J B DIAMONDS,MUMBAI vs. ASST CIT CEN CIR 15 & 16, MUMBAI

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ITA 3306/MUM/2019Status: DisposedITAT Mumbai03 May 2021AY 2008-094 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that both the Assessing Officer and the first appellate authority failed to provide the assessee with a proper opportunity to present its case. Therefore, the impugned order of the CIT(A) was set aside.

What were the facts?

A search operation led to assessment proceedings under Section 153A. The assessee, a partnership firm converted to a company in liquidation, could not furnish records held by the official liquidator. The Assessing Officer completed the assessment under Section 144 best judgment, including a transfer pricing adjustment.

What were the issues?

Whether the assessee was denied a reasonable opportunity of being heard before the Assessing Officer and the CIT(A). Whether the grounds challenging the assessment order and additions were properly adjudicated.

Which sections of the Income-tax Act were involved?

Section 153A,Section 142(2A),Section 142(1),Section 143(2),Section 144,Section 144C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “J” BENCH, MUMBAI

Before: SHRI SAKTIJIT DEY & SHRI MANOJ KUMAR AGGARWAL

For Appellant: Shri Vijay Mehta (AR)
For Respondent: Shri A Mohan [CIT (DR)]

Date of hearing 16 -03-2021 Date of pronouncement 03-05-2021 O R D E R

Per Saktijit Dey, JM:

1.

This is an appeal by the assessee against order dated 12-01-2019 of learned Commissioner of Income Tax (Appeals)-55, Mumbai for the assessment year 2008-09.

2.

Briefly the facts are, the assessee is a partnership firm. As mentioned by the assessing officer, assessee is engaged in the business of import, manufacture, trading in diamonds, windmills. A search and seizure operation were carried out in case of the assessee as well as other group concerns on 29-10-2010.In pursuance to such search and seizure operation, assessment proceedings under 2 ITA 3306/Mum/2019 section 153A of the Act was initiated for the impugned assessment year. It is further evident, assessee’s case was referred for special audit under section 142(2A) of the Act. Be that as it may, in course of assessment proceedings, the assessing officer issued notices under section 142(1) an 143(2) of the Act calling for various details. In response to such notices, the assessee submitted that since the erstwhile partnership firm, in the meanwhile, has been converted to a company and is in the process of liquidation and since all records of the partnership firm and company are in the possession of the official liquidator, the details called for could not be furnished. Alleging that the assessee did not comply with the statutory notices and furnish the necessary details, the assessing officer proceeded to complete the assessment under section 144 of the Act to the best of his judgement. While doing so, he made a reference to the transfer pricing officer (TPO) and thereafter passed the assessment order under section 144 r.w.s. 144C of the Act determining the taxable income of the assessee at Rs.137,21,96,930/-, which included transfer pricing adjustment made of Rs.30,61,88,481/-. Against the assessment order so passed, assessee preferred appeal before learned Commissioner of Income Tax (Appeals). By the impugned order, learned Commissioner of Income Tax (Appeals) disposed of assessee’s appeal ex parte by dismissing it.

3.

Shri Vijay Mehta, the learned authorized representative of the assessee submitted, the first appellate authority has decided assessee’s appeal ex parte without providing due and reasonable opportunity of being heard to the assessee. Further, he submitted, though, the assessee had raised specific ground challenging the validity of the assessment order passed under section 144 r.w.s. 144C(1) of Act as well as the grounds relating to merits of the addition made on 3 ITA 3306/Mum/2019 adhoc basis, however, learned Commissioner of Income Tax (Appeals) has failed to adjudicate them. Thus, he submitted, the matter may be restored back to the assessing officer for fresh adjudication.

4.

Shri A Mohan, learned Departmental Representative, though relied upon the observations of the assessing officer and learned Commissioner of Income Tax (Appeals); however, he submitted, the matter may be restored back to the assessing officer for fresh adjudication.

5.

We have considered rival submissions and perused materials on record. The facts on record clearly reveal that not only the assessment order has been passed under section 144 r.w.s. 144C(1) of the Act to the best of the judgement of the assessing officer; but the appeal filed before the first appellate authority has also been decided ex parte. It is further noticed from the impugned order of learned Commissioner of Income Tax (Appeals) that while on some occasions the assessee took adjournment, whereas, on couple of occasions the notice of hearing issued to the assessee returned back unserved. That is why learned Commissioner of Income Tax (Appeals) proceeded to decide the appeal ex parte. In our view, considering the nature and quantum of addition made, assessee could have been given reasonable opportunity of being heard to put forward its case against the additions made. We have also noted, certain grounds raised by the assessee before the first appellate authority challenging the validity of the assessment order as well as on the merits of the addition made have not been specifically adjudicated by the learned Commissioner of Income Tax (Appeals). Therefore, considering the overall facts and circumstances of the case and particularly the fact that both, before the assessing officer and learned first appellate authority, the assessee did not get a proper opportunity for 4 ITA 3306/Mum/2019 representing its case, for whatever may be the reason, we are inclined to set aside the impugned order of learned Commissioner of Income Tax (Appeals) and restore the matter back to the assessing officer for fresh assessment after due opportunity of being heard to the assessee. At the same time, we also direct the assessee to comply with the queries to be raised by the assessing officer and represent its case in a proper and effective manner. Grounds are allowed for statistical purposes.

6.

In the result, appeal is allowed for statistical purposes. Order pronounced on 03/05/2021. Sd/- sd/- (MANOJ KUMAR AGGARWAL) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dt : 03/05/2021 Pavanan Copy to : 1. Appellant 2. Respondent 3. The CIT concerned 4. The CIT(A) 5. The DR, ITAT, Mumbai 6. Guard File By Order

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