2019 (10) TMI 770 - AT - Income Tax

Reopening of assessment u/s 147 - As recoded by the Ld. CIT(A) neither the assessee nor his authorized representative appeared before him during the course of appellate proceedings - HELD THAT - It is settled law that unless an appeal is rejected in limine for any vital defect, section 250(1) provides that the first appellate authority shall fix a date of hearing and give notice thereof, with the information about the time and place of hearing, to the appellant as well as to the AO against whose order the appeal has been filed. If a party could establish that he was not properly served with the notice of hearing and was therefore unable to present his case at the hearing, it could not be said that the party was given an opportunity of being heard as required u/s 250(1) of the Act. This is not so in this case. The notice dated 02.05.2016 was sent to the assessee fixing the case of hearing on 02.06.2016. The assessee vide letter dated 02.06.2016 sought adjournment and the case was adjourned by the CIT(A) to 28.06.2016. However, no one attended on 28.06.2018 nor was any adjournment sought. Again notice dated 19.09.2016 was sent fixing the case for hearing on 18.10.2016. However, nobody attended nor was any adjournment sought. Finally, notice dated 18.10.2016 was sent fixing the case for hearing on 21.11.2016. The office of the CIT(A) received the acknowledgement of service of the notice, however, nobody attended nor any adjournment was sought. The Ld. counsel has not controverted the above facts. Because of non-compliance by the assessee, the Ld. CIT(A) could not examine the issue in its entirety. Thus considering the facts and circumstances of the case, we set aside the order of the Ld. CIT(A) and restore the matter to him to pass an order afresh after giving reasonable opportunity of being heard to the assessee. We direct the assessee to appear before the Ld. CIT(A) and file the relevant documents/evidence.

Summary

Issues:
1. Validity of re-opening proceedings under section 148 of the Income Tax Act.
2. Validity of assessment order passed under section 143(3) read with section 147 of the Act.
3. Dismissal of appeal by the Commissioner of Income Tax-3, Mumbai.
4. Addition made by Assessing Officer (AO) for alleged on-money investment.
5. Charging of interest under sections 234A, 234B, and 234C of the Act.

Issue 1: Validity of re-opening proceedings under section 148 of the Income Tax Act
The appellant challenged the validity of re-opening proceedings initiated by the issuance of notice under section 148 of the Act. The appellant argued that there was no corroborating evidence to support the re-opening and that suspicion alone should not be the basis for such actions. However, the AO relied on a statement from the Director of Hiranandani Group admitting to on-money transactions, leading to the addition of unexplained investment by the appellant.

Issue 2: Validity of assessment order passed under section 143(3) read with section 147 of the Act
The appellant contested the validity of the assessment order passed under section 143(3) read with section 147 of the Act. The AO had reopened the assessment based on the on-money transactions revealed during a search in the Hiranandani Group. The appellant argued that all payments were duly reflected in the balance sheet and no alleged on-money was paid, but the AO made the addition due to lack of evidence and failure to prove the source of investments.

Issue 3: Dismissal of appeal by the Commissioner of Income Tax-3, Mumbai
The appellant's appeal was dismissed by the Commissioner of Income Tax-3, Mumbai due to non-cooperation during the appellate proceedings. The appellant and their representative did not attend the hearings fixed by the Commissioner, leading to the dismissal of the appeal after examination on merits.

Issue 4: Addition made by Assessing Officer for alleged on-money investment
The AO made an addition of on-money investment based on the statement of the Director of Hiranandani Group admitting to on-money transactions. The AO noted that the appellant failed to provide evidence or confirmations to refute the on-money payments, leading to the addition of the amount as unexplained investment.

Issue 5: Charging of interest under sections 234A, 234B, and 234C of the Act
The AO charged interest under sections 234A, 234B, and 234C of the Act, which was contested by the appellant. The appellant argued against the validity of the interest charges, but the details of this issue were not elaborated upon in the provided summary of the judgment.

In conclusion, the Appellate Tribunal set aside the order of the Commissioner and restored the matter for a fresh order after providing a reasonable opportunity for the appellant to be heard. The appellant was directed to appear before the Commissioner and submit relevant documents and evidence. The appeal was allowed for statistical purposes.