VIJAY KUMAR AGARWAL (HUF),KOLKATA vs. I.T.O.,WARD 28(4), KOLKATA

We have heard the rival contentions and perused the material available on record. It is evident from the records some of which have been extracted above in this order whereby the assessee has made request at all stages of the proceedings to provide opportunity of cross examine of all the persons whose statements have been used against the assessee which were recorded in his absentia. On the plea taken by the assessee to remit the matter back to the Ld. AO in absence of the material made available to the assessee which ought to have been provided by complying with the specific provisions of section 142(3) of the Act, we note that the required compliance with section 142(3) has not been met.

After hearing the rival contentions and perusing the material on record, we note that the facts of present case before us and also as involved in the decision of Tribunal in the case of Amit Agarwal vs. ACIT in for AY 2015-16 and Ors. dated 09.04.2024 Assessment Year: 2015-16 Vijay Kumar Agarwal (HUF) are same. We observe that the appeals were restored to the file of AO to be decided afresh after affording a reasonable opportunity of hearing. The operative part is extracted below: “8. We have heard the rival contentions and perused the material available on record. It is evident from the records some of which have been extracted above in this order whereby the assessee has made request at all stages of the proceedings to provide opportunity of cross examine of all the persons whose statements have been used against the assessee which were recorded in his absentia. On the plea taken by the assessee to remit the matter back to the Ld. AO in absence of the material made available to the assessee which ought to have been provided by complying with the specific provisions of section 142(3) of the Act, we note that the required compliance with section 142(3) has not been met.

Before considering the plea as stated above, we refer to the relevant provisions of sec. 142 which are reproduced as under: Sec. 142 (1) For the purpose of making an assessment under this Act, the Assessing Officer may serve on any person who has made a return under section 139 or in whose case the time allowed under sub- section (1) of that section for furnishing the return has expired a notice requiring him, on a date to be therein specified,- 142(2) For the purpose of obtaining full information in respect of the income or loss of any person, the Assessing Officer may make such inquiry as he considers necessary. 142(3) The assessee shall , except where the assessment is made under section 144, be given an opportunity of being heard in respect of any material gathered on the basis of any inquiry under sub- section (2) or any audit under sub- section (2A) and proposed to be utilised for the purpose of the assessment . [emphasis supplied by us by bold and underline] 10. From the above and in the present context, we note that section 142(2) empowers the AO to make such enquiry as he considers necessary. The discretion is on the AO under the said section. However, having conducted such enquiry as provided in Sec. 142(2), then it is incumbent upon the AO u/s. 142(3) to give an opportunity of being heard in respect of any material gathered on the basis of any enquiry done u/s. 142(2) and proposed to be utilised for the purpose of the assessment. It is important to note that Sec. 142(3) uses the word “shall” which makes it mandatory requirement on the part of the AO to comply with it. 10.1. We also take note of the provisions of Sec. 143(3) wherein the assessment is to be completed by the AO which also provides in sub-section (3) that AO shall make an assessment by an order in writing, inter alia, “after taking into account all relevant material which he has gathered.” Thus, by keeping the provisions of Sec. 142(3) read with section 142(2) and Sec. 143(3) in juxtaposition, we understand that it is a mandatory statutory requirement on the part of the AO to comply with the provisions of Sec. 142(3) in completing the assessment proceeding, failure of which may vitiate the entire assessment itself.

In the present case before us, we note that assessee has made specific request multiple times before the authorities below, which has not been entertained effectively for the assessee. We note that compliance of provisions of sec. 142(3) is a mandatory statutory procedural requirement in completing the assessment proceeding, failure of which may vitiate the entire assessment itself since this sub-section uses the word “shall”. The only exception to this requirement is where an assessment is made u/s 144 which is not so in the present appeal before us.

We observe that in terms of the above mandatory statutory procedural requirement in completing the assessment proceeding, material gathered by the Ld. AO by conducting enquiry u/s. 142(2) has not been supplied to the assessee for which specific request has been made by the assessee before the authorities below. It is a fact on record that ld. AO has recorded the statement of Shri Debesh Upadhyay on 22.09.2017 in the course of impugned assessment proceeding without the knowledge of the assessee and collected the details and material utilised for the purpose of the assessment. In the present case before us, thus, the requirement mandated by section 142(3) has not been complied with in completing the impugned assessment.

We refer to the decision of Hon’ble jurisdictional High Court of Calcutta in the case of PCIT Vs. Swati Bajaj (2020) 139 taxmann.com 352 (Cal) wherein the plea of the assessee on the supply of material has been considered by the Hon’ble High Court which is essentially based on the principle of natural justice contained in audialterem partem rule. Specific reference is made to para 57 of the said order wherein while addressing the prejudice caused to the assessee in breach of the audialterem partem rule, it is stated that “prejudice must be caused to the litigant except in the case of a mandatory provision of law which is conceived not only in individual interest but also in public interest.” (emphasis supplied by us by underline). Hon’ble Court took note of the exception to audi alterem partem rule by taking into account the mandatory provision of law. In the same para, Hon’ble Court referred to the decision in State of Uttar Pradesh Vs. Sudhir Kr. Singh (2020) SCC Online SC 847, wherein it was held that the “prejudice exception ” must be more than a mere apprehension or even a reasonable suspicion of a litigant, which Assessment Year: 2015-16 Vijay Kumar Agarwal (HUF) should exist as a “matter of fact ”, or to be cast upon a definite inference and likelihood of prejudice flowing from the non-observance of natural justice. 13.1. Thus, in the context of the present case, our view as stated herein is confined to the non-supply of material gathered by the ld. AO from the enquiries conducted by him in the course of assessment and utilised for the purpose of assessment without complying with the mandatory statutory procedural requirement stated in section 142(3). In the present case before us, from the perusal of the impugned assessment order, as a matter of fact , it is noted that Ld. AO has not provided the effective opportunity of cross examination and other material relied upon for taking the adverse view. 13.2. Considering the above discussion in respect of provisions contained in sec. 142(3) read with sec. 142(2), we are inclined to consider the plea taken by the ld. Counsel to remit the matter back to the file of Ld. AO and direct the Ld. AO to make available the material gathered by him in the course of enquiry conducted in terms of sec. 142(2) and provide a reasonable opportunity of being heard to the assessee as enunciated u/s. 142(3) of the Act along with effective opportunity of cross examination as requested several times by the assessee. Thereafter, Ld. AO may complete the assessment in accordance with the provisions of law. Accordingly, ground no. 3 taken by the assessee is allowed for statistical purposes.

Since the matter has been remitted back to the file of Ld. AO in terms of above observations and finding, all other grounds taken by the assessee are rendered academic in nature and are, therefore, not adjudicated upon. Accordingly, appeal of the assessee is allowed for statistical purposes. The above observations and finding apply mutatis mutandis all the other six appeals in this consolidated order.

In the result, all the seven appeals of the assessee are allowed for statistical purposes.” Since the facts of the case before us vis-à-vis the appeals as decided by the Co-ordinate Bench are materially same, therefore we respectfully following the same restore the instant appeal as well to the file of AO to be decided afresh after affording a reasonable opportunity of hearing to the assessee.