BOBBY RAY,NAINITAL vs. ITO, NAINITAL

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ITA 5186/DEL/2013Status: DisposedITAT Delhi12 October 2015AY 2009-105 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal noted that the AO framed the assessment ex-parte under section 144 and the CIT(A) sustained the addition without appreciating the facts correctly. The department had not rebutted the assessee's contention that the FDRs were made from the sale proceeds of property considered in the preceding assessment year 2008-09. However, relevant facts, such as the amount received from the sale proceeds in assessment year 2008-09, were not available on record. Citing the maxim 'audi alteram partem' (nobody should be condemned unheard), the Tribunal set aside the issue to the file of the AO for fresh adjudication after providing a due and reasonable opportunity of being heard to the assessee. The assessee was also directed to cooperate and not seek undue adjournments. The appeal was allowed for statistical purposes.

What were the facts?

The assessee, Bobby Ray, is appealing an order dated June 17, 2013, by the CIT(A)-II, Dehradun, which confirmed an addition of Rs. 11,00,000. The Assessing Officer (AO) initiated proceedings under sections 142(1) and 148 of the Income Tax Act, 1961, after gathering information from the Sub-Registrar, Nainital, indicating the assessee deals in immovable property. Due to the assessee seeking adjournments, the AO concluded the assessee had no explanation for the source of income or the investment in FDRs totaling Rs. 11,00,000 in State Bank of India, Bhowali. Consequently, the AO made an addition of Rs. 11,00,000 under section 144/148, passing an ex-parte assessment order on April 20, 2012. The CIT(A) upheld this addition, noting the assessee did not avail the opportunity to assist the AO, leaving the source of FDRs unexplained.

What were the issues?

1. Whether the Learned Commissioner of Income Tax (Appeals) erred in confirming the addition of Rs. 11,00,000, contrary to the facts and principles of natural justice, by not providing a proper opportunity of being heard to the assessee (mixed question of law and fact). Assessee's contention: The AO and CIT(A) failed to provide a proper opportunity of being heard to the assessee, making the addition unjustified. The assessee requested the issue be remanded back to the AO. Revenue's contention: The assessee did not cooperate, and therefore, the addition was rightly made by the AO as the assessee had no explanation for the FDR deposits.

Which sections of the Income-tax Act were involved?

Section 142(1),Section 148,Section 144

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘A’, NEW DELHI

Hearing: 09.10.2015Pronounced: 12.10.2015

ORDER PER N.K. SAINI, A.M. This is an appeal by the assessee against the order dated 17.06.2013 of the ld. CIT(A)-II, Dehradun.

2.

Following grounds have been raised in this appeal:

1.

“I. On the fact and circumstances of the case and in law the Learned Commissioner of Income Tax (Appeals), erred in confirming the addition of Rs. 11,00,000.00. II. The Appellant respectfully, submits as under:- 1. The Learned Commissioner of Income Tax Appeals (CIT-A) has without going into the facts 2 Bobby Ray has sustained addition aggregating to Rs. 11,00,000.00. 2. The ld. CIT-A has sustained the addition ignoring the fact that the appellant has no source of receipts except advance for sale of land and sale proceeds of land. 3. That the order is bad in law, not in agreement with facts and is against the principles of natural justice. III. The Appellant craves leave to add, alter, amend, and/or to modify any Grounds of Appeal

, if necessary.”

3. Facts of the case in brief are that the AO gathered the information from Sub-Registrar, Nainital that the assessee deals in sale of immovable properties which were inherited by him in Vill.- Kahalquira Patti Bhowali which is well within the limits of Municipal Corporation, Bhowali. The AO issued the notices u/s 142(1) and 148 of the Income Tax Act, 1961 (hereinafter referred to as the Act) on 18.08.2011. As the assessee sought adjournment on the various dates, the AO therefore was of the view that the assessee had nothing in his coffer as an explanation about the source of income as well as the investment in the shape of FDRs amounting to Rs. 11,00,000/- in State Bank of India, Bhowali. He made the addition of Rs. 11,00,000/- by 3 Bobby Ray passing the assessment order dated 20.04.2012 u/s 144/148 of the Act.

4.

Being aggrieved the assessee carried the matter to the ld. CIT(A) who confirmed the action of the AO by observing as under: “4.3 The facts have been considered. A very specific opportunity was provided to the Appellant to assist the AO in preparing his report (vide letter dated 13.02.2013 a part of which has been extracted in para 4 above). This opportunity was not availed and the source of the FDRs remains a mystery. In view of this fact the action of Ld. AO is upheld and all the grounds of appeal

are dismissed.”

5. Now the assessee is in appeal. The ld. Counsel for the assessee submitted that neither the AO nor the ld. CIT(A) had given proper opportunity of being heard to the assessee. Therefore, the addition made by the AO and sustained by the ld. CIT(A) without allowing the proper opportunity of being heard to the assessee was not justified. He requested to remand the issue back to the file of the AO.

6. In his rival submissions the ld. DR strongly supported the orders of the authorities below and further submitted that the assessee did not cooperate, therefore, the addition was rightly made by the AO as the assessee was not having any 4 Bobby Ray explanation about the deposit in the FDRs account maintained with State Bank of India, Bhowali.

7. We have considered the submissions of both the parties and carefully gone through the material available on the record. In the present case, it is noticed that the AO framed the assessment ex-parte u/s 144 of the Act and the ld. CIT(A) also sustained the addition without appreciating the fact in right prospective. In the present case, the department had not rebutted this contention of the assessee that the FDRs had been made out of the sale proceeds of the property already considered in the preceding assessment year 2008-09. However, the relevant facts are not available on the record, particularly it is not clear that how much amount the assessee received from sale proceeds of the property in the preceding year i.e. assessment year 2008-09. It is well settled that nobody should be condemned unheard as per the maxim “audi alteram partem”. We, therefore, by considering the totality of the facts deem it appropriate to set aside this issue back to the file of the AO to be adjudicated afresh in accordance with law after providing due and reasonable opportunity of being heard to the assessee. We also direct the assessee to cooperate and not to seek undue and unwarranted adjournment.

5 Bobby Ray 8. In the result appeal of the assessee is allowed for statistical purposes. (Order Pronounced in the Court on 12/10/2015).

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