legal provisions in tax assessments.