2022 (5) TMI 441 - AT - Income Tax

Validity of reopening of assessment - bogus purchases - as argued no notice under section 143(2) of the Act was served on the assessee - appeal of the assessee was decided by the learned CIT(A) on merits of the case however the assessee could not represent before him - HELD THAT - CIT(A) has given finding that notice under section 143(2) of the Act has been issued by the learned Assessing Officer but there is no finding whether it has been served on assessee or not. Further there is no finding that though purchases have been shown by the assessee in its books of account but whether thoe have been in included in the sales which is not disputed by ld AO . Further there is no reference of any quantitative details maintained by the assessee. Therefore in the interest of justice we set aside this appeal back to the file of the learned CIT(A) with a direction to the assessee to raise all these contentions before the Commissioner of Income-tax (Appeals). The assessee is directed to submit within 90 days from the date of this order all these details as well as written submissions placed before us. The learned CIT(A) after granting opportunity of hearing may decide the issue on the merits of the case. Accordingly all the grounds of appeal are allowed for statistical purposes.

Issues:
1. Reopening of assessment and addition on account of bogus purchases.
2. Non-compliance with notice under section 143(2) of the Act.
3. Merits of the case regarding the addition made by the Assessing Officer.
4. Opportunity of hearing not availed by the assessee before the CIT(A).

Analysis:

1. Reopening of assessment and addition on account of bogus purchases:
The appeal was filed against the order passed by the Commissioner of Income-tax (Appeals) for the assessment year 2010-11. The Assessing Officer found that the assessee had engaged in hawala transactions with Om Shanti Trading Co., amounting to Rs. 59,04,762, which were deemed as bogus purchases. Consequently, an addition of Rs. 2,95,238 (5% of the bogus purchases) was made to the total income of the appellant. The CIT(A) upheld the reopening of the assessment and the quantum addition, leading the assessee to appeal the decision.

2. Non-compliance with notice under section 143(2) of the Act:
The authorized representative challenged the reopening of the assessment and the addition on the grounds that no notice under section 143(2) of the Act was served on the assessee. The argument emphasized the procedural irregularity in the assessment process, questioning the validity of the additions made based on the lack of proper notice.

3. Merits of the case regarding the addition made by the Assessing Officer:
The appellant contended that the addition on account of bogus purchases was unjustified and not supported by the merits of the case. Detailed written submissions and judicial precedents were presented to challenge the addition. The case highlighted the importance of substantiating additions with concrete evidence and ensuring that assessments are based on sound legal grounds.

4. Opportunity of hearing not availed by the assessee before the CIT(A):
The CIT(A) granted multiple opportunities for the assessee to present their case but the appellant failed to comply with the scheduled hearings. Despite the lack of representation before the CIT(A), the appeal was decided on the merits of the case. The ITAT, considering the procedural lapses and the need for a fair hearing, set aside the appeal back to the CIT(A) with directions for the assessee to raise all contentions and provide necessary details within a specified timeframe.

In conclusion, the ITAT allowed the appeal filed by the assessee with directions for a fresh consideration of the case by the CIT(A, emphasizing the importance of adherence to procedural requirements and the principles of natural justice in the assessment process.

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