What did the Tribunal hold?

The Tribunal held that the assessee was not given a proper opportunity of being heard by the AO. Following the Supreme Court's decision in Tin Box Co., the matter was remanded to the AO for fresh adjudication.

The assessee firm, engaged in clearing and forwarding, did not receive proper notices from the AO, leading to a best judgment assessment. The AO disallowed 30% of expenses, and the CIT(A) reduced it to 20%.

What were the issues?

Whether the assessment order was valid when the assessee was not given a proper opportunity of being heard by the Assessing Officer.

Ess Dee International vs ITO | ITAT Kolkata 2018

Income Tax Appellate Tribunal, “B” BENCH: KOLKATA

Before: Shri P.M. Jagtap, AM & Shri A. T. Varkey, JM]

Hearing: 08.02.2018Pronounced: 01.05.2018

This is an appeal preferred by the assessee against the order of the Ld. CIT(A)- 10, Kolkata dated 20.01.2017 for the assessment year 2013-14.

2. At the outset, itself it has been brought to our notice that the assessment order passed by the AO u/s 144 of the Act which is the best judgment assessment order of the AO. According to the ld. Counsel the assessee could not appear before the AO because of non-receipt of notices as well as for reasons beyond its control. According to the ld. Counsel the AO has disallowed 30% of the expenses claimed by the assessee. It was brought to our notice that the assessee firm earned income from business of clearing and forwarding and the main expenses are the CFS rent, custom duty, AAITHC

Ess Dee International Commercial Building A.Yr.2013-14 charges, handling charges and port charges. On appeal the Ld. CIT(A) has given partial relief to the assessee by bringing down 30% disallowance to 20%. Aggrieved the assessee is before us.

We have heard both the parties and perused the records. We note that the assessee did not get proper opportunity before the AO which prompted him to disallow 30% of the overall expenses claimed by the assessee. The assessee is in the business of clearing and forwarding. Since the assessee has not get proper opportunity before the AO, we are of the considered opinion that the assessment has to be done by the AO after scrutinizing the documents and after hearing the assessee. For that we rely on the order of the Hon’ble three judge decision of the Hon'ble Supreme Court in Tin Box Co. in 244 ITR 216 (S C) wherein it was held that :

1. 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 selling 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. 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 ?"

Ess Dee International Commercial Building A.Yr.2013-14 4. 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 asses-see.

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. No order as to costs.” Respectfully following the order of the Hon'ble Supreme Court (supra), we set aside the order of the Ld. CIT(A) and remand the matter for de novo adjudication before AO. The assessee is directed to co-operate with the assessment proceedings diligently and the AO to pass speaking order after hearing the assessee.

In the result, the appeal of the assessee is allowed for statistical purposes.

Order is pronounced in the open court on 01.05.2018

ESS DEE INTERNATIONAL,KOLKATA vs. ITO, WARD 34(4), KOLKATA, KOLKATA

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