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Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI
Before: SHRI ABY T. VARKEY & SHRI S.R.RAGHUNATHA
आदेश / O R D E R
PER ABY T. VARKEY, JM:
These are appeals preferred by the assessee’s Trust against the
common order of the Learned Commissioner of Income Tax (Appeals)-18,
(hereinafter ‘Ld.CIT(A)’) Chennai, dated 29.08.2022 for the Assessment
Years (hereinafter ‘AYs’) 2006-07 to 2008-09.
At the outset, the Ld.Counsel for the assessee, Shri S. Sridhar,
Advocate, drew our attention to Ground No.12 and contended that the
ITA Nos.854 to 856/Chny/2022 for AYs 2006-07 to 2008-09 M/s.DeenDayal Medical & Educational Trust :: 2 ::
Ld.CIT(A) erred in passing the impugned order on 29.08.2022, whereas,
he had asked the assessee to respond to his quieries on 30.08.2022.
According to him, thus there was per se violation of natural justice.
Drawing our attention to Ground No.13, the Ld.AR also brought to our
notice that the AO had also passed best judgment assessment u/s.144 of
the Income Tax Act, 1961 (hereinafter ‘the Act’), because, the Managing
Trustee of the Trust Shri T.D.Naidu was unable to produce the relevant
documents supporting the answers to the queries asked by the AO.
Moreover, according to the Ld.Counsel, the documents could not be
produced before AO because, they were in the custody of Enforcement
Directorate, CBI, etc. It was also brought to our notice that Shri
T.D.Naidu was in judicial custody. Therefore, it prevented effective
appearances/production of documents before the AO, which resulted in
him passing best judgment assessment u/s.144 of the Act. It was also
brought to our notice that this Tribunal in the case of Managing Trustee of
the assessee, Shri T.D.Naidu had remitted the assessment back to the file
of the AO in his appeals [ITA NO.1411/Chny/2017] by order dated
22.03.2018 by observing in Para No.4 as under:
The AR submitted that the assessee was in judicial custody as he could not get his bail during the appeal proceedings and was still in judicial custody till the appeal is filed before this tribunal. The CIT(A) dismissed the appeal without effective representation when the assessee was in judicial custody which was known to him. Getting an unfettered bail is the only way to effectively represent himself with free state of mind and in this case it was absent, while the CIT(A)
ITA Nos.854 to 856/Chny/2022 for AYs 2006-07 to 2008-09 M/s.DeenDayal Medical & Educational Trust :: 3 ::
dismissed the appeal without effective representation. Per contra, the DR supported the order of the CIT(A). 4. We heard the rival submissions. On the facts represented above, we deem it fit to remit the issues back to the Assessing Officer for a fresh examination. The assessee shall place all the materials in its support before the AO and comply to the AO's requirements as per law. The A O is free to conduct appropriate enquiry as deemed fit, but he shall furnish adequate opportunity to the assessee on the material etc to be used against it and decide the matter in accordance with law. 3. Thereafter, he drew our attention to another order of this Tribunal
in the assessee’s own case for AY 2010-11 in ITA No.1370 &
1391/Chny/2017 order dated 28.02.2022, wherein, the Tribunal was
pleased to remit the assessment back to the file of the AO for de novo
assessment. Therefore, he prayed that these appeals may also be
restored back to the file of the AO for de novo adjudication.
Per contra, the Ld.DR opposed the plea of the assessee and
contended that the assessee should not be given another innings before
the AO.
Having heard both the parties and after perusal of the records, we
note that the AO has passed an ex parte / best judgment assessment
u/s.144 of the Act. It is noted that the Managing Trustee of the assessee
Trust, Shri T.D.Naidu, was the key person, who was running the affairs of
the assessee Trust; and pursuant to search in the premise of the assessee
on 04.08.2011, the AO initiated proceedings u/s.153A of the Act against
the assessee, which resulted in the AO framing the assessment u/s.153A
r.w.s.144 of the Act and computed the total income at Rs.97,20,500/- for
ITA Nos.854 to 856/Chny/2022 for AYs 2006-07 to 2008-09 M/s.DeenDayal Medical & Educational Trust :: 4 ::
AY 2006-07; and likewise in other AYs 2007-08 & 2008-09. The assessee
has brought to our notice that the relevant documents pertaining to the
income/expenditure of the Trust has been taken into custody by law
enforcement agencies viz., ED, CBI, etc. and Shri T.D.Naidu was in
judicial incarceration during the assessment proceedings. Taking note of
these factual back ground, this Tribunal in the assessee’s own case for AY
2010-11 has already restored assessment back to the file of the AO as
well as that of Shri T.D.Naidu for de novo assessment. In such a
scenario, we relying on the decision of the Hon’ble Supreme Court in the
case of TIN Box Company v. CIT reported in [2001] 249 ITR 216 (SC),
wherein, the Hon’ble Supreme Court has held that if the assessee did not
get proper opportunity before the AO, then the assessment need to be
restored back to the file of the AO for de novo assessment. It would be
gainful to take note of the Hon’ble Supreme Court order which reads as
under:
It is unnecessary to go into great detail in these matters for there is a statement in the order of the Tribunal, the fact-finding authority, that reads thus :
"We will straightaway agree with the assessee's submission that the Income- tax Officer had not given to the assessee proper opportunity of being heard."
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 selling 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.
ITA Nos.854 to 856/Chny/2022 for AYs 2006-07 to 2008-09 M/s.DeenDayal Medical & Educational Trust :: 5 ::
Two questions were placed before the High Court, of which the second question is not pressed. The first question reads thus: "1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in not setting aside the assessment order in spite of a finding arrived at by it that the Income-tax Officer had not given a proper opportunity of hearing to the assessee?" 4. In our opinion, there can only be one answer to this question which is inherent in the question itself: in the negative and in favour of the asses-see. 5. The appeals are allowed. The order under challenge is set aside. The assessment order, that of the Commissioner (Appeals) and of the Tribunal are also set aside. The matter shall now be remanded to the assessing authority for fresh consideration, as aforestated. No order as to costs.
Since, we have noted that the assessee did not get proper
opportunity before the AO due to the circumstances which we have noted
(supra), we are inclined to restore the assessment for all the three years
back to the file of the AO for de novo assessment; and direct the AO to
frame it after hearing the assessee; and the assessee is at liberty to
adduce evidences in support of its claims and the AO to frame the
assessment in accordance with law.
In the result, appeals filed by the assessee for AYs 2006-07 to
2008-09 are allowed for statistical purposes.
Order pronounced on the 10th day of May, 2024, in Chennai.
Sd/- Sd/- (एस. आर. रघुनाथा) (एबी टी. वक�) (S.R.RAGHUNATHA) (ABY T. VARKEY) लेखा सद�य/ACCOUNTANT MEMBER �याियक सद�य/JUDICIAL MEMBER
ITA Nos.854 to 856/Chny/2022 for AYs 2006-07 to 2008-09 M/s.DeenDayal Medical & Educational Trust :: 6 :: चे�ई/Chennai, �दनांक/Dated: 10th May, 2024. TLN, Sr.PS
आदेश क� �ितिलिप अ�ेिषत/Copy to: 1. अपीलाथ�/Appellant 2. ��थ�/Respondent 3. आयकरआयु� (अपील)/CIT(A) 4. आयकरआयु�/CIT 5. िवभागीय�ितिनिध/DR 6. गाड�फाईल/GF