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2021 (3) TMI 932 - AT - Income TaxReopening of assessment u/s 147 - disallowance of purchases wrongly claimed by the assessee - HELD THAT - As manifest from the record that the assessee has not produced the supporting invoices for the claim of purchases as recorded in the books of account. AO also issued notices u/s. 133 (6) to M/s. Sharda Steel Industries, M/s. P.D. Enterprises and M/s. Sahib Brick Field requiring confirmation of transactions entered with the assessee during the year under consideration. It is clear from the assessment order that there is a failure on the part of the assessee to substantiate the claim of the purchases. The assessee challenged the order of the Assessing Officer before the Ld. CIT(A) including the validity of reopening of the assessment for want of service of notice u/s. 148 - CIT(A) stated in the impugned order that several notices was given to the assessee, however the assessee has neither attended the proceedings nor submitted any written submissions or supporting documents. CIT(A) has confirmed the addition made by the AO. It is pertinent to note that once the assessee has raised a legal issue challenging the validity of the notice u/s. 148 irrespective of non-appearance of the assessee, the CIT(A) ought to have decided the said issue on merits. Since, the Ld. CIT(A) has not decided the appeal of the assessee by speaking order and the legal issue raised by the assessee has not been adjudicated, therefore, the impugned order of the Ld. CIT(A) suffers from error and illegality. Accordingly, the impugned order is set aside and the matter is remanded record of the Ld. CIT(A) for re-adjudication of the appeal of the assessee on merits by a speaking order after granting one more opportunity of being heard to the assessee. Appeal of the assessee is allowed for statistical purposes.
Issues:
1. Validity of assessment made under sections 147/143(3) for the assessment year 2006-07. 2. Service of notice under section 148 to the assessee. 3. Passing of ex-parte order by the Ld. CIT(A) without providing a reasonable opportunity to the assessee. 4. Justification of addition of ?11,87,228 on account of purchases. 5. Failure of the assessee to substantiate the claim of purchases and challenges to the validity of the notice under section 148. Issue 1: Validity of assessment made under sections 147/143(3) for the assessment year 2006-07 The Assessing Officer made an addition of ?11,87,228 on account of disallowance of purchases wrongly claimed by the assessee. Despite issuing notices under section 133(6) to suppliers and lack of response from the assessee, the Assessing Officer treated the purchases as bogus. The Ld. CIT(A) dismissed the appeal ex-parte due to the assessee's non-attendance. The Tribunal noted the failure of the assessee to produce supporting invoices and the lack of confirmation from suppliers, leading to the addition. The legal issue challenging the validity of the notice under section 148 was not decided by the Ld. CIT(A), resulting in the order being set aside for re-adjudication. Issue 2: Service of notice under section 148 to the assessee The assessee contended that no notice under section 148 was served, questioning the validity of the assessment. The Ld. CIT(A) mentioned giving several notices to the assessee, who did not attend or submit any written submissions. The Tribunal emphasized that despite the non-appearance of the assessee, the legal issue raised should have been decided on merits. The failure to adjudicate on this legal issue rendered the Ld. CIT(A)'s order erroneous and illegal, leading to the order being set aside for re-examination. Issue 3: Passing of ex-parte order by the Ld. CIT(A) without providing a reasonable opportunity to the assessee The assessee argued that the Ld. CIT(A) passed an ex-parte order without providing a fair opportunity for a hearing. The Tribunal acknowledged the lack of attendance by the assessee during the proceedings. However, it highlighted the necessity for the CIT(A) to decide legal issues raised by the assessee, even in the absence of the assessee. The failure to address these legal contentions led to the order being remanded for a fresh adjudication after granting the assessee another opportunity to be heard. Issue 4: Justification of addition of ?11,87,228 on account of purchases The Assessing Officer added ?11,87,228 on account of disallowed purchases, considering them as incorrect. The assessee attributed this to a mistake by the accountant, who recorded some purchases twice. The Tribunal noted the lack of confirmation from suppliers and invoices without GST. The Ld. AR requested another chance to present correct details, emphasizing the need for verification by the Assessing Officer. The Tribunal set aside the order for re-examination, considering the need for a proper verification of the correct purchase details. Issue 5: Failure of the assessee to substantiate the claim of purchases and challenges to the validity of the notice under section 148 The Tribunal highlighted the failure of the assessee to substantiate purchase claims and the lack of responses from suppliers. Despite the legal challenge to the notice under section 148, the Ld. CIT(A) did not address this issue. The Tribunal emphasized the importance of deciding legal contentions raised by the assessee, leading to the order being remanded for re-adjudication after providing the assessee with another opportunity to present its case. In conclusion, the Tribunal allowed the appeal for statistical purposes, setting aside the Ld. CIT(A)'s order and remanding the matter for re-adjudication on merits after granting the assessee another opportunity to be heard.
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