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Income Tax Appellate Tribunal, “B BENCH: KOLKATA
Before: Shri A. T. Varkey, JM & Dr. A. L. Saini, AM]
The appeal filed by the assessee is against the order of Ld. CIT(A)-3, Kolkata dated 22.11.2016 for AY 2009-10.
The impugned order of Ld. CIT(A) is an ex parte order. The Ld. CIT (A) in order to decide the appeal ex parte has given the reason for doing so at para 2 of his order which is reproduced as under: “2. The case was fixed for hearing on 08.11.2016. The case has gone unrepresented and neither any further time was sought by way of an adjournment application. The appellant does not appear to be serious about pursuing this appeal. Hence, I proceed to decide the appeal on the basis of material on record.”
From a reading of the above reasoning, it is evident that Ld. CIT (A) fixed the hearing of the appeal only on 08.11.2016 and since none represented on behalf of assessee, has passed the ex parte order. As per the Ld. AR, the assessee did not receive any notice of hearing fixed on 08.11.2016, so the impugned order is fragile for violation of natural justice. We note that Ld. CIT (A) has not given any details of the notice issued by his office as to when it was issued and for which date it was fixed for hearing etc. or whether the notices got unserved etc. No details are mentioned by Ld. CIT (A). The Ld. CIT (A) found fault with the assessee not appearing before him on 08.11.2016 and having not filed any adjournment application came to the conclusion that assessee is not interested in pursuing the appeal which action of Ld. CIT (A) cannot be countenanced.
Victor Tradelink P. Ltd., AY- 2009-10 4. Coming to the AO’s order, we note that the AO was giving effect to the order of Ld. CIT passed u/s. 263 of the Act wherein the Ld. CIT has given the following guidelines as to how to investigate. “xxxiv) Examine the genuineness and source of share capital, not on a test check basis, but in respect of each and every shareholder by conducting independent enquiry not through the assessee. The bank account for the entire period should be examined in the course of verification to find out the money trail of the share capital. xxxv) Further the AO should examine the directors as well as examine the circumstances which necessitated the change in directorship if applicable. He should examine them on oath to verify their credentials as director and reach a logical conclusion regarding the controlling interest. xxxvi) The AO is directed examine the source of realization from the liquidation of assets shown in the balance sheet after the change of Directors, if any after conducting the inquiries & verification as directed above, the AO should pass a speaking order, providing adequate opportunity of being heard to the assessee.”
However, we note that AO’s investigation as per his own words as stated at page 2 is as under: “In compliance to the directions of the Ld. CIT, Kolkata-III, notice u/s. 142(1) of the Act was issued to the assessee company requiring it to appear before the undersigned, either personally or through its Authorised Representative, and furnish certain details. Summon u/s. 131 of the Act was also issued to the Directors of the company for their personal attendance. However, neither any one on behalf of the assessee nor the Directors of the assessee company appeared before the undersigned till date. Summons u/s. 131 of the Act were also issued to directors of the subscriber companies, as claimed by the assessee in the course of assessment proceeding for their personal attendance Once again none o the Directors of the subscriber companies appeared before the undersigned till date. Since there was no compliance on the part of the directors of the assessee company or the directors of the subscriber companies, there is no option but to pass the order ex parte.”
So, we note that investigation as per the guidelines of the Ld. CIT has not been adhered to by the AO that is one aspect which has been pointed out by the ld AR assailing the decision of AO.
However the main grievance of the assessee is that no proper opportunity was given to the assessee to discharge the onus casted upon it as required in sec. 68 matters. According to assessee, no statutory notices were served upon it. We note that AO has not given any details of the statutory notices, when it was issued etc., date on which it was fixed are not discernable from the investigation conducted by AO (supra) So, we are of the opinion that no proper opportunity was given to assessee by AO during the reassessment proceedings. The Hon’ble (three judge bench) of the Hon’ble Supreme Court in Tin Box Company Vs. CIT (2001) 249 ITR 216 (SC) 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 :
Victor Tradelink P. Ltd., AY- 2009-10 “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. 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 also note that the Hon’ble Delhi High Court in the case of CIT Vs. Jansampark Advertising & Marketing Pvt. Ltd. in dated 11.03.2015 wherein after noticing inadequate enquiry by authorities below have held as under:
“41. We are inclined to agree with the CIT(Appeals), and consequently with ITAT, to the extent of their conclusion that the assessee herein had come up with some proof of identity of some of the entries in question. But, from this inference, or form the fact that the transactions were through banking channels, it does not necessarily following that satisfaction as to the creditworthiness of the parties or the genuineness of the transactions in question would also have been established.
The AO here may have failed to discharge his obligation to conduct a proper inquiry to take the matter to logical conclusion. But CIT(Appeals), having noticed want of proper inquiry, could not have closed the chapter simply by allowing the appeal and deleting the additions made. It was also the obligation of the first appellate authority, as indeed of ITAT, to have ensured that effective inquiry was carried out, particularly in the fact of the allegations of the Revenue that the account statements reveal uniform pattern of cash deposits of equal amounts in the respective accounts preceding the transactions in question. This necessitated a detailed scrutiny of the material submitted by the assessee in response to the notice under Section148 issued by the AO, as also the material submitted at the stage of appeals, if deemed proper by way of making or causing to be made a 'further inquiry’ in exercise of the power under Section 250(4). His approach not having been adopted, the impugned order of ITAT, and consequently that of CIT(Appeals), cannot be approved or upheld."
In view of the aforesaid order and in the light of the Hon’ble Supreme Court’s decision in Tin Box Company (supra) and taking into consideration the fact the order of the Ld. CIT passed u/s. 263 of the Act in similar cases being upheld up to the level of Apex Court, and taking note of Hon’ble Delhi High Court’s order in Jansampark Advertising &
Victor Tradelink P. Ltd., AY- 2009-10 Marketing Pvt. Ltd. (supra), we set aside the order of the Ld. CIT(A) and remand the matter back to the file of AO for de novo assessment and to decide the matter in accordance to law after giving opportunity of being heard to the assessee.
In the result, the appeal of assessee is allowed for statistical purposes .
Order is pronounced in the open court on 9th May, 2018. Sd/- Sd/- (Dr. A. L. Saini) (Aby. T. Varkey) Accountant Member Judicial Member Dated : 9th May, 2018 Jd.(Sr.P.S.) Copy of the order forwarded to: Appellant – Victor Tradelink Pvt. Ltd., C/o D. J. Shah & Co., Kalyan 1. Bhavan, 2, Elgin Road, Kolkata-700 020. Respondent – ITO, Ward-9(2), Kolkata. 2 The CIT(A), Kolkata 3. 4. CIT , 5. DR, ITAT, Kolkata. /True Copy, By order,
Senior Pvt. Secy.