2023 (6) TMI 1166 - AT - Income Tax

Dismissal of assessee appeal by CIT(A) by passing an ex-parte order on the basis of the non-prosecution - denial of principles of natural justice - Reopening of assessment - capital introduced by the appellant in firm by alleging the same to be from unexplained source - HELD THAT - We find that the CIT(A) has dismissed the appeal without considering the material available on record as also without going into the merits of the case. As such an opportunity of hearing requires to be given to the assessee to represent his case fully before the Ld. PCIT. Even otherwise it is trite S. Velu Palandar Vs. DCIT 1971 (8) TMI 42 - MADRAS HIGH COURT ) and incumbent on the authority to decide an appeal on merit. Finding force in the grievance raised by the Assessee in the interest of justice the matter is remitted to the file of the ld. CIT(A) to be decided afresh on merit in accordance with law on affording due and adequate opportunity of hearing to the assessee.

Summary

Issues involved:
The judgment involves issues related to the assessment order passed by the Assessing Officer under section 147 of the Income Tax Act, 1961, the confirmation of addition made by the Assessing Officer, the legality of reopening the case under section 148, and the ex-parte order passed by the Commissioner of Income Tax (Appeals) (CIT(A)).

Assessment Order under Section 147:
The original assessment under section 143(3) of the Income Tax Act, 1961 was made at an income of Rs. 14,72,000, with an addition of Rs. 13,20,000 made on account of unexplained capital introduced in the capital account with a firm. The Assessing Officer (AO) was not satisfied with the details furnished by the Assessee regarding the sources of the introduced capital, as the Assessee had declared meager income and failed to provide evidence of receiving gifts from relatives. Consequently, the AO treated the undisclosed income as earned from undisclosed sources and added it to the Assessee's income.

Confirmation of Addition by CIT(A):
In the appeal before the CIT(A), the addition made by the AO was sustained through an ex-parte order, as the Assessee failed to appear despite several opportunities provided. The CIT(A) passed the order without proper perusal of the assessment record and without considering the e-filed reply and applications for adjournment submitted on the portal. The Assessee's counsel argued that the Assessee had a strong case and requested a reasonable opportunity for a hearing to present the appeal on merits.

Legality of Reopening the Case:
The Assessee contended that the reopening of the case under section 148 was illegal and void-ab-initio. The Assessee's counsel emphasized the importance of principles of natural justice and requested a fair hearing before the Commissioner.

Ex-Parte Order by CIT(A):
The Tribunal observed that the CIT(A) had dismissed the appeal in an ex-parte manner without considering the material on record or the merits of the case. It was deemed necessary to afford the Assessee an opportunity to fully represent their case before the Principal Commissioner of Income Tax (PCIT) and to decide the appeal on its merits. The Tribunal remitted the matter back to the file of the CIT(A) for a fresh decision on merit, emphasizing the need for due and adequate opportunity of hearing for the Assessee.

Conclusion:
The Tribunal allowed the appeal for statistical purposes, remitting the matter back to the CIT(A) for a fresh decision on merit, with the directive for affording the Assessee a fair opportunity to present their case. The Assessee was expected to cooperate in the fresh proceedings, and all legal remedies remained available to them.