VIJAY KUMAR SHARMA,KOLKATA vs. I.T.O.,WARD-45(4), KOLKATA

The assessee in the present case is an individual who is engaged in the business of readymade garments. The return of income for the year under consideration was filed by the assessee on 23.09.2014 declaring a total income of Rs. 3,20,524/-. The said return was selected for scrutiny by the AO and in response to the notices issued u/s 142(1) of the Act, the details and documents required by the AO were furnished by the assessee. As noted by the AO in the assessment order, the assessee however failed to produce the purchase register

Against the order passed by the AO u/s 143(3) of the Act, and appeal was preferred by the assessee before the ld. CIT(A) challenging the entire addition made by the AO u/s 41(1)(a) of the Act and since there was no satisfactory compliance on the part of the assessee to the notices issued by him fixing the said appeal for hearing from time to time, the Ld. CIT(A) dismissed the appeal of the assessee and confirmed the entire addition made by the AO u/s 41(1)(a) of the Act. Aggrieved by the order of the Ld. CIT(A), the assessee has preferred this appeal before the Tribunal.

We have heard the arguments of both the sides and also perused the relevant material available on record. As rightly pointed out by the ld. Counsel for the assessee, the notices u/s 133(6) of the Act were issued by the AO to the concerned sundry creditors on 15.12.2016 and since the assessment order was passed on 26.12.2016, even the reasonable time was not allowed by the AO to the concerned sundry creditors to respond to the notices issued u/s Vijay Kumar Sharma 133(6) of the Act. He has also pointed out that one of the sundry creditors had sought some time to submit the information required by the AO and this request made in writing on 28.12.2016 was mentioned by the AO in the assessment order passed on 26.12.2016. This glaring mistake committed by the AO clearly shows that the assessment order was passed by him in unusual haste giving antedate and making a huge addition of Rs. 15,29,71,250/- u/s 41(1)(a) of the Act without bringing anything on record to prove that the trading liability on account of sundry creditors as shown by the assessee had ceased to exist during the year under consideration. It is also noted that the fact of non-reply on the part of the concerned sundry creditors to the notices issued u/s 133(6) was never confronted by the AO to the assessee and no opportunity whatsoever was given by him to the assessee to prove the genuineness and existence of the trading liability on account of sundry creditors before invoking section 41(1)(a). As submitted by the ld. Counsel for the assessee, even the written submission filed by the assessee before the ld. CIT(A) was completely overlooked by him while confirming the arbitrary and unreasonable addition made by the AO u/s 41(1)(a). Keeping in view all these facts of the case as explained and highlighted by the ld. Counsel for the assessee, we find that the huge addition of Rs. 15.29 crores was made by the AO u/s 41(1)(a) of the Act and confirmed by the ld. CIT(A) without giving proper and sufficient opportunity of being heard to the assessee and there is a clear violation of principle of natural justice. Even the ld. DR has not been able to rebut or controvert this position clearly apparent from the orders passed by the authorities below. We, therefore, consider it fair and proper and in the interest of justice to set aside the impugned

In the result, the appeal of the assessee is treated as allowed for statistical purpose.