2016 (2) TMI 597 - AT - Income Tax

Reopening of assessment - Held that - The assessee in the assessment proceedings u/s.143(3) r.w.s 147 of the Act has filed material information which the Assessing Officer has overlooked the vital documents further the assessee filed appeal before the Commissioner of Income Tax (Appeals) and also filed submission 05.06.2015 which ld. Commissioner of Income Tax (Appeals) has ignored. Therefore we are of the opinion that one more opportunity be given on the principles of natural justice as the Commissioner of Income Tax (Appeals) confirmed the order of the Assessing Officer without going into the merits of the case. Considering the facts and circumstances we set aside the order of the Commissioner of Income Tax (Appeals) and remit the disputed issue back to the file of the Commissioner of Income Tax (Appeals) for hearing and the ld.CIT(A) should provide adequate opportunity of being to the assessee and dispose off the appeal on merits.

Summary

Issues involved:
Reopening of assessment, interest disallowance, no opportunity of hearing.

Reopening of assessment:
The appeal was against the order of the Commissioner of Income-tax (Appeals) for the assessment year 2007-2008. The Assessing Officer had reopened the assessment under section 147 of the Income Tax Act, 1961. The assessee contended that the original return filed should be treated as a response to the notice issued under section 148. The Assessing Officer disallowed interest income on certain advances made by the assessee, leading to the appeal.

Interest disallowance:
During the assessment proceedings, the Assessing Officer found loans and advances in the balance sheet, with interest debited in the profit and loss account. The Assessing Officer believed that the assessee had not offered any interest income on these advances. The assessee explained that the advances included various components like advance tax, TDS deducted, investments, and staff advances. The Assessing Officer relied on a High Court decision and disallowed the interest amount. The Commissioner of Income Tax (Appeals) upheld this decision, leading to the appeal before the Tribunal.

No opportunity of hearing:
The Commissioner of Income Tax (Appeals) upheld the Assessing Officer's order without delving into the merits of the case. The assessee contended that adequate opportunity of hearing was not provided before passing the order. The Tribunal observed that the Commissioner of Income Tax (Appeals) had overlooked vital submissions and documents filed by the assessee. The Tribunal set aside the order and remitted the issue back to the Commissioner of Income Tax (Appeals) for a fresh hearing, emphasizing the principles of natural justice and the need for a fair opportunity to present the case.

In conclusion, the Tribunal partly allowed the appeal, emphasizing the importance of providing adequate opportunity of being heard to the assessee and ensuring that the appeal is disposed of on its merits.