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Income Tax Appellate Tribunal, “B” BENCH: KOLKATA
Before: Shri A. T. Varkey, JM & Dr. A. L. Saini, AM]
ORDER
Per Shri A.T.Varkey, JM
This appeal preferred by the revenue is against the order of the Ld. CIT(A)-2, Kolkata dated 30.06.2015 for AY 2012-13 on the following grounds:
“1. For that on the facts and in the circumstances of the case, Ld. CIT(A)-2, Kolkata, erred in law and on fact in deleting the addition made u/s. 68 of the Income-tax Act, 1961, amount to Rs.2,93,00,000/- without objectively dealing with the material, information, evidences available on records.
2. For that on the facts and in the circumstances of the case, the Ld. CIT(A)-2 erred in law and on facts for not giving the AO a reasonable opportunity to defend his assessment, which is against the principal of natural justice.
3. For that the appellant craves leave to the file additional grounds and/or amend or alter the grounds already taken either before or at the time of hearing of the appeal.”
At the outset itself, the Ld. AR of the assessee brought to our notice that the AO has made the addition because the director of the share subscribers did not comply with the direction of the AO to appear before him. Therefore, the adverse inferences were drawn against the assessee and the addition was made. On appeal, the Ld. CIT(A) deleted the 2 Subhjyoto Suppliers Pvt. Ltd., AY 2012-13 addition. According to Ld. AR, during the assessment proceeding since the directors of the share subscribers were not in station at that time when the AO directed to present the directors before him, they could not appear before the AO. According to Ld. AR, since the AO has made the addition only because the directors did not turn-up before him, and the assessee is ready to comply with the direction of AO if an opportunity is given to them by producing the director of the share subscribers before the AO. Since there was no proper opportunity was given to the assessee, the Ld. AR prays that the matter may be remanded back to the AO. The Ld. DR does not have any objection if the assessee cooperates before the AO by producing the directors.
We note that directors of the share subscribing companies could not appear before the AO because they were out of station. Since the directors did not turn up before the AO, he drew adverse inference against the assessee and made the addition. The Ld. CIT(A) has deleted the addition after going through the documents and case laws relied upon by the assessee. However, during the hearing before us, the Ld. AR has brought to our notice that given an opportunity the assessee is ready to produce the directors of the share subscribing companies. In the aforesaid circumstances, we are of the opinion that there was no proper opportunity granted to the assessee at the time of assessment stage. Therefore, relying on the decision of the Hon’ble Supreme Court in the case of Tin Box Company Vs. CIT (2001) 249 ITR 216 (SC), wherein the Hon’ble Supreme Court has held as under:
“It is unnecessary to go into great detail in these matters for there is a statement in the order of the Tribunal, the fact-finding authority, that reads thus : “We will straightaway agree with the assessee’s submission that the Income-tax Officer had not given to the assessee proper opportunity of being heard.” That the assessee could have placed evidence before the first appellate authority or before the Tribunal is really of no consequence for it is the assessment order that counts. That order must be made after the assessee has been given a reasonable opportunity of setting out his case. We, therefore, do not agree with the Tribunal and the High Court that it was not necessary to set aside the order of assessment and remand the matter to the assessing authority for fresh assessment after giving to the assessee a proper opportunity of being heard.
3 Subhjyoto Suppliers Pvt. Ltd., AY 2012-13 Two questions were placed before the High Court, of which the second question is not pressed. The first question reads thus : “1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in not setting aside the assessment order in spite of a finding arrived at by it that the Income- tax Officer had not given a proper opportunity of hearing to the assessee ?” In our opinion, there can only be one answer to this question which is inherent in the question itself : in the negative and in favour of the assessee. The appeals are allowed. The order under challenge is set aside. The assessment order, that of the Commissioner (Appeals) and of the Tribunal are also set aside. The matter shall now be remanded to the assessing authority for fresh consideration, as aforestated.” We set aside the orders of the lower authorities and remand the matter back to the file of AO to frame de novo assessment after affording reasonable opportunity of being heard to the assessee and the assessee to diligently participate in the assessment proceedings.
In the result, the appeal of revenue is allowed for statistical purposes.
Order is pronounced in the open court on 17th May, 2019.