2019 (12) TMI 347 - AT - Income Tax

Reassessment u/s 147 - estimation of profit - Principles of natural justice - no notice u/s 148 was ever served by the Ld AO - impugned assessment order passed without giving any opportunity of hearing - HELD THAT - The assessee is apparently not aware either of the statutory rules or the provisions. A perusal of the impugned order also brings out the fact that admittedly the statutory Appellate Forum provided to the assessee namely First Appellate Authority in the facts of the present case has not been availed of by the assessee effectively. The reasons for making the said observation is evident not only from the manner in which the prayer in the grounds has been couched. The assessee admittedly was required to address during the assessment proceedings the deposits in his bank account. On account of inability to address the facts with supportive evidences addition of ₹ 16,54,127/- stood made as a result of estimation of profits @ 5% of the deposits amounting to ₹ 3,30,82,547/- made in assessee's bank account - the assessee was under a bonafide belief that on the advancing of arguments of having been framed by some person named Ishu Sharma, the ld. CIT(A) would have the power to waive the fine imposed . The assessee appearing in person admittedly did not comprehend the nature of relief being sought and failed to comprehend that there was no such power vested by the Statute in the Authority of the First Appellate Authority and further that no fine had been imposed - the Right to Appeal cannot be said to have been exercised by the assessee in all fairness as the assessee failed to comprehend the nature of the order and the magnitude of the evidences required. It is deemed appropriate to restore the issue back to the file of the Ld. CIT(A), directing the assessee to address the relevant facts on the basis of which the Ld. CIT(A) can grant relief if maintainable in law. The appeal of the assessee is allowed for statistical purposes.

Summary

Issues:
1. Validity of assessment order due to lack of proper notice service.
2. Validity of assessment order due to lack of evidence of affixture of notices.
3. Denial of opportunity of being heard to the appellant/assessee.
4. Allegations of victimization and suffering without fault.

Issue 1: Validity of assessment order due to lack of proper notice service:
The appellant challenged the assessment order citing that the Assessing Officer (AO) erred by not serving notice under section 148 of the Income Tax Act, 1961. The appellant argued that failure to serve notice renders the assessment void ab initio. The appellant highlighted the necessity of proper notice service for a valid assessment order. The appellant referenced legal precedents emphasizing the importance of notice service for a lawful assessment. The appellant contended that the absence of notice service invalidated the assessment order.

Issue 2: Validity of assessment order due to lack of evidence of affixture of notices:
The appellant contested the assessment order on grounds of lack of evidence regarding the identification of the place of affixture of notices. The appellant argued that without proof of an individual person being associated with identifying the place of affixture of notices, the notice under section 144 is legally flawed. Legal precedents were cited to support the argument that without proper evidence of affixture, the notice is considered bad in law. The appellant pointed out discrepancies in the AO's actions regarding notice service through affixture, emphasizing the necessity of evidence for a valid notice service.

Issue 3: Denial of opportunity of being heard to the appellant/assessee:
The appellant raised concerns regarding the denial of the opportunity to be heard during the assessment proceedings. The appellant argued that the principle of natural justice mandates that every party should have the chance to present their case. The appellant contended that the order passed without granting the opportunity of being heard goes against established legal principles. The appellant emphasized the importance of being heard before any decision is made.

Issue 4: Allegations of victimization and suffering without fault:
The appellant alleged victimization and suffering without fault, stating that the appellant had been subjected to undue hardship despite no wrongdoing. The appellant mentioned being in custody without committing any offense, highlighting the distress faced by the entire family. The appellant's circumstances were presented to demonstrate the unfair treatment faced, including financial difficulties and personal hardships. The appellant's plea for justice in light of the alleged victimization was a key aspect of the appeal.

The judgment ultimately allowed the appeal for statistical purposes, emphasizing the need for proper compliance and fair utilization of opportunities provided to the appellant. The issue was remanded back to the First Appellate Authority for further consideration based on the relevant facts presented by the appellant. The judgment highlighted the importance of substantial justice and the proper exercise of the right to appeal in a fair and informed manner.