2021 (10) TMI 220 - AT - Income Tax

Violation of principles of natural justice - CIT-A passed ex parte order - Assessee's contention that no proper opportunity was given by the AO to explain the assessee's stand and he has used the material at the back of the assessee - HELD THAT - The contents of the affidavit have not been controverted by the Revenue. Before us, Learned AR also given an undertaking that there will be representation before the authorities by the assessee and all the necessary documents called for shall also be filed - we are of the view that one more opportunity be granted to the assessee to substantiate its case. We therefore restore the issue back to the file of the AO and direct him to decide the issue afresh in accordance with law after considering the submissions of the assessee. Thus the ground of the assessee is allowed.

Issues involved:
Appeal against assessment order for AY 2013-14 - Addition of unsecured loans under section 68 - Addition under section 14A - Violation of principles of natural justice - Confirmation of interest under sections 234A, 234B, 234C, 234D - Confirmation of penalty under section 271(1)(c).

Analysis:

1. Appeal against assessment order for AY 2013-14:
The appeal was filed by the assessee against the order dated 30.10.2017 of the Commissioner of Income Tax (Appeals)-Aligarh relating to Assessment Year 2013-14. The assessee, engaged in Real Statement Management Consultancy and Infrastructure Development, filed its return of income declaring a loss. The case was selected for scrutiny, and the assessment was framed under section 143(3) of the Act, determining the total income. The CIT(A) dismissed the appeal, leading the assessee to appeal further. The grounds of appeal included challenges to the assessment order, addition of unsecured loans, addition under section 14A, and confirmation of interest and penalty.

2. Addition of unsecured loans under section 68:
The CIT(A) confirmed the addition of unsecured loans under section 68 without appreciating individual facts and evidence, leading to an arbitrary addition without proper application of mind. The assessee contended that all additions to unsecured loans were explained as per the provisions of section 68. The issue raised concerns about the proper application of section 68 and the need for a detailed consideration of the evidence presented.

3. Addition under section 14A:
The CIT(A) confirmed the addition under section 14A without appreciating the facts and evidence on record. The assessee challenged this addition, highlighting the need for a thorough review of the evidence and facts presented during the assessment proceedings. This issue involves the correct interpretation and application of section 14A in the context of the assessee's case.

4. Violation of principles of natural justice:
The assessee raised concerns about the violation of principles of natural justice during the assessment proceedings. It was argued that the AO passed the order arbitrarily without appreciating the evidence on record and without giving proper opportunity to the assessee to present its case. The issue emphasizes the importance of adhering to the principles of natural justice in tax proceedings.

5. Confirmation of interest under sections 234A, 234B, 234C, 234D:
The CIT(A) confirmed the interest under sections 234A, 234B, 234C, and 234D of the IT Act. The assessee challenged this confirmation, alleging errors in law and facts. This issue involves a detailed examination of the provisions related to interest under the IT Act and the correctness of the CIT(A)'s decision in this regard.

6. Confirmation of penalty under section 271(1)(c):
The CIT(A) confirmed the initiation of penalty under section 271(1)(c) of the IT Act. The assessee disputed this confirmation on legal and factual grounds. This issue requires a thorough analysis of the penalty provisions under section 271(1)(c) and the justification for confirming the penalty in the present case.

7. Decision and Conclusion:
The ITAT Delhi, after hearing the rival submissions and perusing the materials, found merit in the assessee's contentions regarding the violation of principles of natural justice. The tribunal granted one more opportunity to the assessee to substantiate its case and directed the AO to decide the issue afresh after considering the submissions of the assessee. Consequently, the appeal of the assessee was allowed, and the matter was restored to the file of the AO for fresh consideration. The grounds on merits were not adjudicated, given the restoration of the issue to the AO.

This comprehensive analysis outlines the key issues raised in the appeal and the tribunal's decision to grant the assessee another opportunity to present its case before the AO for a fair consideration of the facts and evidence involved in the assessment proceedings.

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