2021 (7) TMI 408 - AT - Income Tax

Assessment u/s 144 - admission of additional evidence - main grievance of the appellant/assessee is that the Ld. CIT(A) has wrongly declined to admit the additional evidence which the assessee wanted to rely during the appellate proceedings - HELD THAT - Admittedly, in this case, the AO has passed the assessment order u/s. 144 of the Act and the assessee could neither file any document in support of his contention nor argue his case personally or through his representative. Under these circumstances the assessee had no option but to adduce additional evidence and plead his case before the appellate authority. Hence, the assessee requested the Ld. CIT(A) to admit the additional evidence. In the present case, since the assessment order had been passed u/s. 144 of the Act, the assessee had no occasion to place on the record the relevant evidence essential for the just decision of the case. Further, it is not apparent from the assessment order that the notices issued/sent to the assessee were served upon him and the despite the service of notices, the assessee failed to appear before the AO. The assessee had no option but to adduce additional evidence before the Ld. CIT(A). Hence, in our considered view, the Ld. CIT(A) ought to have admitted the additional evidence which the assessee intended to adduce. Appeal filed by the assessee is allowed for statistical purposes.

Summary

Issues:
1. Validity of the assessment order passed under section 144 r.w.s. 147 of the Income Tax Act, 1961.
2. Reopening of the assessment by issuance of notice u/s. 148.
3. Addition of salary received from alleged undisclosed sources.
4. Consideration of additional evidence during appellate proceedings.

Analysis:
1. The appellant challenged the assessment order under section 144 r.w.s. 147 of the Income Tax Act, contending that it was made without a proper opportunity of hearing, violating the Principles of Natural Justice. The AO proceeded ex-parte as the appellant did not respond to notices, resulting in the determination of total income. The CIT(A) upheld the AO's decision. The appellant argued against the best judgment assessment, claiming the salary was received from a bank with taxes deducted, challenging the legality and justification of the assessment. The Tribunal found the CIT(A)'s decision unsustainable and directed a fresh consideration with additional evidence, emphasizing the importance of substantial justice over technicalities.

2. The appellant contested the reopening of the assessment under section 147, alleging no income escapement. The Tribunal noted the appellant's objections but primarily focused on the need for a fair opportunity to present evidence and arguments. The Tribunal set aside the CIT(A)'s decision, emphasizing the appellant's right to a proper hearing and consideration of additional evidence.

3. The dispute involved the addition of salary received from alleged undisclosed sources. The appellant argued that the salary was from a known source with taxes deducted, questioning the assessment's validity. The Tribunal acknowledged the appellant's contentions and emphasized the necessity of a fair hearing and consideration of all relevant evidence. The Tribunal directed the CIT(A) to reevaluate the issue with the additional evidence presented during the appellate proceedings.

4. The appellant raised concerns about the CIT(A)'s refusal to admit additional evidence during the appellate proceedings. The Tribunal noted the appellant's argument that the evidence was crucial for a just decision. Citing legal provisions and precedents emphasizing substantial justice, the Tribunal criticized the CIT(A)'s decision and directed a fresh consideration with the additional evidence, stressing the importance of a fair hearing and the right to present relevant evidence.

In conclusion, the Tribunal allowed the appeal for statistical purposes, setting aside the CIT(A)'s decision and directing a fresh consideration with the additional evidence presented by the appellant during the appellate proceedings. The Tribunal emphasized the importance of affording the appellant a fair opportunity to be heard and present relevant evidence for a just decision.