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Facts
The assessee was found carrying cash of Rs.99,80,000/-. The Assessing Officer (AO) reopened the case under Section 147 and added the entire amount to the assessee's income. The CIT(A) also sustained the addition, leading to the present appeal.
Held
The Tribunal held that while the assessee should have been vigilant, the CIT(A) did not provide adequate opportunity for being heard, violating the principles of natural justice. Therefore, the order was set aside.
Key Issues
Whether the CIT(A) provided adequate opportunity of hearing to the assessee, and if not, whether the assessment order should be set aside on grounds of violating natural justice.
Sections Cited
147, 144B, 148A, 142(1), 143(2), 250, 251
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Income Tax Appellate Tribunal, LUCKNOW BENCH “B”, LUCKNOW
Before: SHRI KUL BHARAT & SHRI ANADEE NATH MISSHRA
PER KUL BHARAT, VICE PRESIDENT.:
This appeal, by the assessee, is directed against the order of the Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi, dated 26.11.2024, pertaining to the assessment year 2018-19. The assessee has raised the following grounds of appeal: - “1 Because the Ld. CIT(A) has failed to know about the facts and circumstances of the case, and has arbitrarily give the decision thereof is bad in law and liable to set aside.
2. Because the Ld. CIT(A) has erred while not giving adequate opportunity of being heard like thereof is bad in law and against the Principle of Natural Justice “Audi Alteram Partem’ of Constitution of India.
Page 2 of 6 3. Because the assessee financial condition is very poor that’s why the assessee does not hire the proper council, since requested to you please set aside the case. 4. Because the appellant craves leave to add to or alter, by deletion, substation, modification or otherwise, the above grounds of appeal s, either before or during the hearing of the appeal.”
2. The facts giving rise to the present appeal are that it was intercepted by the concerned authority that the assessee was carrying cash amounting to Rs.99,80,000/- on 03.05.2017. Accordingly, this information was passed on the Assessing Officer (AO). Subsequently, the case was re-opened for assessment u/s 147 read with section 144B of the Income Tax Act, 1961 (“the Act”, for short) and the assessment was framed exparte to the assessee vide order dated 24.03.2023. Thereby, the amount so found in the possession of the assessee amounting to Rs.99,80,000/- was added back to the total income of the assessee. Aggrieved against this, the assessee preferred an appeal before the Ld. CIT(A) who also sustained the addition made by the AO. Now, the assessee is in appeal before this Tribunal.
3. At the time of hearing, Ld. Counsel for the assessee had filed written submissions and reiterated the contention of the same. For the sake of clarity, the written submissions of the assessee are reproduced as under: - “2. That the appellant is a proprietor; partner, and director in the several firms and companies, which are the source of his income.
3. That the SCN u/s 148A(b) issued dated 13/03/2022, stated that Rs.99,80,000/- intercepted with cash in the possession of the Appellant dated 03/05/2017 by the authorities and no explanation has been submitted by you but when asked by the Id. AO as to which officer intercepted, then the Id. AO could not provide this information.
4. That the Id. JAO has issued SCN u/s 148A(b), of the Income Tax Act, 1961, dated 13/03/2022 and same was signed dated 14/03/2022 at 02:41 PM and fixed hearing date 19/03/2022, that is less-then, 7 days, hence therefore failed to give statutory time for filing reply and submission that is clear cut violation of u/s 148A(b).
5. That, the Appellant filed reply incompliance to notice u/s 148, but Id. AO (NFAC), passed the assessment order in absence of notice u/s 143(2) of the Act.
That in the present case during assessment proceeding Id. AO (NFAC) has issued single notice u/s 142(1) dated 10/01/2023 then after issued SCN u/s 147 dated 16/02/2023, after that passed the assessment order after filed reply and submissions hence it is clear cut violation of natural of principle justice.
That during the assessment proceeding council of the appellant has filed reply and submission and requested if need any cross verification then kindly verify the same instead of this Id. AO simply stated that the assessee failed to file complete documents and made addition in the hands of the appellant. All the above-mentioned facts raced before the Id. CIT(A), with his grounds of appeal
s but Id. CIT(A) issued four notices u/s 250 of the Income Tax Act, and fixed hearing dated with very short time is mentioned as under: SI. No Date of notice Date of hearing Diff between date of notice and hearing date. 1 27/06/2024 12/07/2024 15 days 2 13/08/2024 23/08/2024 10 days 3 16/10/2024 22/10/2024 6 days 4 18/11/2024 22/11/2024 4 days 5 26/11/2024 Order passed. Kindly refer to the above table then it is found that the Id. CIT(A), failed to given proper opportunity to the appellant to file reply and submission during the appeal proceedings. The appellant being aggrieved has come up be fore your Honour for relief as per legal Grounds of Appeal in respect of which our submissions are as under: Grounds No.: -1 &
2. The Assessment Order U/s 147 r.w.s. 144B of the Income Tax Act, 1961, was passed on 24/03/2023, in which the following additions were made by the Ld. Assessing Officer: Income as returned Rs.6,60,420/- Addition made by Ld. AO Rs.99,80,000 – Total Rs.1,06,40,420/- The Assessee filed appeal before the Ld. CIT (A). However, the assessee did not comply with hearing notices by the Ld. CIT(A). As the assessee did not appear before the Ld. CIT (A), and no reply has been filed furnished against hearing notices. Then the reason that the Id. AO Order is upheld by the Id. CIT (A) (NFAC), and dismissed the appellant appeal dated 26/11/2024.
