2008 (1) TMI 515 - AT - Income Tax

Summary

Issues Involved:
1. Protective assessment for additions.
2. Compliance with Tribunal's order.
3. Consideration of original and additional evidence.
4. Validity of ex parte order.
5. Service of notice and jurisdictional issues.

Summary:

1. Protective Assessment for Additions:
The Tribunal held that in block assessments under Chapter XIV-B of the IT Act, there cannot be any addition on a protective basis. The Tribunal's order dated 20th Dec., 2000, clearly stated that any addition in such cases must be on a substantive basis. Consequently, the additions made by the AO on a protective basis were deleted.

2. Compliance with Tribunal's Order:
The Tribunal directed the AO to make a fresh assessment strictly in accordance with the Tribunal's order, which required substantive additions only. The AO's fresh assessment, except for an addition of Rs. 8,221.04 on account of undisclosed bank deposits, was found to be in violation of this direction as it included protective additions. Therefore, the AO's order was quashed for non-compliance with the Tribunal's directive.

3. Consideration of Original and Additional Evidence:
The Tribunal noted that the AO failed to appreciate the original evidence and ignored the Tribunal's order to apply his mind afresh. Additionally, the AO did not consider the additional evidence produced before the Tribunal. The Tribunal emphasized the necessity of entertaining additional evidence and conducting further investigations as required.

4. Validity of Ex Parte Order:
The Tribunal found that the AO passed an ex parte order without providing adequate opportunity to the assessee. The Tribunal highlighted that the AO must allow the assessee to furnish necessary evidence and provide a reasonable opportunity for a fair assessment.

5. Service of Notice and Jurisdictional Issues:
The Tribunal observed that the AO did not state when the first notice of hearing was served, and there were jurisdictional issues due to the appellant's difficulty in locating the new AO. The Tribunal acknowledged the appellant's situation, where the flat was attached by Government authorities, making it unreasonable to expect the appellant to continue residing there.

Conclusion:
The Tribunal quashed the assessment order dated 28th March, 2002, and allowed the assessee's appeal, emphasizing the need for compliance with legal provisions and proper consideration of evidence.