2021 (3) TMI 616 - AT - Income Tax

CIT(A) has passed an ex parte order after fixing the appeal on three occasions - non service of notice/mode of service - HELD THAT - As noted that the Ld. CIT(A) has not said anything regarding service of notice/mode of service whether it was served or it has returned etc. So the impugned order of Ld. CIT(A) is bad since Ld. CIT(A) is duty bound to decide the appeal in accordance to section 250(6) of the Act. So we do not countenance the action of Ld. CIT(A) to have dismissed the appeal ex parte and not on merits which according to us is per-se in violation of natural justice and without giving proper opportunity of hearing to the assessee. We note that the AO has acknowledged to have served notices on six (6) share subscribers out of eleven (11) and the assessee was not put to notice regarding the non-service of notice to eight (8) parties. However it has been brought to our notice that all the share subscribers had in fact replied with all the details and supporting documents to the assessee pursuant to sec. 133(6) notice. The replies from share subscribers were late by one (1) day (before the assessment was framed on 21.12.2016). Therefore we find that in this case the assessee did not get proper opportunity before the AO therefore we relying on the decision of Tin Box Company 2001 (2) TMI 13 - SUPREME COURT set aside the order of the Ld. CIT(A) and remand the matter back to the file of AO for de novo assessment in accordance to law. Appeal of assessee is allowed for statistical purpose.

Summary

Issues Involved:
Improper opportunity given to the assessee by the Ld. CIT(A) leading to an ex parte order and violation of natural justice, hasty completion of assessment by AO without proper consideration of responses from share subscribers, need for remand of the matter back to AO for de novo assessment.

Issue 1: Improper opportunity given to the assessee by the Ld. CIT(A) leading to an ex parte order and violation of natural justice:

The appeal was against the order of Ld. CIT(A)-15, Kolkata for AY 2014-15. The Ld. Counsel for the assessee pointed out that the Ld. CIT(A) passed an ex parte order without giving proper opportunity to the assessee. The notice of hearing was not received by the assessee, and the Ld. AR could not attend the hearing as there was no instruction from the assessee. The Ld. CIT(A) had fixed three hearings but hastily passed the order without proper service of notice. The AO made additions without considering responses from share subscribers, leading to a violation of natural justice. The Tribunal noted that the Ld. CIT(A) dismissed the appeal ex parte without giving proper opportunity for hearing, which was against the principles of natural justice. The matter was remanded back to the AO for de novo assessment to ensure the assessee's right to be heard.

Issue 2: Hasty completion of assessment by AO without proper consideration of responses from share subscribers:

During the assessment proceedings, the AO did not give sufficient time for share subscribers to respond to notices sent under section 133(6) of the Income-tax Act. The AO hurriedly passed the order without waiting for responses from share subscribers, even though replies were received a day after the assessment was framed. The AO acknowledged serving notices on some share subscribers but failed to inform the assessee about non-service to others. All share subscribers had replied with details and documents, albeit late by one day. The Tribunal found that the AO's hasty assessment deprived the assessee of a proper opportunity to present its case. Relying on the decision of the Hon'ble Supreme Court, the Tribunal set aside the Ld. CIT(A)'s order and remanded the matter back to the AO for a fresh assessment, emphasizing the importance of giving the assessee a reasonable opportunity to be heard.

Issue 3: Need for remand of the matter back to AO for de novo assessment:

Due to the improper opportunity given to the assessee by the Ld. CIT(A) and the hasty completion of assessment by the AO, the Tribunal decided to remand the matter back to the AO for de novo assessment in accordance with the law. The Tribunal directed the assessee to be diligent, file/produce documents, and submit written submissions before the AO during the assessment proceedings. The appeal of the assessee was allowed for statistical purposes, ensuring that the assessee receives a fair chance to present its case before the AO.

This comprehensive analysis of the judgment highlights the issues involved, the arguments presented, and the Tribunal's decision to uphold the principles of natural justice and provide the assessee with a proper opportunity to be heard during the assessment process.