RAJIV YASHWANT BHALE,,PUNE vs. INCOME TAX OFFICER,, PUNE

The appeal of assessee and Stay Application were heard together.

The assessee in quantum appeal is aggrieved by the ex parte order passed by the CIT(A) in not allowing sufficient reasonable opportunity of hearing to the assessee.

The first ground of appeal raised by the assessee reads as under:- 1. The learned CIT – 11, Pune erred in law and on facts in dismissing the appeal of the appellant without giving a sufficient reasonable opportunity of being heard to the appellant. The learned CIT(A) ought to have appreciated the appellant’s dire and precarious financial conditions, events of auction of offices, etc. due to which, appellant’s ability to provide explanations was severely jeopardized. The learned CIT(A) erred in not assuming a reasonable / practical approach of the situation.

Briefly, in the facts of the case, the assessee had furnished return of income declaring total income at Nil. The assessee had also claimed carry forward of losses of ₹ 2.40 crores in the return of income. The case of assessee was selected for scrutiny. However, because want of proper compliance before the Assessing Officer, addition of ₹ 29,52,80,184/- was made on account of unexplained cash credits.

The CIT(A) issued three notices of hearing to the assessee. However, none appeared on behalf of the assessee. The CIT(A) therefore, upheld the addition in the hands of assessee.

The case of assessee before us is that there was search on the assessee and in respect of block period, a petition was filed before the Settlement Commission, where tax liability of ₹ 11-12 crores was determined. The assessee could not pay the installments granted to it, consequent to which all the bank accounts of assessee and all the properties were attached. The residential house of assessee was auctioned for recovery of demand. There was turmoil in the affairs of assessee and the assessee was also going through extreme financial crisis. Consequently, there was non-appearance before the Assessing Officer and CIT(A). The assessee in this connection has made a plea that reasonable opportunity of hearing may be allowed to the assessee.

We find merit in the claim of assessee. We have gone through the records and necessary information filed by the assessee during stay proceedings. The events of auction of residential premises stands established. All the bank accounts of assessee have been attached and the attachment orders continue to be in force, despite the fact the entire demand payable by the assessee was already adjusted against the sale proceeds of the residential house of the assessee. All these events contributed for the failure of the assessee for attending at the given scheduled dates by the Assessing Officer / CIT. We find the explanations of the assessee are not contradicted by the Revenue. In the entirety of the above said facts and circumstances, we hold that the assessee was prevented by sufficient cause from non-appearance before both the Assessing Officer and CIT(A). It is a trite law that principles of natural justice demands that no person should be condemned unheard. Accordingly, we remit the matter back to the file of Assessing Officer for carrying out de novo assessment after affording reasonable opportunity of hearing to the assessee. The assessee is also directed to cooperate and appear before the Assessing Officer and furnish necessary information. Thus,

In view of our decision of setting aside the matter to the file of Assessing Officer, the demand becomes uncollectable. Consequently, the Stay Application moved by the assessee becomes academic.

In the result, appeal of assessee and Stay Application are disposed of as indicated above.