2020 (8) TMI 8 - AT - Income Tax

Validity of reopening of the assessment - appeal of the assessee was dismissed ex-parte due to non appearance - HELD THAT - Once, the assessee has filed an appeal and raised this issue before the ld. CIT(A) then the matter ought to have been decided by the first appellate authority. Therefore, the non adjudication of this issue by the ld. CIT(A) due to non appearance of the assessee would not give an absolute right to the assessee to raise these issued before the Tribunal without having benefit of finding of the first appellate authority. This is a mixed question law and facts. The legal issue can be decided only after considering the factual aspect of the transactions. The assessee has not produced the relevant record and evidence to show that the transactions carried out by the assessee in the commodity exchange have no linked with the persons who were found to be indulged in providing commodity entries of bogus speculative profit and loss. AO given a finding that the transactions of the assessee has a nexus with those persons being counter party providing these transactions however, in the absence of the relevant record we cannot examine and give a conclusive finding on this issue which is factual in nature to the extent whether the finding of the AO is factual correct or not. Though the assessee claimed to have produced the relevant record before the AO however, in the absence of the same produce before us we cannot give a finding that the decision of the AO is perversed. Approval granted u/s 151 - Proforma proposal send by the AO for approval contains all the details as well as the reasons recorded by the AO which were also examined by the JCIT and recommended the proposal of the AO for issuing notice u/s 148 of the Act and thereafter the Ld. Pr.CIT has granted the approval. Therefore, we do not find any infirmity on the face of it however, the ld. CIT(A) has not decided this issue on merits and dismissed the appeal of the assessee summarily. Appeal of the assessee was dismissed ex-parte due to non appearance of the assessee we set aside this issue to the record of the ld. CIT(A) for granting one more opportunities to the assessee of hearing and then decide the same on merits. Appeal of the assessee is partly allowed for statistical purposes.

Summary

Issues:
Validity of reopening of assessment under Section 147/144, approval granted by Pr.CIT U/s 151 of the Act, and ex-parte dismissal of appeal by ld. CIT(A).

Validity of Reopening of Assessment:
The appeal challenged the validity of reopening the assessment under Section 147/144 for the assessment year 2010-11. The Assessing Officer (AO) reopened the assessment based on information received from the Investigation Wing, Ahmedabad, regarding bogus commodity entries. The assessee's representative argued that there was no tangible material to support the reopening and that the AO's belief was not well-founded. The AR highlighted that there was no direct link between the reasons recorded and the alleged income escaping assessment. The AR also contested the mechanical approval granted by the Pr.CIT U/s 151, citing a typographical error in the relevant section mentioned in the proposal form. The AR relied on a Tribunal decision to support their argument against the reopening.

Arguments and Counter-Arguments:
The Departmental Representative (DR) contended that the AO had specific information about bogus commodity entries received by the assessee, leading to the evasion of tax on speculative profit. The DR emphasized that the approval granted by the Pr.CIT was based on a thorough examination of the reasons recorded by the AO, and the reopening was justified. The DR further pointed out that the assessee's non-appearance before the ld. CIT(A) resulted in the ex-parte dismissal of the appeal, limiting the grounds for challenging the reopening.

Judgment and Decision:
The Tribunal considered the submissions and relevant records. It noted the dismissal of the appeal by the ld. CIT(A) due to the assessee's non-appearance, emphasizing the importance of being heard in the adjudication process. The Tribunal found the issue to be a mix of law and facts, requiring consideration of factual aspects. As the assessee did not provide relevant evidence to disprove the AO's findings, the Tribunal could not conclusively determine the correctness of the AO's decision. Regarding the approval granted U/s 151 of the Act, the Tribunal found no apparent infirmity but directed the issue back to the ld. CIT(A) for a detailed examination. The Tribunal partially allowed the appeal for statistical purposes, setting aside the matter for fresh adjudication on the grounds related to the validity of reopening.

In conclusion, the Tribunal emphasized the importance of presenting evidence and attending hearings for a fair adjudication process, directing a re-examination of the issues by the ld. CIT(A) for a more comprehensive decision.

Judges:
Shri Vijay Pal Rao, JM
Shri Vikram Singh Yadav, AM