2022 (4) TMI 107 - AT - Income Tax

Reopening of assessment u/s 147 - notice sent to wrong address - HELD THAT - This Bench conclude that their appears to be some apparent mistake or ambiguity in the address of assessee upon which notices were served by the AO. Most likely due to merger and re-name of Assessee. Order of ld. First Appellate Authority indicate that only one notice was issued on 28.08.2018 and the same was also through e-mail and not by post while postal address of the assessee was shown to be of village Ghamroj, Gurgaon Sohna Road, Tehsil Sohna, Gurgaon, Haryana and there was specific ground of appeal before Ld. FAA that Ld. AO issued notices on wrong address of Old DLF Gurgaon. Thus, there appears to be an error in conduct of proceedings by both Ld. AO and Ld. FAA in not giving adequate and reasonable opportunity of hearing to the assessee after serving the assessee on correct postal address. Even otherwise the order of Ld. First Appellate Authority has an inherent vice as can observed from discussion in para 4.1 to 5 of Ld. CIT(A) orders, reproduced above, that at one end the appeal is being dismissed for non prosecution on the other hand a discussion on merits has also been made to dismiss the appeal on merits. Appeal deserves to be allowed on ground no. 1 alone requiring restoration of the appeal to the files of Ld. First Appellate Authority for fresh decision on merits after giving hearing opportunity to the assessee.

Summary

Issues:
1. Ex-parte order passed against the assessee without a proper hearing.
2. Jurisdictional issues in passing the order under section 148.
3. Addition of a specific amount without proper basis.
4. Adequacy of opportunity of being heard.

Analysis:

Issue 1: Ex-parte order without a proper hearing
The appeal was filed against an order passed by the Commissioner of Income Tax (Appeals) and the Income Tax Officer under sections 144/147 of the Income Tax Act, 1961. The appellant contended that both the Commissioner and the Income Tax Officer erred in passing an ex-parte order without providing the assessee with an opportunity to be heard. The Counsel for the assessee argued that the ex-parte order was based on notices issued to an incorrect address. However, the Senior DR defended the orders, stating that the correct address was used for communication.

Issue 2: Jurisdictional issues in passing the order under section 148
The assessment order was passed under section 144 read with section 147 of the Act. The appellant, Dr. Fresh Property Development Pvt. Ltd., failed to attend despite multiple notices issued by the Income Tax Officer. The address discrepancy raised by the appellant was noted, indicating that notices were sent to the wrong address. The order mentioned the address as "M/s. Dr. Fresh Property Dev Pvt. Ltd., 11A, 1B- 43C, Old DLF, Gurugram-122001," which differed from the address claimed by the appellant. The First Appellate Authority issued notices via email, and despite adjournments, no submission was made by the appellant, leading to the dismissal of the appeal.

Issue 3: Addition of a specific amount without proper basis
The Income Tax Officer had reopened the case under section 147 based on information regarding an investment in immovable property. Despite repeated notices and a show cause notice seeking an explanation for the investment, the appellant failed to provide any explanation. Consequently, the investment was treated as unexplained, and an addition of ?1,27,50,000 was made. The appellant did not furnish any explanation during the appeal, leading to the confirmation of the addition.

Issue 4: Adequacy of opportunity of being heard
The Tribunal observed an error in the proceedings by both the Income Tax Officer and the First Appellate Authority in not providing adequate hearing opportunities to the assessee. The address discrepancy and the lack of proper communication were highlighted. The Tribunal concluded that the appeal should be allowed for restoration to the First Appellate Authority for a fresh decision on merits after providing a hearing opportunity to the assessee.

In conclusion, the appeal succeeded on the grounds of inadequate hearing opportunities and address discrepancies, leading to a remand of the case for a fresh decision.