2006 (7) TMI 261 - AT - Income Tax

Summary

Issues:
1. Non-service of notice of hearing and denial of reasonable and sufficient opportunity of being heard.
2. Merits on the additions made by the AO and upheld by learned CIT(A).

Analysis:
Issue 1: The appeal was filed against the order of CIT(A)-XXIV for the block period from 1st April, 1988 to 31st Dec., 1998. Grounds 1 to 3 in the appeal raised concerns about the non-service of notice of hearing and denial of a fair opportunity to be heard. The learned CIT(A) proceeded ex parte as the notices for hearing were allegedly not received by the assessee. Despite the issuance of notices fixing dates for hearing, the assessee did not attend or file any reply, leading the learned CIT(A) to rely on the AO's order and confirm the additions made.

Issue 1 (contd.): The assessee, in an affidavit, affirmed not receiving the hearing notices and explained the challenges in receiving them due to the location of the market premises. The assessee argued that the lack of proper notice deprived them of a fair hearing, resulting in a miscarriage of justice. The Tribunal observed that there was no evidence of the notices being received by the assessee, indicating a lack of a reasonable opportunity for the assessee to present their case.

Issue 1 (contd.): The Tribunal, upon finding that the assessee was deprived of a fair opportunity, set aside the CIT(A)'s order and directed a fresh hearing to be conducted, allowing the assessee to present their case. Both parties consented to this decision, and the assessee agreed to appear before the CIT(A) within a specified timeframe for further directions on the date of the hearing. Consequently, the appeal was treated as allowed for statistical purposes.

Issue 2: The remaining grounds in the appeal pertained to the merits of the additions made by the AO and upheld by the CIT(A). However, due to the primary issue of non-service of notice and denial of a fair hearing, the Tribunal's decision focused on setting aside the CIT(A)'s order for a fresh hearing rather than delving into the merits of the additions made by the tax authorities.

In conclusion, the Tribunal's decision primarily addressed the issue of non-service of notice of hearing and the denial of a reasonable opportunity to be heard, leading to the setting aside of the CIT(A)'s order for a fresh hearing, ultimately allowing the appeal for statistical purposes.