2017 (2) TMI 1004 - AT - Income Tax

Violation of provisions of section 127 and 129 - non issuing a notice to the assessee on change of jurisdiction of the assessee - Held that - Assessee has admittedly received notices from the new incumbent Officer and therefore, there is no violation of section 127 of the Act. However, as regards the contentions that the notices were received only on the date scheduled for hearing and therefore, the assessee was not given an opportunity of representing, we find that the assessments were completed exparte the assessee. Therefore, we accept the contentions that the assessee was prevented by reasonable cause from nonappearance on the dates fixed by the new AO. Therefore, though the ground of cross objection is not sustainable, we are of the opinion that the assessees should have been given sufficient opportunity of presenting their case. As regards the merits of the disallowances, we find that the assessees have filed the detailed submissions before the CIT (A), but we find that the CIT (A) (without even calling for a remand report from the AO except in the case of Lingam Tulasi Prasad) has given relief to the assessee on the basis of the material, which has not been verified by the AO and also not even considering the remand report in the case of Tulasi Prasad. Therefore, we deem it fit and proper to set aside the assessments and direct the AO to complete the assessments de novo in accordance with law.

Issues:
1. Ex-parte assessments completed by AO under section 143(3) r.w.s. 144 of the I.T. Act.
2. Alleged violation of provisions of section 127 and 129 of the Act by Assessing Officers.
3. Opportunity given to AO under Rules 46A regarding unexplained credits in the capital account.
4. Relief granted by CIT (A) without giving sufficient opportunity to AO.
5. Change of jurisdiction of the assessees and violation of section 127 of the Act.
6. Merits of disallowances and relief granted by CIT (A) without verifying material.

Analysis:

1. The appeals were filed by the Revenue against the orders of the CIT (A)-V, Hyderabad, dated 28.05.2013, regarding ex-parte assessments completed by the Assessing Officers under section 143(3) r.w.s. 144 of the I.T. Act. The CIT (A) partly allowed the appeals filed by the respective assessees, leading to the Revenue appealing against the relief granted.

2. The assessees raised cross objections alleging that the Assessing Officers violated the provisions of section 127 and 129 of the Act by not issuing a notice on the change of jurisdiction. The Tribunal found that the assessees did receive notices from the new incumbent Officer, indicating no violation of section 127. However, the Tribunal agreed that the assessees should have been given sufficient opportunity to present their case.

3. In the case of Shri Lingam Tulsi Prasad, the Revenue raised a ground of appeal regarding the opportunity given to the AO under Rules 46A for explaining unexplained credits in the capital account. The Counsel for the assessee argued that the CIT (A) had called for a remand report from the AO before granting relief. The Tribunal noted discrepancies in the handling of remand reports by the CIT (A) in different cases.

4. The Revenue contended that the CIT (A) granted relief to the assessee without providing sufficient opportunity to the AO and without a proper basis. The Tribunal observed that the CIT (A) had not consistently followed procedures in calling for remand reports, leading to discrepancies in granting relief.

5. The assessees argued that the Assessing Officers completed the assessment without giving them sufficient opportunity after a change in jurisdiction. The Tribunal found that while the assessees did receive notices from the new AO, they were prevented from appearing due to reasonable cause, warranting a fair opportunity to be provided to them.

6. Regarding the merits of disallowances and relief granted by the CIT (A), the Tribunal found that the CIT (A) had not adequately verified the material before granting relief. It was deemed fit to set aside the assessments in all cases and direct the AO to complete assessments de novo, ensuring a fair opportunity for the assessees to present their case.

In conclusion, the appeals of the Revenue were set aside, and the cross objections were dismissed, with directions for de novo assessments to be conducted in accordance with the law, providing the assessees with a fair opportunity of hearing.

← Previous Next →