MAHESH KUMAR,DELHI vs. ITO, REWARI

PER ANADI N MISHRA, A.M. This appeal filed by the assessee is directed against the order of the CIT(A), Rohtak dated 2.1.2013 for A.Y 2009-10. The grounds of appeal are as under :-

3. That on the facts and in the circumstances of the case and in law, learned CIT-A erred in upholding the addition on account of notional interest addition of Rs. 186,900 without any basis of the same, being hypothetical addition.

4. That on the facts and in the circumstances of the case and in law, learned CIT-A erred in sustaining the addition made by Ld. AO amounting to Rs. 15,57,500/- & Rs. 186,900 dehors the material available on record based on perverse findings and conclusions, ignoring assessee’s written submissions. 5. That on the facts and in the circumstances of the case and in law, learned CIT-A erred in directing the Ld. AO to verify deduction u/s 80C instead of himself allowing it on basis of evidence submitted. (Amount Rs. 100,000) 6. That the appellant craves leave to add, to amend, modify, rescind, supplement or alter any of the grounds stated herein above, either before or at the time of hearing of this appeal.”

2. During assessment proceedings, the Ld. AO issued show cause notice alongwith notices u/s 143(2)/142 (1) of Income Tax Act to the assessee, which was served upon the assessee on 1.11.2011, fixing up the case for 11.11.2011. In response to the show cause notice neither anybody attended before the Ld. AO on behalf of the assessee nor any written reply was filed. Thereafter, without giving the assessee any further opportunity, Ld. Assessing Officer completed assessment u/s 144 of I.T. Act wherein an addition of Rs. 17,44,400/- was made on account of cash deposits in bank account of the assessee. Moreover, the deduction claimed u/s 80C of I.T. Act amounting to Rs. 1,10,575/- was disallowed. The appeal filed by the assessee against the order of the Ld. AO was dismissed by Ld. CIT(A).

Aggrieved, the assessee is in appeal in ITAT. For the sake of convenience, all grounds of appeal are taken up together. In the course of hearing, the Ld. AR of FIT For PUBLICATION Sd/- (AM) Sd/- (JM) the assesssee submitted that the Ld. AO provided only one opportunity for compliance of show cause notice. He further contended that time given for compliance was inadequate. He requested to restore the case to Ld. Assessing Officer for de-novo assessment while assuring us that the assessee will cooperate with the Ld. AO in making compliances at the time of de-novo assessment. On the other hand Ld. DR supported the orders of the lower authorities. He contended that adequate opportunity was provided to the assessee by Ld. CIT(A), which the assessee failed to avail.

264 of I.T. Act); rectification proceedings (u/s 154 of I.T. Act); u/s 153A of I.T.

Act ; etc. the fact that Revenue has no right of appeal against the order of Assessing Officer implies that the matter attains, in a way, limited finality if the assessee is able to explain his case at the first stage, i.e. at the stage of Assessing Officer, to the satisfaction of the Assessing Officer. That is why it is of utmost importance that the assessee gets proper and reasonable opportunity at the first stage (i.e. at the stage of Assessing Officer) so that he has the chance to have the benefit of limited finality at first stage; if he is able to explain the matter to the satisfaction of the Assessing Officer at that stage. If the Assessing Officer takes an adverse view against the assessee without giving him proper and reasonable opportunity, the assessee may (or may not, but even assuming that he does) get relief at the stage(s) of proceedings before Commissioner of Income Tax (Appeals) / Income Tax Appellate Tribunal / High Court / Supreme Court ; but even then the fact that Revenue has right to appeal against orders of Ld. CIT(A) / ITAT / HC and moreover, the fact that Revenue also has right to move special leave petition before Hon’ble Supreme Court implies that there is likelihood of the assessee being unjustly and unfairly denied the chance to obtain the benefit of limited finality at the first stage. Thus , failure of the Assessing Officer to provide proper and reasonable opportunity at the first stage results in the assessee being unjustly and unfairly denied the chance to obtain benefit of limited finality at first stage. Thus, even if the assessee is later provided 4 FIT For PUBLICATION Sd/- (AM) Sd/- (JM) sufficient opportunity at appellate proceedings and even if he gets relief from higher authorities on merits of the case, it cannot be denied that the assessee was unjustly and unfairly denied the chance he had to obtain benefit of limited finality at first stage, had the Assessing Officer provided proper and reasonable opportunity. It is of utmost importance that the assessee gets proper and reasonable opportunity at the first stage of proceedings before Assessing Officer to play his best hand, so to say; so that he has a chance to obtain the benefit of limited finality at first stage. If the assessee is unjustly denied the chance he has to obtain the benefit of limited finality at first stage ; he not only has to take part in proceedings before Ld. CIT(A) / ITAT/HC/SC and bear related expenses ; but he also has to go through an agonizing period of uncertainty of tax dispute during which he may, in addition, be also asked by Revenue, to add to his agony, to make part/full payment of tax. When the assessee is burdened with a likelihood of this avoidable hardship unjustly and unfairly because he was not provided reasonable and proper opportunity by the Assessing Officer at the first stage; the assessee has the right to claim such opportunity at a later stage, irrespective of whether or not the assessee was later provided adequate opportunity at appellate stage. Right of proper and reasonable opportunity at first stage is sacrosanct, because it is only at that stage that the assessee has the chance to obtain the benefit of limited finality. If this right was denied by the Assessing Officer, the assessee can justifiably claim this right at a later stage. For this proposition, we 5 FIT For PUBLICATION Sd/- (AM) Sd/- (JM) take support from the decision of Hon’ble Apex Court in the case of Tin Box Company vs. CIT 249 ITR 216 (SC). Hon’ble Supreme Court has held in the case of Tin Box Company vs. CIT (supra) as under :-

“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.”

Order pronounced in open court on 9th August, 2016.