SHRI. DURUDUNDESH PRAKASHAPPA WALI,BIJAPUR vs. I.T.O., BIJAPUR

Per VIJAY PAL RAO, JM:

1. ”The order of learned Commissioner of Income-Tax(Appeals), Belgaum, in so far as it against the Appellant is opposed to law, facts, equity, weight of evidence, facts and Shri Durudundesh Prakashappa Wali Page 2 of 5 circumstances of the case.

2. The assessee has also raised the additional ground which reads as under:

“In the above case, the appellant has filed FormNo.36 for the relevant assessment year. While raising the original grounds the appellant by oversight did not raise the additional grounds which are enclosed to this memo. In the circumstances, it is prayed that the additional grounds now raised may kindly be linked up with the original grounds of appeal and may kindly be admitted and disposed of on merits in the interest of justice.”

3. First we take up the additional ground filed by the assessee raising the issue of validity of assessment passed u/s 144 of the Act on the ground that the AO has passed the ex parte order without complying with the provisions of the Act and therefore the same is bad in law. Shri Durudundesh Prakashappa Wali Page 3 of 5 4. We have heard the learned AR of the assessee as well as the learned departmental representative and considered the relevant material on record. We note that that the issue of validity of ex parte assessment u/s 144 of the IT Act was also raised by the assessee before the CIT(A) as ground No.1 which has been reproduced by the CIT(A) at page 3 of the impugned order as under: “1. The Income Tax Assessment order passed u/s 144 is bad in law”

The learned AR of the assessee has submitted that the AO has not complied with the provisions of sec.144, 143 as well as 142 as the notices issued u/s 142(1) were not served on the assessee. We find that the CIT(A) while deciding the ground No.1 has found that the assessment order has been passed ex parte and the assessee did not have the opportunity to submit his say before the AO and the evidence submitted by the assessee during the appellate proceedings was not available before the AO. Accordingly, the CIT(A) issued a remand order for consideration of the evidence as well as the submissions of the assessee. The AO vide letter dated 11/11/2014 submitted its remand report. After considering the remand report, the CIT(A) has confirmed the action of the AO and dismissed the appeal of the assessee. Thus it is clear that the issue of validity of ex parte assessment was dealt with by the CIT(A) only by issuing a remand order and finally after receiving the remand report decided the appeal of the Shri Durudundesh Prakashappa Wali Page 4 of 5 assessee. Now, the learned AR has contended that the assessee has duly pointed out before the CIT(A) that the first notice issued by the AO on 12/9/2012 has been received on 19/9/2012 and thereafter the alleged further notices issued to the assessee were not received by the assessee. Thus, it is contended that without the proper services of the notice, the AO proceeded to pass an ex parte order which is not sustainable in law.

5. We find that it is a matter of fact, whether the notices issues by the AO were received or served upon the assessee. Therefore this issue can be decided only after examination of the relevant record regarding the proper service of the notices issues by the AO to the assessee. Accordingly, the additional ground raised by the assessee is set aside to the record of the AO for examination of the fact as alleged by the assessee. Even on the merits, we find that the CIT(A) has decided the appeal of the assessee by observing that the AO has not given a specific finding on examination of the evidence in the remand report. Therefore in the absence of necessary examination and verification of the record, it was not clear before the CIT(A) whether the assessee has substantiated its claim by producing the documentary evidence or not. Further from the finding of the CIT(A) it is manifest that the remand report of the AO was not proper on the issue of making an addition of Rs.99 lakhs found deposited in two bank accounts of the assessee. The assessee claimed that these deposits represent booking advances received by him from Shri Durudundesh Prakashappa Wali Page 5 of 5 the prospective buyer. However, in the absence of proper examination and verification of the record and a clear cut finding of fact, it is not possible to give a conclusive finding. Accordingly, the issue on merits is also set aside to the record of the AO for proper verification and examination of the evidence relied upon by the assessee and thereafter decide the same as per law after giving an appropriate opportunity of hearing to the assessee