VINOD KUMAR JAJODIA AND OTHERS,KOLKATA vs. I.T.O.,WARD-50(3), KOLKATA

At the outset itself, the Ld. Counsel for the assessee pointed out that this is a case wherein the Ld. CIT(A) has passed an ex parte order without giving proper opportunity to the assessee. According to the ld. AR, the notice fixing the date of hearing was not received by the assessee so, since there was no instruction from the assessee, the Ld. AR could not attend the hearing. It was pointed out by the ld AR that the Ld. CIT(A) after fixing the case only in the month of May, 2019 (three hearings) had hastily passed the impugned order on 31.05.2019. Moreover, it was brought to our notice that the AO also has saddled the addition without giving any information as to how he got information that assessee earned Rs.4,26,113/- from commodity profit whereas in the books of account of the assessee the income earned from the commodity profit is reflecting at only Rs.2,75,500/-. The Ld. AR submitted that the assessee is not aware about any information about assessee’s earning Rs.4,26 ,113/- and according to the assessee, it has earned only income to the tune of Rs.2,75,500/- from the commodity profit and even though the assessee requested for the adverse information/material on which the AO infers that assessee has received Rs.4.26 lakh, it may be shared with the assessee which the AO did not give and proceeded to make addition, which according to ld. AR is per-se in violation of natural justice and want us to interfere. The ld. DR on the other hand, supported the order of ld. LD. CIT(A) and does not Vinod Kr. Jajodia & Ors. AY- 2010-11 want us to interfere. According to him, since the AO got the information from Investigation Wing it is correct and AO made the addition.

Having heard both sides, I note that the assessee had filed return of income declaring a total income of Rs.3,27,168/- and the same was processed u/s. 143(1) of the Act. Thereafter, case was reopened u/s. 147 and notice u/s. 148 of the Act dated 28.03.2017 was issued to the assessee. From perusal of the assessment order, we note that the AO noticed that the assessee had disclosed commodity profit of Rs.2,75,500/-. However, according to AO, as per information received from DDIT (Inv.) Unit III, Kolkata, assessee had profit from commodity transaction account to Rs.4,26,113/-. Thus, according to AO, there was an escapement of income of Rs.1,50,613/- which was detected and accordingly, was of the opinion that assessee should explain the discrepancy otherwise this amount would be treated as undisclosed income and added to the total income. Thereafter, the AO notes that since the assessee could not give proper explanation and since he has not discharged the onus to disclose the correct commodity profit and, therefore, added Rs.1,50,613/-. We note that the assessee pursuant to the notice of the AO had in no uncertain manner expressed that he had in no way earned Rs.4,26,113/- as alleged by the DDIT (Inv.) from commodity profit and had mentioned that it had only earned Rs.2,75,500/-. We note that while making the addition, the AO kept the assessee in dark and had not bothered to give a copy of the adverse material or the DDIT (Inv.)’s report, which in my opinion, AO ought to have given to the assessee so that he could have set the defence and/or gave explanation. Since the AO has not shared the material on the basis of which he has concluded that the assessee had earned Rs.1,50,613/- there is ex-facie violation of natural justice, so I set aside the order of the Ld. CIT(A) and remand the matter back to the file of AO for fresh adjudication and also direct the AO to furnish a copy of the material on the basis of which he has come to the conclusion that assessee has not disclosed Rs.1,50,613/- from the commodity profit and thereafter, the AO to frame the reassessment order after hearing the assessee as per law.

In the result, the appeal of assessee is allowed for statistical purposes Order is pronounced in the open court on 31st December, 2019.

DR, ITAT, Kolkata. (sent through e-mail)