GAURAV MADAN,NEW DELHI vs. ITO, NEW DELHI

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ITA 5376/DEL/2016Status: DisposedITAT Delhi13 February 2017AY 2010-116 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the CIT(A) order was passed without proper service of notice for the hearing and without giving an independent finding. The principle of 'audi alteram partem' (hear the other side) was violated.

What were the facts?

The assessee's appeal was dismissed ex parte by the CIT(A) due to non-appearance. The assessee contended that the CIT(A) order was passed without a reasonable opportunity of being heard and that the original assessment order was bad due to lack of notice under Section 143(2).

What were the issues?

Whether the CIT(A) order was passed ex parte in violation of natural justice and whether the original assessment order was valid without a Section 143(2) notice.

Which sections of the Income-tax Act were involved?

Section 143(2),Section 143(3),Section 292BB

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC- 1” Bench, New Delhi

Before: N.K. SAINI

For Appellant: Adv & Sh
For Respondent: Shri. Ramanjaneyulu, Sr. DR

Appellant by : Sh. Ved Jain, Adv & Sh. Ashish Chaddha, Adv Respondent by : Shri. Ramanjaneyulu, Sr. DR Date of hearing : 30-11-2016 Date of pronouncement : 0 -02-2017 O R D E R PER N.K. SAINI, A.M. : This is an appeal by the assessee against the order dated 5.5.2016 of CIT (A), 28, New Delhi. Following grounds have been raised in this appeal:-

1.

On the facts and circumstances of the case, the order passed by the learned Assessing Officer (AO) is bad both in the eye of law and on facts. 2(i) On the facts and circumstances of the case, the learned AO has erred both on facts and in law in passing the ex parte order in violation of principle of natural justice. (ii) That the non-appearance before the learned CIT(A) was on account of reason beyond the control of the assessee.

3.

On the facts and circumstances of the case, the learned AO has erred both on facts and in law in passing the order without giving any finding on the merits of the case.

4. On the facts and circumstances of the case, the learned AO has erred both on facts and in law in confirming the order of the AO despite the fact that the order under Section 143(3) made by AO is bad and liable to be quashed as the same has been passed without service of notice under section 143(2) of the Act. 5(i) On the facts and circumstances of the case, the learned AO has erred both on facts and in law in confirming the addition of Rs.6,61,362/- made by the AO. (ii) That the addition was made despite the fact that the said amount received is not in the nature of income.

6.

On the facts and circumstances of the case, the learned AO has erred both on facts and in law in confirming the addition of Rs.2,187/- made by the AO on account of bank interest.

7.

That the appellant craves leave to add, amend or alter any of the grounds of appeal.

2. The main grievance of the assessee in this appeal relates to the ex parte order passed by the learned CIT(A) and that, the assessment framed u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act) without serving the notice u/s 143(2) of the Act was liable to be quashed.

Facts of the case in brief are that the assessee filed the return of income of Rs. 7,13,636/- on 12.07.2010 which was processed under section 143(1) of the Act and subsequently the case was selected for scrutiny. The AO passed the order u/s 143(3) of the Act and made the addition of Rs. 6,61,632/- on account of non declaration of interest which was appearing in Form No. 26 AS. He also added Rs. 2,187/- credited to the saving bank account of the assessee which was not declared.

3. Being aggrieved, the assessee carried the matter to the learned CIT(A) who passed the ex parte order by stating that a final opportunity was given vide notice dated 21.4.2016 and the case was fixed for 2.5.2016 but there was no compliance. The learned CIT(A) upheld the action of the AO by observing in para 4.1 of the impugned as under: “In view of the facts stated above, it is observed that the assessee was given sufficient opportunities to represent his case before the appellate authority but nobody attended the proceedings. In view of the indifferent approach, I find that no useful purpose would be served by keeping the appeal proceedings pending indefinitely. Therefore, it is presumed that the assessee has nothing to appeal against the additions made by the Assessing Officer. Hence, the action of the AO is upheld and the appeal is dismissed.”

4.

Now the assessee is in appeal. The learned counsel of the assessee submitted that the learned CIT(A) passed the ex parte order without providing due and reasonable opportunity of being heard to the assessee. It was further submitted that the AO also made arbitrary additions without considering the explanation and the submissions of the assessee. It was also submitted that the notice u/s 143(2) was not served upon the assessee which is the mandatory requirement for framing the assessment u/s 143(3) of the Act. It was stated that the AO applied the provisions laid down in section 292 (BB) of the Act but have not considered the proviso to section 292(BB) of the Act. In his rival submissions, the learned DR strongly supported the orders of the authorities below.

5.

I have considered the submissions of both the parties and carefully gone through the material available on record. In the present case, it is noticed that the learned CIT(A) had not given his independent finding while passing the ex parte order. He simply stated that it was to be presumed that the assessee has nothing to appeal against the additions made by the AO. It is also noticed that the learned CIT(A) mentioned in the impugned order that a notice dated 21.4.2016 was issued to the assessee and the case was fixed for 2.5.2016 but nowhere it is brought on record that the said notice was served upon the assessee. It is well settled that nobody should be condemned unheard as per the maxim “audi alteram partem”. 6. In the instant case, as I have pointed out earlier that nothing is brought on record to substantiate that the notice for hearing on 2.5.2016 was served upon the assessee. Therefore the impugned order is set aside and the matter is remanded back to the learned CIT (A) to be decided afresh in accordance with law after providing due and reasonable opportunity of being heard to the assessee.

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