In the above facts find by the Ld. CIT (A) (NFAC), Delhi and Ld. AO without knowing the facts and circumstances of the appellant case and without giving proper opportunity of being heard that is the against the Principle of Natural Justice, so that I humble requested to you please set-aside the case. Section 250 6 of the Income Tax Act: The order of the [Joint Commissioner (Appeals) or the] Commissioner (Appeals) disposing of the appeal shall be in writing and shall state the points for determination, the decision thereon and the reason for the decision. Further we are heedful to the restriction placed by clause (a) of sub-section (1) of section 251 of the Act which obligates the Ld. CIT(A) to adjudicate the issue either by confirming or annulling the addition or reducing or enhancing the addition made by the assessing officer without the right to remand the matter back. However, while exercising the jurisdiction u/s 251(1)(a) of the Act, the Ld. CIT(A) is mandated to state point of determination, its decision thereon and clear reasons therefore in terms of section 250(6) of the Act. This exercise by the Ld. CIT(A) is a pre-requisite and invariably necessary for each assessment year in each case irrespective of its repetition. This is because in taxation each assessment year per-se is a separate unit as is governed by its own peculiar facts & features and as such the principle of res-judicata is inapplicable in fiscal laws. Therefore, any adjudication in taxation reaches finality utterly for the year of adjudication only and in no case, it does govern any later or subsequent year. This find fortified in ‘Radheshyam Satsang Vs CIT’ [1992, 193 ITR 321 (SC)], ‘AkzoNobel India Pvt. Ltd. Vs Addl CIT’ (2022, in ITA 370/2022, (Del)]. It is a trite law as laid down by Hon’ble Supreme Court in case ‘Chandra Kishore Jha Vs Mahavir Prasad’ reported in 8 SCC 266 (SC), that ‘if a statute provides for a thing to be done in a particular manner, then it has to be done in that manner and in no other manner’. Therefore, in our considered view, in the absence of clear authorization in the statue permitting the Ld. NFAC to culminate proceedings without touching merits even in ex-parte proceedings is violative of provision of sub-section (6) of section 250 of the Act. In view of the above forging submissions, we most humbly requested to grant relief to the appellant for the stake of justice. Ground No.:3 With most humbly inform you that during the year appellant financial condition is very poor and he has facing lots of financial crises then the appellant does not hire the proper council who has peruse the case on time to time. Sir/Sirs requested to you please set-aside the case. Ground No.:4 General in nature. Your Honours in the above facts of the case you are therefore requested to please kindly consider the same and set - aside the case and provide the relief of the appellant.”
Page 5 of 6 4. On the other hand, the Ld. Sr. Departmental Representative (DR) supported the orders of the lower authorities and contended that the assessee was throughout negligent and no liberal view can be taken against the assessee. Therefore, Ld DR prayed for sustaining the impugned addition.
We have heard rival contention and perused the materials available on record. It is the case of the assessee that the amount is well explained by the assessee. It is contended that the lower authorities did not give adequate opportunities to the assessee. It is also contended that the Ld. CIT(A) did not consider the submissions made before him and the supporting evidences filed by the assessee. Considering the material placed on record and submissions made by the assessee, we are of the considered view that the assessee ought to have been vigilant about his case. It was incumbent on the assessee to dispel the suspicion caused by recovery of amount from his possession. From the assessment order, it is evident that the assessee was provided with sufficient opportunity. It is not the case where no opportunity was granted. However, it is observed that at first appellate stage the hearing was adjourned at short interval. Therefore, to sub-serve the principles of natural justice and to be fair with both the parties, we deem it necessary and expedient under the facts of the present case to set aside the impugned order and restore the matter back to the file of the Ld. CIT(A) to decide the appeal afresh after giving adequate opportunity of being heard to the assessee. Needless to say that the assessee would co-operate in the proceedings and would not seeks adjournment without any compelling exigency. Grounds raised in this appeal are allowed for statistical purpose.
Order pronounced in the open Court on 06/05/2025.