PRAFUL PANINDARE,NAVI MUMBAI vs. ITO 35(2)(5), MUMBAI

The various grounds of appeal raised by the assessee are as under : “ 1) a) The learned Commissioner of Income Tax (Appeal) has erred in confirming the order passed by the Learned Assessing Officer without considering the facts and circumstances of the case. The same be deleted.

The Learned Commissioner of Income Tax (Appeals) has also failed to consider the various submissions filed by the assessee before the Learned Assessing Officer as well as CIT(A) in regard to explanation that the transaction between the two companies are in the normal course of business. The same be considered and the addition be deleted. c) The Learned Commissioner of Income Tax (Appeals) has failed to consider the confirmations, bank statements as well as Income tax returns filed by the respective parties. d) The Learned Assessing Officer during the remand proceeding had given no opportunity of personal hearing to the assessee and passed the remand report based on documents file by the assessee before the ld.CIT(A). The Learned Assessing Officer had also not confirmed the said transactions by issuing notice U/S 133(6) of the Income Tax Act, 1961. Hence the said order passed by the Learned Commissioner of Income Tax (Anneal) is bad in law and needs to be quashed.”

The issue raised in ground No.(d) is qua not allowing any opportunity of hearing to the assessee during the remand proceedings by the AO who finalized the remand report on the basis of documents as filed by the assessee before the ld. CIT(A). The AO has also not confirmed the transactions by issuing notice under section 133(6) of the Income Tax Act, 1961 and therefore the order of the first appellate authority was bad in law and requested the bench to quash the same.

The facts of the case are that the assessee filed return of income on 15.10.2009 declaring total income of the assessee at Rs.3,28,115/-. The case of the assessee was reopened under section 147 on the basis of information received regarding cash deposit of Rs.42,34,000/- in the bank account of the assessee. Accordingly, a notice was issued to the assessee

In the appellate proceedings, the ld.CIT(A) called for the remand report from the AO by sending various documents to the AO. The ld.CIT(A) on receipt of remand report confirmed the action of the AO. Aggrieved by the order of ld. CIT(A), the assessee is in appeal before the Tribunal.

Before us, the ld.AR vehemently submitted before us that during the course of appellate proceedings, the ld.CIT(A) called for the remand report from the AO by sending various documents to the AO. The AO, thereafter prepared the remand report on the basis of documents received from the ld.CIT(A) without giving any opportunity of being heard causing grave miscarriage of justice by violating the principle of natural justice. The ld. AR prayed before the bench that the matter may be set aside to the file of AO with a direction to allow an opportunity to the assessee to represent his case before the AO and decide the case denovo as per law.

The ld. DR did not object to the plea putforth by the ld.AR.

We have heard the arguments of the parties and perused the material placed before us including the orders of authorities below. We find that the AO has prepared remand report without allowing opportunity to the assessee which was relied upon by CIT(A) while deciding the appeal of the assessee. The AO should have given opportunity to the assessee during the remand proceedings which was not given. In our opinion, the ends of justice would be met if the issue is restored back to the file of AO to decide the issue afresh as per facts on record and law after affording fair and reasonable opportunity being heard to the assessee. We also direct the assessee to co-operate in the set aside proceeding before the AO.

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