SAIKIA AUTO PRIVATE LIMITED,NOTH LAKHIMPUR vs. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-TEZPUR, TEZPUR

At the outset, it has been brought to our notice that there was a delay of 190 days and 221 days respectively to file appeals before us. We, however, from the perusal of the affidavit and the condonation of delay application, note that the assessee was suffering from serious illness and had undergone prolonged treatment at VNRC Hospital Dispur, Guwahati. Since there is a reasonable cause for delay, we are inclined to condone the delay of the assessee in filing both the appeals and admit the appeals for hearing.

Coming to the appeals, the Ld. AR drew our attention to the fact that the AO had passed an order u/s. 154 of the Income-tax Act, 1961 (hereinafter referred to as the “Act”) and the fact that AO had bothered to issue only one notice and without hearing the assessee has taken note of the failure to deduct tax at source for remuneration paid to the directors of the assessee company has resorted to disallowance by resorting to section 154 of the Act (rectify the mistake) and consequently has made the addition.

According to AO, he fixed the matter on 03.08.2017 vide notice dated 18.07.2017, however, found that assessee did not appear before him, so he passed the section 154 of the Act order dated 11.08.2017. On appeal, the Ld. CIT(A) has dismissed the same ex parte, without going into the merits of the grounds raised by the assessee. Aggrieved, the assessee is before us assailing both the action of Ld. CIT(A) and AO for passing the order without giving proper opportunity of hearing. From the discussion (supra), we note that the assessee did not get proper opportunity before the AO and the Ld. CIT(A) has passed an ex parte order. Therefore, taking note of the decision of Hon’ble Supreme Court in the case of Tin Box Company Vs. CIT (2001) 249 ITR 216 (SC) wherein it was held that in case if the assessee did not get proper opportunity before AO, then the matter needs to be remanded back to AO. In the said judgment, the Hon’ble Apex Court has held as under (Head Note): “Held, reversing the decision of the High Court, that once the Tribunal found that the Income-tax Officer had not given to the assessee proper opportunity of being heard, that the assessee could have placed the evidence before the appellate authority or before the Tribunal was really of no consequence for it was the assessment order that counted: that order had to be made after the assessee had been given a reasonable opportunity of being heard.”(emphasis given by us)