Loading judgment…
Facts
The assessee's appeal was directed against the NFAC's order confirming an addition of Rs. 20,62,601/- related to remission of liability, claimed as debit balances of debtors. The NFAC had rejected the appeal ex-parte due to non-pursuit by the assessee.
Held
The Tribunal found that the ex-parte order violated principles of natural justice as the assessee was not given adequate opportunity to present their case. The addition was based on a misinterpretation of the disputed amount as remission of liability instead of debit balances of debtors.
Key Issues
Whether the ex-parte order passed by the Ld. JCIT(A) violated the principles of natural justice and if the addition was correctly confirmed based on the facts.
Sections Cited
Section 254
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, JODHPUR BENCH (Virtual
Before: DR. MITHA LAL MEENA, HONBLE & SHRI UDAYAN DAS GUPTA, HONBLE
This appeal by assessee is directed against the order of National Faceless Appeal Centre [in short, the Ld. NFAC/ADDL/JCIT(A)] dated 19.12.2023 with respect to the assessment year 2015 16 challenging therein confirmation of addition of Rs. 20,62,601/- on account of remission of liability, claimed as debit balances on account of debtors.
We have heard both the sides and perused material on record. From the record, it is seen that the learned JCIT (A) rejected the appeal of the assessee exparte qua the assessee by observing as under:
"
The facts of the case as noted above are that the appellant has not pursued the appeal despite being granted several opportunities as elaborated supra. No details documents or submissions have been provided to come to any conclusion other than those arrived at by the assessing officer in the order. The notices have been duly served upon the assassin via email. Regrettably no response whatsoever was forthcoming on the appointed date. Thus, nothing has been placed on record to substantiate as to why the addition made by the AO should not be sustained."
The Ld. AR argued that the order passed by ghe Ld. JCIT was contrary to the principles of natural justice and had been made without due opportunity of hearing to the appellant. He contended that the Id. JCIT(A) has erred in sustaining the addition of Rs. 20,62,601/- by way of wrongly stating the facts and interpreting that the disputed amount is remission of liability, while these were the debit balances of debtors, and that the entire basis of addition was bad in law and not justified. He pleaded that the matter may be restored to the file of the AO to examine the veracity of the evidence with reference to the debit entries of the debtors in the books of account of the assessee and counter verification form the debtors while passing assessment de novo after granting adequate opportunity of being heard to the assessee.
Per contra, the Ld. DR stands by the impugned order, however, he has no objection in remanding the matter to AO in view of natural justice.
Admittedly, the Ld. JCIT has passed orders ex parte qua the assesse. The Ld. AR argued that the worthy JCIT(A) decided the case exparte without granting opportunity of the hearing while confirming the assessment order passed by the AO in arbitrary manner without appreciating the submission and material evidence. It is noted that while deciding the case ex-parte, the Ld. JCIT(A) has not appreciated the facts of the case and arbitrary confirmed the assessment order regarding the addition of Rs. 20,62,601/- against remission of liability. However, neither the AO nor the Ld. CIT(A) has addressed the relevant matter regarding appellants claim that the amount disputed stands debit entries of the debtors in the books of account of the assessee. In our view, the authorities below have acted in violation of principles of natural justice.
The Hon'ble Supreme Court of India in the case of Tin Box Company vs. CIT reported in 249 ITR 216 in which their Lordships of Supreme Court of India observed as under: "Assessment - Opportunity of being heard - Setting aside of assessment - Assessment order must be made after the assessee has been given reasonable opportunity of setting out his case - Same not done - Fact that the assessee could have placed evidence before the first appellate authority or before the Tribunal is really of no consequence for it is assessment order that counts - Assessment order set aside and matter remanded to assessing authority for fresh consideration."
Accordingly, we consider it deem fit to restore back the matter to the file of the Ld. AO to pass de novo assessment after considering the written submission and evidence filed on record and may be filed before him during the fresh proceedings after granting sufficient opportunity of being heard to the assesse.
In the result, the appeal of the assesse is allowed for statistical purpose. Order pronounced on 24/03/2025 under Rule 34(4) of Income Tax (Appellate Tribunal) Rules, 1963. (DR. MITHA LAL MEENA) ACCOUNTANT MEMBER Dated: 24/03/2025 Copies to : (1) The appellant. (2) The respondent. (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File (7) By Oder