2021 (9) TMI 508 - AT - Income Tax

Ex parte proceedings by CIT-A - denial of natural justice - Reopening of assessment u/s 147 - disallowance of depreciation, addition on account of share application under section 68 and disallowance of purchase - assessee has challenged the order of Ld. CIT(A) on the ground that order was passed without granting opportunity of hearing - HELD THAT - CIT(A) has not recorded as to when the last date of hearing was fixed. The Ld. CIT(A) has not discussed the facts of the case, issues for determination and decision thereon. CIT(A) has not discussed the facts of the case on adjudication point of determination and the decision thereon for such decision, meaning thereby the order passed by Ld. CIT(A) is not as per the mandate of section 250(6) - Therefore instead of going on the merit of additional grounds of appeals and on the original grounds of appeals, we restore the matter back to the Ld. CIT(A) to adjudicate all the issues afresh in accordance with law. The assessee is given liberty to raise all legal or factual issues before the Ld. CIT(A). CIT(A) is directed to provide reasonable and fair opportunity of hearing to the assessee before passing the order afresh - Appeal of assessee is allowed for statistical purposes

Summary

Issues Involved:
1. Validity of re-opening under section 147 of the Income Tax Act, 1961.
2. Addition of ?1,66,300 on account of depreciation.
3. Addition of ?11,95,000 out of share application money as income from undisclosed sources.
4. Addition of ?7,19,60,000 out of share capital as income from undisclosed sources.
5. Addition of ?1,37,915 treating the same as unverifiable purchases.
6. Penalty levied under section 271(1)(c) of the Income Tax Act, 1961.
7. Legal grounds regarding the notice issued under section 148 and 143(2) of the Income Tax Act, 1961.
8. Denial of deduction under section 80IB of the Income Tax Act, 1961.
9. Violation of principles of natural justice.

Detailed Analysis:

1. Validity of Re-opening under Section 147:
The assessee challenged the re-opening of the assessment under section 147, arguing that the notice issued under section 148 and the reassessment order passed under section 143(3) r.w.s. 147 were illegal, bad in law, barred by time limitation, and without jurisdiction. The Tribunal noted that these legal grounds were not raised before the CIT(A). The Tribunal restored the matter back to the CIT(A) to adjudicate all issues afresh, including the validity of the re-opening.

2. Addition on Account of Depreciation:
The assessee contested the addition of ?1,66,300 on account of depreciation. The Assessing Officer disallowed the depreciation due to the absence of documentary evidence. The CIT(A) upheld this addition as the assessee failed to provide sufficient evidence. The Tribunal restored the matter back to the CIT(A) for fresh adjudication, directing the assessee to furnish necessary documents.

3. Addition of Share Application Money:
The assessee challenged the addition of ?11,95,000 out of share application money, treating it as income from undisclosed sources. The Assessing Officer made this addition due to the lack of confirmation and evidence regarding the genuineness and creditworthiness of the transactions. The CIT(A) upheld this addition. The Tribunal restored the matter back to the CIT(A) for fresh adjudication.

4. Addition of Share Capital:
The assessee contested the addition of ?7,19,60,000 out of share capital, treating it as income from undisclosed sources. The Assessing Officer made this addition due to the absence of confirmation and evidence. The CIT(A) upheld this addition. The Tribunal restored the matter back to the CIT(A) for fresh adjudication.

5. Addition Treating Unverifiable Purchases:
The assessee challenged the addition of ?1,37,915 treating it as unverifiable purchases. The Assessing Officer disallowed part of the expenditure due to the lack of details and confirmation. The CIT(A) upheld this addition. The Tribunal restored the matter back to the CIT(A) for fresh adjudication.

6. Penalty under Section 271(1)(c):
The assessee contested the penalty levied under section 271(1)(c) amounting to ?2,62,93,833. The Assessing Officer imposed the penalty due to major additions under section 68 and disallowance of purchases. The CIT(A) upheld the penalty. The Tribunal restored the matter back to the CIT(A) to decide after adjudicating the quantum assessment afresh.

7. Legal Grounds Regarding Notices:
The assessee raised additional legal grounds regarding the invalidity of the notice issued under section 148 and the reassessment order passed under section 143(3) r.w.s. 147, arguing that the approval under section 151 was invalid and the notice under section 143(2) was not served as per the provisions of the law. The Tribunal restored the matter back to the CIT(A) for fresh adjudication, allowing the assessee to raise these legal grounds.

8. Denial of Deduction under Section 80IB:
The assessee argued that the Assessing Officer erred in denying the deduction under section 80IB. The Tribunal restored the matter back to the CIT(A) for fresh adjudication, directing the assessee to furnish necessary evidence.

9. Violation of Principles of Natural Justice:
The assessee claimed that the assessment order and the order of CIT(A) were passed in gross violation of principles of natural justice as no adequate and reasonable opportunity was provided. The Tribunal noted that the CIT(A) passed the ex-parte order without discussing the facts and issues in detail. The Tribunal restored the matter back to the CIT(A) for fresh adjudication, directing to provide a reasonable and fair opportunity of hearing to the assessee.

Conclusion:
The Tribunal set aside the orders of the CIT(A) and restored the matters back to the CIT(A) for fresh adjudication, directing to provide a reasonable and fair opportunity of hearing to the assessee and to expedite the disposal of the appeal. The appeals were allowed for statistical purposes.