2022 (3) TMI 23 - AT - Income Tax

Assessment u/s. 144/147 - not allowing proper opportunity of being heard to the assessee - HELD THAT - As AO, in the instant case, has given a very short time to submit the details and the principles of natural justice has not been followed and, therefore, in the interest of justice, the assessee should be given due opportunity to represent her case properly. We deem it proper to restore the issue to the file of the AO with a direction to grant one final opportunity to the assessee to substantiate her case and decide the issue as per fact and law. The assessee is also hereby directed to appear before the AO and cooperate in early completion of the assessment proceedings by filing the requisite details and without seeking any adjournment under any pretext, failing which the AO is at liberty to pass appropriate order as per law - Appeal filed by the assessee is allowed for statistical purposes.

Issues:
1. Validity of reopening of assessment under section 147 of the Income Tax Act.
2. Adequacy of opportunity provided to the assessee during assessment proceedings.
3. Correctness of addition made under the head of capital gains.
4. Adjudication of the ground related to allowing basic exemption to the assessee.

Validity of Reopening of Assessment:
The appeal challenged the reopening of assessment under section 147 of the Income Tax Act. The AO had reopened the assessment based on information received regarding unsecured loans and property transactions involving the assessee. The assessee failed to provide explanations despite multiple opportunities. The Tribunal considered the submissions and directed the AO to grant a final opportunity to the assessee to substantiate her case, emphasizing the principles of natural justice and the need for a proper opportunity to be given to the assessee.

Adequacy of Opportunity During Assessment:
The assessee contended that due to external pressures, she could not appear before the AO, resulting in an ex-parte assessment order. The AO was criticized for the hurried assessment process near the end of the financial year, potentially impacting the fairness of the proceedings. The Tribunal noted the lack of proper opportunity provided to the assessee and ordered the issue to be restored to the AO for a fair assessment process, emphasizing the importance of due opportunity and cooperation from the assessee.

Correctness of Capital Gains Addition:
The addition made by the AO under the head of capital gains was challenged by the assessee. The Tribunal observed discrepancies in the assessment and directed a reevaluation of the addition, considering the indexed cost of improvement claimed by the assessee. The Tribunal highlighted the need for a thorough examination of facts and adherence to legal principles in determining the correct amount of capital gains.

Adjudication of Basic Exemption Ground:
The appeal raised a ground related to allowing basic exemption to the assessee, which was not adjudicated by the CIT(A). The Tribunal noted this omission and directed that the ground be considered for adjudication. The importance of addressing all grounds raised by the appellant was emphasized to ensure a comprehensive review of the case. The Tribunal allowed the grounds raised by the assessee for statistical purposes, indicating a favorable outcome for the appellant.

In conclusion, the Tribunal allowed the appeal filed by the assessee for statistical purposes, highlighting the need for a fair and thorough assessment process, adherence to principles of natural justice, and proper consideration of all grounds raised during the proceedings. The decision aimed to ensure a just outcome for the assessee by providing adequate opportunities for representation and a reevaluation of the assessment based on factual and legal considerations.

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