2021 (4) TMI 950 - AT - Income Tax

Addition u/s 68 - assessee submitted that, the notice of hearing sent by the ld. CIT(A) was on a wrong address and consequently, the assessee did not receive the notice and thus, none appeared before the ld. CIT(A) and the ld. CIT(A) passed an ex-parte order - HELD THAT - As relying on M/S. SRIRAM TIE UP PVT. LTD. VERSUS ITO, WD 9 (4). KOLKATA 2018 (3) TMI 1403 - ITAT KOLKATA ITAT has passed similar orders in many cases on the same issue of additions made u/s 68 of share capital and has set aside the assessment to the file of the AO for fresh adjudication with a direction that Assessing Officer may examine the evidence already on record as well as other documentary evidences which the assessee may file before him and adjudicate the issue in accordance with law. There is violation of the principles of natural justice in this case. Keeping in view the totality of the facts and circumstances of the case, the submissions of both sides and also the orders of the Co-ordinate Bench of the Tribunal in similar matters, we set aside this issue to the file of the AO for fresh adjudication in accordance with law, after giving the assessee adequate opportunity of being heard. Appeal of the assessee is allowed for statistical purposes.

Summary

Issues:
Appeal against order of CIT(A) under Income Tax Act for Assessment Year 2012-13.

Analysis:
1. The assessee, a company, filed its return of income showing a loss. The Assessing Officer selected the case for scrutiny due to shares issued at a premium. Notices were sent, but the assessee and directors did not appear. Consequently, an addition was made under section 68 of the Act. The CIT(A) passed an ex-parte order.
2. The assessee contended that notices were sent to the wrong address, leading to non-appearance. The Assessing Officer did not provide a proper opportunity. The assessee offered to produce directors and evidence if given a chance. The Department did not object to the matter being restored to the Assessing Officer.
3. The ITAT considered various case laws, including Sriram Tie Up Pvt. Ltd vs. ITO, and noted the lack of fair opportunity for the assessee to present evidence. Guidelines were given for deep investigation. The matter was remanded to the AO for fresh adjudication, emphasizing the importance of following investigating guidelines and ensuring a fair opportunity for the assessee.
4. The ITAT highlighted the violation of principles of natural justice and set aside the issue to the AO for fresh adjudication in accordance with law, granting the assessee adequate opportunity for being heard.
5. The appeal of the assessee was allowed for statistical purposes, following the pattern of similar cases where the Kolkata Bench of the ITAT had set aside assessments for fresh adjudication to ensure fairness and compliance with legal procedures.

This detailed analysis of the judgment showcases the procedural irregularities, legal arguments, and the decision of the ITAT to remand the case back to the Assessing Officer for fresh adjudication, ensuring the principles of natural justice and fair opportunity for the assessee.