2024 (6) TMI 925 - AT - Income Tax

Ex-parte appellate order by CIT(A) without providing reasonable opportunity - HELD THAT - It is a matter of fact borne from record that on the first occasion when the appeal was fixed for hearing before the CIT(Appeals), i.e., on 15.10.2018, the assessee company had specifically vide its letter of even date that was filed with the CIT(Appeals) on the same date requested him for an adjournment. Considering all we find that the CIT(Appeals) had wrongly observed that the assessee company had failed to comply with and participate in the course of proceedings which were fixed before him on 15.10.2018. Also, we find substance in the claim of the Ld. AR that now when the notice dated 19.11.2018 issued by the office of the CIT(Appeals) fixing the hearing of the appeal on 03.12.2018 was in itself received by the assessee company on 04.12.2018, therefore, there was no occasion for the assessee appellant to participate in the proceedings before the said first appellate authority. We find it incomprehensible that though the assessee company had vide its letter dated 06.12.2018 duly brought the aforesaid fact of having been intimated about the fixation of the appeal for 03.12.2018 only as on 04.12.2018, but the CIT(Appeals) had brushed aside the said material fact and instead of having afforded an opportunity of being heard to the assessee company had proceeded with the matter and disposed off the appeal on the very next date, i.e, on 07.12.2018. The very manner, in which, the CIT(Appeals) had disposed off the appeal of the assessee is in clear violation of the basic principles of natural justice. It is a case where the assessee company had suffered dismissal of the appeal vide an ex-parte order without having been afforded sufficient opportunity to participate and prosecute the matter before the first appellate authority. We, thus, in terms of our aforesaid observations, restore the matter to the file of the CIT(Appeals) with a direction to re-adjudicate the same after affording a reasonable opportunity of being heard to the assessee company. Appeal of the assessee is allowed for statistical purposes.

Issues Involved:
1. Ex-parte appellate order by CIT(A) without providing reasonable opportunity.
2. Addition of Rs.7,83,43,683 as unexplained investment u/s 69.
3. Addition of Rs.13,51,466 as unaccounted sales.
4. Validity of the assessment order u/s 143(3).
5. Additional grounds regarding the legality of the assessment order.

Issue-wise Summary:

1. Ex-parte appellate order by CIT(A) without providing reasonable opportunity:
The assessee contended that the ex-parte order passed by the CIT(A) was "highly unjustified, bad in law, without providing reasonable opportunity of being heard, against the principles of natural justice and not in accordance with the provisions of law." The Tribunal found merit in the assessee's claim that the notice for the hearing on 03.12.2018 was received only on 04.12.2018, and the CIT(A) dismissed the appeal ex-parte without considering the request for adjournment. The Tribunal restored the matter to the file of the CIT(A) for re-adjudication after affording a reasonable opportunity of being heard to the assessee.

2. Addition of Rs.7,83,43,683 as unexplained investment u/s 69:
The assessee challenged the addition of Rs.7,83,43,683 made by the AO on account of alleged excess stock found during the survey, treating it as unexplained investment u/s 69. The assessee argued that the stock verification was done using a crude volumetric method, which was inaccurate. The Tribunal did not delve into the merits of this contention as the matter was restored to the CIT(A) for fresh adjudication.

3. Addition of Rs.13,51,466 as unaccounted sales:
The assessee also contested the addition of Rs.13,51,466 made by the AO for alleged stock shortage, treating it as unaccounted sales. Similar to the previous issue, the assessee argued that the stock verification method was improper. The Tribunal refrained from addressing the merits of this issue, directing the CIT(A) to re-examine it.

4. Validity of the assessment order u/s 143(3):
The assessee argued that the assessment order u/s 143(3) was "illegal, bad in law and suffering from legal infirmities." The Tribunal noted that the assessee's case was selected for "limited scrutiny," and the additions made by the AO were beyond the scope of the issues selected for scrutiny. The Tribunal did not decide on this issue, leaving it to the CIT(A) to consider during the re-adjudication.

5. Additional grounds regarding the legality of the assessment order:
The assessee raised additional grounds challenging the validity of the assessment order on the basis that it was void ab initio, invalid, and barred by limitation. The Tribunal did not address these additional grounds, allowing the assessee to raise them before the CIT(A) during the fresh proceedings.

Conclusion:
The Tribunal allowed the appeal for statistical purposes, restoring the matter to the CIT(A) for re-adjudication after providing a reasonable opportunity of being heard to the assessee. The Tribunal refrained from addressing the merits of the various contentions raised by the assessee, leaving them to be considered by the CIT(A) in the fresh proceedings.

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