2012 (10) TMI 672 - AT - Income Tax

Undisclosed capital gain, unexplained agricultural income and income from other sources - appeal heard ex parte - Held that - The impugned order deserves to be set aside as the same is not in conformity with the requirements of the provisions of law as the conclusion in upholding the assessment order is not supported by any reasoning. Recording of reasons is a part of fair procedure as reasons are the harbinger between the mind of the maker of the decision in the controversy and the decision or conclusion arrived at. Statute mandatorily required that the CIT(A) while deciding the appeal to set out the issues for determination and the decision thereon along with reasons for the decision is missing in the impugned order - restore the issue back to the file of the CIT(A) with the direction to decide the appeal by way of a speaking order - in favour of assessee for statistical purposes.

Summary

Issues:
Appeal against the order of the Commissioner of Income-tax (Appeals) - Assessment Year 2006-07 - Ex parte decision - Addition of undisclosed capital gain, unexplained agricultural income, and income from other sources - Dismissal of appeal by CIT(A) due to non-appearance of assessee - Lack of reasoning in upholding assessment order - Violation of provisions of law - Requirement of setting out issues for determination and providing reasons for decision by CIT(A).

Analysis:

1. The appellant filed an appeal against the order of the Commissioner of Income-tax (Appeals) for the Assessment Year 2006-07, raising various grounds on facts and merit. Despite notice, no one appeared on behalf of the assessee during the hearing. The Assessing Officer had assessed the income at Rs.6,18,135/-, making additions for undisclosed capital gain, unexplained agricultural income, and income from other sources.

2. The CIT(A) proceeded ex parte and dismissed the appeal, citing the assessee's non-attendance at the appeal proceedings. The dismissal was based on the decisions in various cases. However, the ITAT found the impugned order lacking reasoning to support the assessment decision. The ITAT emphasized the importance of providing reasons for decisions, citing the necessity under the Income-tax Act for the CIT(A) to set out issues for determination and provide reasons for the decision.

3. The ITAT held that the CIT(A)'s action was not in conformity with the requirements of the Income-tax Act. Therefore, the ITAT set aside the impugned order and directed the CIT(A) to decide the appeal by way of a speaking order in accordance with the law. The ITAT stressed the significance of recording reasons in decisions to ensure fairness and justice, as per established legal principles.

4. Consequently, the ITAT allowed the appeal for statistical purposes, emphasizing the need for adherence to procedural requirements and the provision of reasoned decisions in tax matters. The order was pronounced in the Open Court on the date of the hearing, i.e., 16th October 2012.