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2019 (9) TMI 944 - AT - Income TaxReopening of assessment u/s 147 - failure to issue statutory notice u/s 143(2) - enhancement of income by the CIT(A) without giving assessee a proper and adequate opportunity of being heard - HELD THAT - Contentions of the AR that there is failure on part of issuance of statutory notice u/s 143(2) of the Act that does not seem tenable as the Assessing Officer has mentioned in the Assessment Order that notice under Section 143(2) has been issued to the assessee. The Assessee in fact participated in the Assessment Proceedings and got the fair opportunity of hearing to represent the case. Therefore, Ground No. 2 is dismissed. Prior to enhancement, no reasonable opportunity was granted to the assessee as per the requirement of Section 251(2) of the Income Tax Act, 1961. Thus, the contentions of the Ld. AR to that extend are sustainable and Ground No. 3 is allowed. Non-disposal of the objections filed by the Assessing Officer against re-opening of reassessment proceedings - Assessing Officer has not disposed off the objections of the assessee filed at the initiation of assessment proceedings. Thus, in light of the decision in case of Surendra Kumar Jain 2019 (8) TMI 23 - DELHI HIGH COURT we are also of the opinion that the objections filed by the assessee should have been disposed off by the Assessing Officer at the initial stage and then should have proceeded with the completion of the Assessment. Therefore, we remand back the issue of disposing off the objections to the file of the Assessing Officer to first deal with the objections of the Assessee, and thereafter passed an appropriate order itself. - Appeal of the assessee is partly allowed for statistical purpose.
Issues Involved:
1. Validity of the order passed by the Commissioner of Income Tax (Appeals) [CIT(A)]. 2. Adequacy of opportunity of being heard provided to the assessee. 3. Enhancement of income without notice. 4. Validity of the reassessment proceedings under Section 147 read with Section 148. 5. Disposal of objections against reopening of assessment. 6. Disallowance of 12.32% of total expenses. Issue-wise Detailed Analysis: 1. Validity of the Order Passed by the CIT(A): The assessee contended that the order passed by the CIT(A) was bad in law and on facts. However, this ground was deemed general in nature and dismissed. 2. Adequacy of Opportunity of Being Heard: The assessee argued that the CIT(A) erred in passing the order without giving a proper and adequate opportunity of being heard, violating the principle of natural justice. The tribunal found that the assessee had participated in the assessment proceedings and had a fair opportunity to represent the case. Therefore, this ground was dismissed. 3. Enhancement of Income Without Notice: The CIT(A) enhanced the income of the assessee without issuing a show cause notice under Section 251(2) of the Act. The tribunal agreed with the assessee that no reasonable opportunity was granted before the enhancement, violating Section 251(2). Thus, this ground was allowed. 4. Validity of the Reassessment Proceedings: The assessee challenged the reassessment proceedings initiated by the AO, arguing that the conditions and procedures prescribed under the statute were not satisfied. The tribunal noted that the AO had not disposed of the objections filed by the assessee against the reopening of the assessment by passing a speaking order, which is a requirement as per the decision in GKN Driveshafts (India) Ltd. vs. ITO. The tribunal remanded the issue back to the AO to first deal with the objections of the assessee and then proceed with the assessment. This ground was partly allowed for statistical purposes. 5. Disposal of Objections Against Reopening of Assessment: The tribunal found that the AO did not pass a speaking order disposing of the objections raised by the assessee against the reopening of the assessment. Citing the decision in Surendra Kumar Jain vs. Pr. CIT, the tribunal held that the AO should have rejected the objections before passing the final order. The matter was remanded back to the AO to dispose of the objections first and then proceed with the assessment. This ground was partly allowed for statistical purposes. 6. Disallowance of 12.32% of Total Expenses: The AO disallowed 12.32% of the total expenses incurred by the assessee on an ad-hoc basis, which was confirmed and enhanced by the CIT(A). The assessee argued that the disallowance was made without any material or evidence and that all expenses were genuine and fully vouched. The tribunal did not comment on the merit of this issue as it was remanded back to the AO along with the objections against reopening. Therefore, this ground was not dealt with in detail. Conclusion: The appeal was partly allowed for statistical purposes, with the tribunal remanding the matter back to the AO to address the objections raised by the assessee regarding the reopening of the assessment and then proceed with the assessment in accordance with the principles of natural justice. The enhancement of income without notice was found untenable, and the related ground was allowed.
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