2023 (10) TMI 1273 - AT - Income Tax

Rejection of the request for adjournment non intimated to assessee - HELD THAT - As stated by the AR and, rightly so, the failure on the part of the CIT(A) to intimate to the assessee the rejection of his request for adjournment had clearly divested him of an opportunity to defend his case by placing on record whatever material/submissions he had as on the date on which the appeal was fixed for hearing. Reason that in case the rejection of the request for adjournment would have been intimated to the assessee, then he might have participated in the proceedings on the stipulated date of hearing, i.e., on 18.07.2023 and defended his case with whatever material that was available to him. As the CIT(A) had proceeded with and disposed off the appeal at the back of the assessee, concur with the claim of the AR that the latter had remained divested of his right to defend his case before the first appellate authority. Matter, in all fairness and the interest of justice, requires to be restored to the file of the CIT(Appeals) with a direction to him to re-adjudicate the same after affording a reasonable opportunity of being heard to the assessee.

Issues involved:
The appeal filed by the assessee against the order passed by the Commissioner of Income-Tax (Appeals) involving additions/disallowances under Sec.143(3) of the Income-tax Act, 1961 for the assessment year 2015-16.

Grounds of Appeal:
1. The Commissioner of Income-tax (Appeals) dismissed the appeal without allowing the appellant to file written submissions after an adjournment application was overlooked.
2. Addition of Rs. 14,53,494/- as unexplained investments under section 69 of the Income-tax Act, 1961.
3. Addition of Rs. 14,99,300/- as unexplained cash gifts received from parents under section 69 of the Income-tax Act, 1961.
4. Addition of Rs. 6,03,850/- as unexplained peak credit under section 69 of the Income-tax Act, 1961.
5. Challenging the impugned order on legal and factual grounds.
6. Reserving the right to make additions or omissions to the grounds of appeal in the interest of justice.

Assessment and Additions:
The assessee, engaged in the retail business, filed a return of income for A.Y. 2015-16, declaring income of Rs. 2,69,640. The assessment under Sec.143(3) of the Act resulted in the determination of income at Rs. 38,26,294 after additions of Rs. 14,53,494 for unexplained investments, Rs. 14,99,300 for unexplained cash gifts, and Rs. 6,03,850 for unexplained peak credit.

CIT(Appeals) Observations:
The CIT(Appeals) upheld the additions made by the Assessing Officer based on the facts and provisions of the law. The appellant's explanations were deemed unacceptable, leading to the additions. The appellant failed to provide any reply, submission, or evidence to counter the findings of the AO, resulting in the dismissal of grounds No.1 to 4.

Appeal and Arguments:
The assessee appealed the CIT(Appeals) order, claiming insufficient opportunity to be heard. The Authorized Representative highlighted that the appeal was disposed of without addressing the adjournment request, depriving the assessee of a fair chance to present his case. The Departmental Representative supported the lower authorities' orders.

Judgment:
The Judicial Member acknowledged the assessee's request for adjournment and found merit in the claim that the appellant was unaware of the rejection of the adjournment request. The failure to communicate this decision deprived the assessee of the opportunity to defend his case adequately. Consequently, the matter was restored to the CIT(Appeals) for re-adjudication with a direction to provide a reasonable opportunity for the assessee to be heard. The appeal was allowed for statistical purposes, without delving into the merits of the case.

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