2019 (4) TMI 696 - AT - Income Tax

Exparte order of CIT(A) - sufficient opportunity - sufficient cause in not complying to the notices of hearing issued by the CIT(A) - rejecting the books of accounts u/s. 145(3) thereby making an addition to the manufacturing / trading results - HELD THAT - We find that AO has passed the exparte order u/s. 144(1) read with section 145(3) of the Act and similarly, the Ld. CIT(A) has also passed the exparte order dated 30.5.2018 by only upholding the order of the AO and did not pass a speaking order, which is not sustainable in the eyes of law. Keeping in view of the facts and circumstances of the case, the issues involved in the main Appeal for AY 2014-15 are set aside to the file of the Ld. CIT(A) with the directions to decide the same afresh, in accordance with law after giving adequate opportunity of being heard to the assessee and pass a speaking order. The Assessee through his counsel is directed to appear before the Ld. CIT(A) on 03.04.2019 at 10.00 AM for hearing and substantiate its claim before him and produce all the relevant evidences

Summary

Issues involved: Stay application under section 35A of ITAT Rules, exparte order by AO and CIT(A), grounds raised in main appeal challenging exparte assessment, rejection of books of accounts, addition of income and loan, directions for fresh decision by CIT(A), dismissal of stay application.

Analysis:
1. Stay Application under Section 35A:
The assessee filed a Stay Application seeking to suspend the outstanding disputed demand. The counsel stated that a partial payment had been made towards the demand. However, during the hearing, both parties acknowledged that the CIT(A) had decided the case exparte without providing sufficient opportunity to the assessee. Consequently, the main appeal was to be resolved promptly.

2. Exparte Orders and Grounds Raised in Main Appeal:
The main appeal challenged the exparte assessment by the AO and the subsequent order by the CIT(A). The grounds included contentions regarding non-compliance with hearing notices, unjust denial of adjournment, rejection of books of accounts, excessive income addition, and arbitrary loan addition. The Tribunal found the exparte orders unsustainable in law and directed the CIT(A) to rehear the case, emphasizing the importance of providing a fair opportunity to the assessee and issuing a speaking order.

3. Directions for Fresh Decision by CIT(A):
Given the deficiencies in the previous proceedings, the Tribunal set aside the issues to the CIT(A) for a fresh decision in compliance with the law. The assessee was instructed to appear before the CIT(A) on a specified date, present relevant evidence, and avoid unnecessary adjournments. The Tribunal decided not to send formal notices, as the date was announced in the Open Court.

4. Dismissal of Stay Application and Conclusion:
As the main appeal issues were remanded to the CIT(A) for a fresh decision, the Stay Application became irrelevant and was dismissed. The main appeal was allowed for statistical purposes. The order was pronounced on a specific date, concluding the proceedings.

This detailed analysis highlights the procedural irregularities, grounds of appeal, directions for rehearing, and the consequential dismissal of the Stay Application in the context of the legal judgment delivered by the ITAT Delhi.