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Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH, VISAKHAPATNAM
Before: SHRI V. DURGA RAO, HON’BLE & SHRI D.S. SUNDER SINGH, HON’BLE
IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO, HON’BLE JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH, HON’BLE ACCOUNTANT MEMBER ITA No. 185/VIZ/2015 (Asst. Year : 2010-11) Purna Chandra Kishan Kaza, vs. ITO, Ward-2(2), D.No. 2-15-42/6, Main Road, Visakhapatnam MVP Colony, Visakhapatnam. PAN No. AEQPK 8689 F (Appellant) (Respondent)
Assessee by : Shri I. Kama Sastry – FCA. Department By : Shri T.S.N. Murthy – CIT DR
Date of hearing : 26/09/2019. Date of pronouncement : 30/10/2019. O R D E R PER D.S. SUNDER SINGH, ACCOUNTANT MEMBER
This appeal by the assessee is directed against the order of Commissioner of Income Tax-1, Visakhapatnam, dated 24/03/2015 for the Assessment Year 2010-11. 2. Ground Nos. 1 & 2 are related to the validity of order passed u/sec. 263 of the Income Tax Act, 1961 (for short ‘Act’) without giving opportunity of being heard to the assessee.
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In the instant case, the Assessing Officer has completed the assessment u/sec. 143(3) on 23/03/2013 on total income of Rs.6,45,760/- against the returned income of Rs. 2,89,690/-. The ld.CIT-1, Visakhapatnam has taken up the case for revision u/sec. 263 and found that the Assessing Officer did not examine the sources of cash deposits made in the Savings Bank account with HDFC, Visakhapatnam amounting to Rs. 15.76 lakhs. The ld.CIT further observed that, out of total cash deposits of Rs. 15.76 lakhs, the Assessing Officer made the addition of Rs.3.47 lakhs without examining the veracity of the statements given by the creditors and without collecting any corroborative evidence for accepting the sources of deposits, hence, held that the order passed by the Assessing Officer is erroneous and prejudicial to the interest of the Revenue to the extent of Rs. 9.00 lakhs, therefore CIT set aside the assessment passed u/sec. 143(3) dated 20/03/2013 and remitted the matter back to the file of the Assessing Officer with a direction to make further enquiries and to complete the assessment proceedings afresh after giving opportunity to the assessee. 4. Against the order of the ld.CIT, the assessee is in appeal before this Tribunal raising as many as 06 grounds in this appeal.
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Ground Nos. 1 & 2 are related to the validity of passing the order without having served the notice to the assessee. During the appeal hearing, ld.AR submitted that the ld.CIT has issued the notice u/sec. 263 dated 12/03/2015 and fixed the case for hearing on 23/03/2015. Neither the notice was received to the assessee nor was the communication reached to the assessee with regard to the issue of notice and pendency of proceedings u/sec. 263. The assessee has taken the track of postal delivery on net and it was found that the notice was delivered in the post-office on 14/03/2015 and delivered to the assessee on 07/04/2015 i.e. after passing of the order u/s 263. In between, it appears that the postal authorities made the attempts and missent the bags. Ultimately, the notice was served on the assessee on 07/04/2016. By the time, the notice was served, the ld.CIT had already passed the order u/sec. 263 in absentia. Ld.AR argued that without having served the notice or giving opportunity of being heard, the order passed by the ld.CIT is invalid hence, requested to set aside the order of the CIT and allow the appeal of the assessee. Ld.AR relied on the decision of the Hon'ble Andhra Pradesh High Court in the case of CIT Vs. G.K. Kabra [(1995) 211 ITR 336] and argued that the assessee must be given opportunity of being heard before
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passing the order. Ld.AR relied on the following other decisions also:- a) CIT & Ors. Vs. Ramendra Nath Ghosh (82 ITR 888) b) Peerless General Finance & Investment Co. Ltd. Vs. ACIT [(2006) 5 SOT 17] c) Bagsu Devi Bafna Vs. CIT & Ors. (62 ITR 506)
On the other hand the Ld.DR supported the order of the Ld.CIT and argued that the ld.CIT has sent the notice within the time allowed under the act and delivered to the post office in advance of the date of hearing. Therefore requested to uphold the order u/s 263 and dismiss the appeal of the assessee. 7. We have heard both the sides and perused the material placed on record. In the instant case, there is no dispute that the notice issued u/sec. 263 was neither served on the assessee nor the Ld. CIT has sent a communication to the assessee with regard to the issue of show-cause notice and pendency of proceedings 263. Therefore, the assessee could not attend on the date of hearing and represent his case. The assessee did not get any opportunity to represent the case before the Ld.CIT because of delay in serving the notice. It is a mandatory obligation of the authorities to see that such notice was served on the assessee well before the time either by post or by any mode of service. In
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the instant case, it appears that the Department sent the notice by post and did not make any effort to reach the communication to the assessee with regard to pendency of proceedings as on date of hearing. The department ought to have verified the status of service of notice on the date of hearing before taking up the case for hearing. In case, notice was not served, the Ld.CIT ought to have made one more attempt to send the communication to the assessee either through notice server or through registered post or by any other mode of communication. In the instance case, neither notice was served nor communication was reached to the assessee. Therefore no opportunity was given to the assessee which is against the principles of natural justice. The Hon'ble Andhara Pradesh High Court in the case of G.K. Kabra (supra) has held that proper and sufficient opportunity should be given to the assessee to explain the case with regard to error and prejudice in the assessment order passed by the Assessing Officer on the issues raised in the show-cause notice. The coordinate Bench of ITAT, Hyderabad in the case of Anthi Reddy Yamireddy. vs. Deputy Commissioner of Income-tax, Central Circle-3(1), Hyderabad, [2017] 88 taxmann.com 635 (Hyderabad - Trib.) has considered the similar issue and held that without giving proper opportunity to the assessee, revision proceedings under
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section 263 cannot be finalized as the provisions of section 263 mandates that the Commissioner may pass such orders after giving an opportunity of being heard. We, have also gone through the other decisions relied up on by the assessee and the same also supports the case of the assessee. Therefore, in these circumstances we hold that the order passed by the Ld.CIT without giving opportunity to the assessee is unsustainable. Accordingly, we quash the order of the ld.CIT and allow the appeal of the assessee.
In the result, appeal filed by the assessee is allowed. Order Pronounced in open Court on this 30th day of Oct., 2019.
Sd/- Sd/- (V. DURGA RAO) (D.S. SUNDER SINGH) Judicial Member Accountant Member Dated: 30th October, 2019. vr/-
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Copy to: 1. The Assessee – Purna Chandra Kishan Kaza, D.No. 2-15-42/6, Main Road, MVP Colony, Visakhapatnam. 2. The Revenue – ITO, Ward-2(2), Visakhapatnam. 3. The CIT-1, Visakhapatnam. 4. The D.R., Visakhapatnam. 5. Guard file. By order
(VUKKEM RAMBABU) Sr. Private Secretary, ITAT, Visakhapatnam.