2019 (6) TMI 338 - AT - Income Tax

Denial of natural justice - CIT(A) in passing the ex-parte order without giving opportunity of being heard - issue relates to the reopening of the assessment and additions on merit - HELD THAT - The assessee has given the same address for the purpose of service in the appeal papers as was given before the CIT(A). The observations of the CIT(A) clearly show that the notices issued for hearing of the appeal before the ld. CIT(A) have not been served upon assessee. No attempt has been made to serve the assessee personally through the process server of the Department. Therefore, the appellate order is passed without giving opportunity of being heard to the assessee in violation of principle of natural justice. CIT(A) then decided the appeal on merit merely by observing that the assessee has neither given any evidence or material or reasoning as to how reopening of the assessment is bad in law and as to how additions on merit are unjustified. CIT(A) did not verify from the assessment record that all the evidences are part of the record of the Assessing Officer. Therefore, even if ld. CIT(A) wanted to decide the appeal of the assessee ex parte on merit, in such circumstances, the assessment record could have been summoned for deciding the appeal of the assessee on merits. CIT(A) noted that neither the assessee nor the Departmental Officer appeared at the time of hearing of appeal, therefore, none of the documentary evidences on record have been considered by him at appellate stage while dismissing the appeal of the assessee without giving opportunity of being heard to the assessee. Whatever statements were recorded by the Department were not subjected to cross-examination on behalf of the assessee. All these issues raised in the written submission have not been dealt either by the Assessing Officer or by the ld. CIT(A). Since no findings of fact have been recorded by the authorities below on merit on all the issues and that, no opportunity have been given to the assessee to argue the appeal on merit at appellate stage, therefore, the entire matter requires reconsideration - thus restore the entire matter to Ld. CIT(A) with the direction to re-decide the appeal strictly on merit as per law by giving reasonable/sufficient opportunity of being heard to the assessee - Decided in favour of assessee for statistical purposes.

Summary

Issues involved:
Reopening of assessment, addition of unexplained credit under section 68 of the IT Act, addition of commission expenses, passing of ex-parte order without opportunity of being heard.

Reopening of assessment:
The appeal was against the order of ld. CIT(A) for the Assessment Year 2009-10. The assessee filed a return of income declaring 'Nil' income, but later, it was found that the assessee was involved in receiving accommodation entries. The Assessing Officer made additions on account of unexplained credit and commission expenses. The assessee challenged the reopening of assessment and the additions before ld. CIT(A). The notices issued to the assessee were returned unserved, indicating an issue with the address provided. Ld. CIT(A) decided the appeal on merits without proper evidence or reasoning from the assessee, leading to the dismissal of the appeal.

Passing of ex-parte order without opportunity of being heard:
The assessee challenged the order of ld. CIT(A) for passing an ex-parte order without giving an opportunity of being heard, reopening of assessment, and making additions on merit. The Tribunal observed that the notices for the appeal were not served upon the assessee, violating the principle of natural justice. Ld. CIT(A) decided the appeal on merit without considering all documentary evidence, and neither the assessee nor the Departmental Officer appeared during the hearing. The Tribunal noted that no findings of fact were recorded on merit by the authorities below, and the assessee was not given an opportunity to argue the appeal on merit at the appellate stage.

Conclusion:
The Tribunal found that the matter required reconsideration due to procedural irregularities and lack of opportunity for the assessee to present its case. The Tribunal set aside the impugned order and directed ld. CIT(A) to re-decide the appeal strictly on merit, providing reasonable/sufficient opportunity of being heard to the assessee. The Tribunal allowed the appeal of the assessee for statistical purposes, emphasizing the importance of following due process and considering all relevant evidence before making decisions.