TARA HOSPITALITY PVT LTD,OFFICE NO A vs. INCOME TAX OFFICER 15(3)(1), MUMBAI, MUMBAI

We heard the rival submission and considered the documents available in the record. The assessee company filed the return by admitting loss amount of Rs.6,85,303/-. The assessment proceeding was initiated. During the assessment Ld. AO found in column no.31(a) of the audit report for form no.3CD that assessee has taken loan from three different parties amount of Rs.1,45,75,891/-. But finally the assessment order was passed ex parte and the unsecured loan amount of Rs.1,45,75,891/- was added back as unexplained cash credit u/sec. 68 of the Act. Aggrieved assessee filed an appeal before the Ld. CIT(A). The Ld. CIT(A) passed an order ex parte and uphold the impugned assessment order. Being aggrieved assessee filed an appeal before us.

During the assessment proceedings, the assessee did not get opportunity to submit any of the documents relied upon in relation to the addition made on account of the loan under section 68 of the Act. During the appellate proceedings, the Ld. CIT(A) granted four opportunities of hearing. Out of these four dates, the assessee sought adjournment on two occasions. However, on the remaining two hearing dates, there was no response from the assessee. Accordingly, the appellate order was passed ex parte. In our considered view, it is evident that the appellate & assessment orders were passed ex parte and that the assessee was not afforded a reasonable opportunity of being heard. The denial of such opportunity amounts to a violation of the principles of natural justice. Therefore, we consider it appropriate to restore the matter to the file of the Ld. AO for adjudication de novo, after granting the assessee a reasonable opportunity of being heard. The assessee shall also be permitted to file any additional evidence relevant to the appeal proceedings. We make no observation on the merits of the Tara Hospitality Pvt. Ltd. case, so as to avoid causing any prejudice in the fresh proceedings. The assessee is directed to cooperate and be diligent during the remand proceedings to enable expeditious disposal of the assessment.