2023 (1) TMI 405 - AT - Income Tax

Validity of order by CIT(A) in accordance with law after providing reasonable opportunity to the assessee - HELD THAT - As we are of the view that the learned CIT(A) did not provide reasonable opportunity to the assessee in respect of notice of hearing dated 17/07/2019, whereby hearing was fixed on 26/07/2019. Further, we have already noted earlier that learned CIT(A) has failed to establish that rejection of adjournment in respect of hearing fixed on 26/07/2019 by aforesaid notice dated 17/07/2019, was just and proper in the facts and circumstances of the case. As in view of the foregoing, that rejection of adjournment sought by the assessee, amounted to violation of principle of natural justice. Further, as discussed earlier in the foregoing paragraph (B.1) of this order, the requirement prescribed u/s 250(6) has not been fulfilled by the learned CIT(A). We set aside the impugned appellate order of the learned CIT(A) and we restore all the issues in dispute in the present appeal before us, to the file of the learned CIT(A) with the direction to pass denovo appellate order in accordance with law, after providing reasonable opportunity to the assessee; and further, in conformity with principles of natural justice; and furthermore, having due regard for requirements prescribed u/s 250(6) of IT Act.

Summary

Issues:
1. Failure to provide reasonable opportunity of being heard by the CIT(A)
2. Disallowance of interest paid and other expenditures by the AO
3. Dismissal of the assessee's appeal by the CIT(A) in a summary manner without passing a speaking order

Analysis:

(A) Failure to provide reasonable opportunity of being heard by the CIT(A):
The appeal was filed against the order of the CIT(A) for Assessment Year 2012-13. The appellant contended that the CIT(A) erred by not providing a reasonable opportunity of being heard, which is a legal requirement. The CIT(A) passed an ex-parte order without adequately considering the appellant's submissions. The notice of hearing was sent by speed post, and the appellant's adjournment request was rejected without proper justification. The inadequate duration between the notice and the hearing date was deemed insufficient to constitute a reasonable opportunity for the assessee.

(B) Disallowance of interest paid and other expenditures by the AO:
The AO disallowed interest paid and various expenditures incurred by the assessee, alleging they were not for the purpose of business. The CIT(A) confirmed these disallowances without appreciating the appellant's submissions. The ITAT found that the CIT(A) failed to discuss the grounds on which the adjournment was sought and dismissed the appeal in a summary manner without passing a speaking order. This was a violation of the requirement under section 250(6) of the Income Tax Act, which mandates a detailed decision with reasons.

(B.1) Dismissal of the assessee's appeal in a summary manner without passing a speaking order:
The ITAT noted that the CIT(A) did not fulfill the duty to dispose of the appeal by stating the points for determination, the decision, and the reasons as required by section 250(6) of the IT Act. The appellant requested the issues in dispute be restored to the CIT(A) for a fresh order after providing a reasonable opportunity. The ITAT held that the rejection of adjournment and the summary dismissal of the appeal violated the principles of natural justice. Therefore, the ITAT set aside the CIT(A)'s order and directed a denovo appellate order with due consideration for the principles of natural justice and statutory requirements.

(C) Conclusion:
The ITAT partly allowed the appeal, treating it as a restoration of all issues in dispute to the CIT(A) for a fresh adjudication in accordance with law. The decision was made to ensure a fair process and uphold the principles of natural justice as required by the Income Tax Act.

This detailed analysis highlights the procedural and substantive issues addressed in the judgment, emphasizing the importance of providing a fair opportunity to be heard and ensuring a reasoned decision-making process in tax matters.