2013 (12) TMI 471 - AT - Income Tax

Assessment u/s 153C - The assessee has received Rs.89.50 lakhs through three demand drafts; Rs.5 lakhs through cheque and a further amount of Rs.89.50 lakhs in cash, for services rendered by him in connection with sale/purchase of land by DLF group of companies Held that - The assessee did not appear before the AO for confronting the questions CIT(A) only considered the documents submitted in the Lok Adalat - It is not clear whether the assessee was a party in the proceedings before the Lok Adalat or he was given opportunity to explain on this aspect Although the assessee has lodged complaints with the Police and Bank authorities In view of natural justice the assessee was given one more opportunity to substantiate his claim The matter was set aside for fresh examination.

Summary

Issues:
Assessment under section 144 of the Income Tax Act, addition of undisclosed income, challenge to assessment order, confirmation of additions by CIT(A), disputed documents, lack of opportunity for the assessee to substantiate claims, necessity of fair play and natural justice, setting aside CIT(A) order, restoration to the Assessing Officer for fresh assessment, direction to consider objections regarding agricultural income.

Analysis:
The appeal before the Appellate Tribunal ITAT Hyderabad concerned the assessment under section 144 of the Income Tax Act for the assessment year 2008-09. The assessee, an individual, was issued a notice under section 153C of the Act following a search and seizure operation in Radha Realty group of cases. The Assessing Officer added an amount of Rs. 89.50 lakhs to the assessee's income based on undisclosed receipts related to the sale of land to group companies of DLF. Additionally, amounts received from other sources were also added to the income. The CIT(A) upheld these additions, citing lack of evidence from the assessee to refute the claims made by the Revenue authorities.

The assessee contended that the amounts credited to the bank account were misused by a third party and not earned by the assessee. The Assessing Officer proceeded ex-parte due to the assessee's non-appearance during the assessment proceedings. The CIT(A) upheld the additions without substantial evidence to support the assessee's claims. The Tribunal noted the lack of opportunity for the assessee to present its case effectively and the failure to confront the assessee with seized materials. The Tribunal emphasized the importance of fair play and natural justice in such proceedings.

In light of the circumstances and the magnitude of the additions, the Tribunal set aside the CIT(A) order and directed the matter to be restored to the Assessing Officer for a fresh assessment. The Assessing Officer was instructed to allow the assessee a fair opportunity to substantiate its case with proper evidence. The Tribunal also directed the Assessing Officer to re-decide the issue of agricultural income after giving the assessee a reasonable opportunity to be heard.

Ultimately, the Tribunal allowed the assessee's appeal for statistical purposes, emphasizing the importance of providing a fair opportunity for the assessee to present its case and ensuring due process in the assessment proceedings.