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Income Tax Appellate Tribunal, DELHI BENCH “F” DELHI
Before: SHRI KUL BHARAT & SHRI PRADIP KUMAR KEDIA
PER PRADIP KUMAR KEDIA, A.M.: The captioned appeal has been filed at the instance of the Assessee against the order of the Commissioner of Income Tax (Appeals)-XIX, New Delhi [‘CIT(A)’ in short], dated 28.03.2019 arising from the assessment order dated 28.12.2016 passed by the Assessing Officer (AO) under Section 143(3) of the Income Tax Act, 1961 (the Act) concerning AY 2014-15.
2. The grounds of appeal raised by the assessee reads as under:
“1. The assessee could not receive proper opportunity of being heard before passing of the order u/s 263 due to non receipt of the notice u/s 263 in time.
The order of Ld. Pr. Commissioner of Income tax is bad in law
as the proper opportunity of being heard was not available at the disposal of the assessee in accordance with rules of natural justice.
3. The Ld. Pr. CIT has erred in law and facts of the case in reopening the case as no new fact or any enquiries has been recorded in the order passed u/s 263 which concludes that the assessment order passed u/s 143(3) was erroneous, which is a pre- requisite condition to invoke Sec 263.”
When the matter was called for hearing, the ld. counsel for the assessee at the outset submitted that the show cause notice under Section 263 of the Act dated 09.03.2019 alleged to have been served on the assessee was never received by the assessee and therefore the assessee was prevented by sufficient cause for non compliance of the notice. It was thus submitted that the Pr.CIT was not justified in exercising the power under Section 263 of the Act without giving any opportunity to the assessee. It was next submitted that the assessment order dated 28.12.2016 passed under Section 143(3) of the Act for Assessment Year 2014-15 was framed after requisite inquiry relevant in the context and therefore the allegation of the revisional Commissioner that such assessment order is erroneous in so far as it is prejudicial to the interest of the Revenue is misconceived on facts and law. The ld. counsel thus essentially submitted that the impugned revisional order is vitiated in law and requires to be quashed.
Ld. DR for the Revenue, on the other hand, submitted that judgment rendered by the Hon’ble Supreme Court in the case of Daniel Merchants Pvt. Ltd. vs. ITO (Appeal No.2396/2017) dated 29.11.2017; Malabar Industrial Co. Ltd. vs. CIT (2000) 243 ITR 83 (SC) and also rendered by the Hon’ble Calcutta High Court in the case of Rajmandir Estates P. Ltd. vs. PCIT (2016) 386 ITR 162 (Cal.) have held that in the absence of any supporting material placed and without making any inquiry in the relevant issue the assessment order passed by the Assessing Officer is susceptible to revision within the scope of Section 263 of the Act. It was pointed out that the assessee has made large deposits and withdrawals in the vicinity of Rs.30 crore. The details of which have not been inquired in tune with ordinary prudence of a reasonable man. It was thus submitted that the revisional commissioner was having no option but to invoke jurisdiction under Section 263 of the Act. The assessee was having the opportunity to dispel the cause of action by adducing evidences and making explanations. The assessee has not availed the opportunity, and therefore, the action of the Pr.CIT cannot be condemned in law.
We have carefully considered the rival submissions. The assessee has inter alia challenged the action of the revisional commissioner on the plank of violation of principles of natural justice. As per Ground No.1 and 2 (supra), the assessee has challenged the revisional order for want of proper opportunity of being heard and miscarriage of natural justice. We find merit in the plea of the assessee. It is observed from the revisional order that a reference has been made to a solitary notice to the assessee for compliance of show cause notice issued under Section 263 of the Act. The assessee has failed to comply with the aforesaid notice purportedly owning to non receipt thereof. The revisional order was eventually passed ex-parte and the Assessing Officer was directed to pass assessment order denovo in terms of the observations made in the order.
On a plain reading of Section 263 of the Act, it transpires that the opportunity to the assessee while passing the revisional order is inbuilt in the Section itself. In the instant case, a notice has been issued at the fag end of the expiry of the limitation period which remained unattended. The revisional commissioner has hurriedly passed the revisional order ex-parte without ensuring the preconditions of proper opportunity enjoins under Section 263 of the Act. Thus, the principles of natural justice has been clearly violated in the instant case which cannot be countenanced in law.
As noted earlier, the revisional commissioner has passed the order ex-parte without taking into account the defense of the assessee against the allegations raised. Therefore it is not feasible for the Tribunal to look into the merits of the allegations against the assessee in the absence of any defense raised on behalf of the assessee. It is difficult to appreciate the factual matrix independently in the absence of any speaking order on merits from the revisional commissioner so passed without taking cognizance of the justification in the action of the Assessing Officer from the other side.
In the totality of the circumstances, we consider it just and expedient to restore the matter back to the Pr.CIT in the interest of justice with a view to enable the assessee to avail proper opportunity to defend its case appropriately. Hence, the order of the revisional commissioner appealed against, is set aside and restored back to the file of the revisional Commissioner for fresh determination of all issues in accordance with law after giving reasonable opportunity of hearing to the assessee.
In the result, the appeal of the assessee is allowed for statistical purposes. Order was pronounced in the open Court on 26/07/2022.