2023 (5) TMI 946 - AT - Income Tax

Validity of assessment - violation of principle of natural justice - assessment order passed without confronting the Appellant with the information/documents on which reliance was placed by the AO and/or by the CIT(A) - HELD THAT - On perusal of the order passed by the CIT(A) it is not clear whether a copy of the remand report was furnished to the Appellant. Therefore, in order to address the grievance of the Appellant regarding violation of principle of natural justice, we deem it appropriate to set aside the order passed by the CIT(A) with the directions to adjudicate the issue raised in appeal before CIT(A) afresh after giving the Appellant a reasonable opportunity of being heard. CIT(A) is directed to confront the Appellant with the remand report received from the AO in response to letter dated 09/02/2017 sent by the CIT(A) to AO for examination of additional evidence filed by the Appellant along with submissions before adjudicating upon the issue of admissibility or otherwise of the additional evidence furnished by the Appellant. Appeal preferred by the Assessee is allowed for statistical purposes.

Issues involved:
The appeal challenges the order passed by the Ld. Commissioner of Income Tax (Appeals)-17, Mumbai for the Assessment Year 2012-13, regarding dismissal of the appeal against the Assessment Order under Section 143(3) of the Income Tax Act, 1961.

Natural Justice Issue:
The Appellant contended that the Ld. CIT(A) erred in not granting proper opportunity of being heard, breaching principles of natural justice, and passing the order without application of mind to the facts and submissions. The Appellant also raised concerns about the confirmation of additions made by the Assessing Officer based on surmises and conjecture, without relevant considerations.

Addition of Unsecured Loans Issue:
The Ld. CIT(A) confirmed the addition of Rs. 2,13,00,000 under Section 68 of the Act for alleged accommodation entry of unsecured bogus loan. The Appellant argued that no such addition was warranted and if required, the computation was arbitrary and excessive.

Interest Expenditure Disallowance Issue:
The Ld. CIT(A) confirmed the addition of Rs. 1,47,575 for disallowance of interest expenditure related to alleged bogus unsecured loans. The Appellant disputed the necessity of this addition based on the facts and law.

Commission Expenditure Issue:
The Ld. CIT(A) upheld the addition of Rs. 3,19,500 for alleged commission expenditure incurred for obtaining accommodation entry of unsecured loans. The Appellant contended that no such addition was justified in the circumstances.

Judgment Details:
The Appellant, a private limited company, challenged the assessment order for the Assessment Year 2012-13, which included additions for accommodation entry of unsecured loans, disallowance of interest expenditure, and commission expenditure. The CIT(A) dismissed the appeal after considering additional evidence and a remand report.

Upon hearing arguments, the Appellant claimed the order lacked sufficient opportunity for the Appellant to be heard, violating natural justice principles. The Departmental Representative provided communication indicating the consideration of the remand report by the CIT(A), refuting the Appellant's claims.

After evaluating the submissions, the Tribunal found ambiguity regarding the furnishing of the remand report to the Appellant. To address the Appellant's grievance of natural justice violation, the order was set aside with directions for the CIT(A) to reconsider the issues after giving the Appellant a reasonable opportunity to be heard. The appeal was allowed for statistical purposes, leaving all rights and contentions open.

In conclusion, the appeal was allowed for statistical purposes, emphasizing the importance of providing a fair opportunity for the Appellant to present their case.

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