2021 (6) TMI 924 - AT - Income Tax

Addition u/s 68 and 69C - transactions in penny stock income of which was claimed as exempt u/s 10(38) - CIT(A) in his ex parte order, upheld the additions made by the AO - submission of the assessee that no proper opportunity was granted by the CIT(A) and in the interest of justice the assessee should be given an opportunity to substantiate his case - HELD THAT - Although letter for adjournment was filed by the assessee on dak counter of CIT(A) on 22.11.2018, however, there is no mention of any acceptance or rejection of the same by the ld. CIT(A). In the interest of justice, we deem it proper to restore the issue to the file of the CIT(A) with a direction to grant one final opportunity to the assessee to substantiate his case and decide the issue as per fact and law. The assessee is also hereby directed to appear before the CIT(A) and substantiate his case without seeking any adjournment under any pretext failing which the ld.CIT(A) is at liberty to pass appropriate order as per law. Grounds raised by the assessee are accordingly allowed for statistical purposes.

Summary

Issues:
1. Addition of income under sections 68 and 69C of the IT Act
2. Opportunity granted to the assessee for presenting case before CIT(A)

Analysis:
1. Addition of income under sections 68 and 69C of the IT Act:
The case involved the assessee appealing against an ex parte order confirming the addition of ?4,22,00,498 made by the AO under sections 68 and 69C of the IT Act. The assessee had claimed an exemption of ?4,11,45,660 under section 10(38) of the IT Act on long-term capital gain from trading in ICVL Chemicals Limited shares. The AO, after noting discrepancies and a nationwide investigation on bogus entries of long-term capital gain, made additions totaling ?5,09,17,180 to the assessee's income. The CIT(A) upheld these additions in an ex parte order, as the assessee failed to appear despite opportunities granted.

2. Opportunity granted to the assessee for presenting case before CIT(A):
The Tribunal considered the sequence of events regarding adjournment requests and hearings before the CIT(A. The assessee claimed inadequate opportunity to present their case before the CIT(A), citing a lack of proper communication regarding adjournment rejections. The Tribunal, in the interest of justice, directed the issue to be restored to the CIT(A) with a final opportunity for the assessee to substantiate their case. The assessee was instructed to appear before the CIT(A) without seeking adjournment, with the CIT(A) authorized to pass an appropriate order if the assessee failed to comply. Consequently, the grounds raised by the assessee were allowed for statistical purposes, and the appeal was allowed on such grounds.

In conclusion, the Tribunal allowed the appeal for statistical purposes, emphasizing the importance of providing the assessee with a fair opportunity to present their case before the CIT(A) and ensuring due process in the assessment of income under sections 68 and 69C of the IT Act.