SHRI ABDUL AZIZ DAR,SRINAGAR vs. INCOME TAX OFFICER WARD-1, SRINAGAR

At the outset, the Ld. Counsel submitted that the Ld. CIT(A)/NFAC has grossly erred in confirming the addition without going into merits of the case and that the said addition was made by the AO in an ex parte assessment order passed u/s 144 of the act in violation of principles of Natural Justice. He further submitted that the worthy CIT(A) has grossly erred in confirming the same without appreciating the facts on merits of the case that the assesse was running a Brick kiln business under a Government License and the disputed amount of cash Rs. 61,96,090/- was deposited in the bank account out of the sale proceeds of Brick Kiln business. He contended that neither the AO nor the Ld. CIT(A) has addressed the relevant matter regarding appellants claim of source being the cash sale proceeds of Brocks being deposited in the current account are nothing but business receipts which goes to the root of the matter.

Per contra, the Ld DR although supported the impugned order, however, he has no objection to the request of the appellant in view of principles of natural justice.

Heard rival contentions, perused the material on record, impugned order, written submission and case law cited before us. Admittedly, the revenue authorities have passed orders ex parte qua the assesse. The Ld. AR argued that the worthy CIT(A) decided the case exparte without granting opportunity of the hearing against the ex parte assessment order passed under section 144/147 of the act and that while deciding the case ex-parte, the Ld. CIT(A) has not appreciated the facts of the case and arbitrary confirmed the assessment order passed u/s 144 r.w.s. 147 of the I.T. Act. It is seen that neither the AO nor the Ld. CIT(A) has addressed the relevant issue on merits of the case that the assesse was running a Brick kiln business under a Government License and the disputed amount of cash Rs. 61,96,090/- was deposited in the current bank account out of the sale proceeds of Brick Kiln business. It is seen that neither the AO nor the Ld. CIT(A) has addressed the relevant matter regarding appellants claim of source of cash deposit in its current bank account was being the business receipts from the cash sale proceeds of Bricks. In support, the Ld. AR filed statement of account with documentary evidence to establish its claim as an additional evidence under Rule 29 of the ITAT Rules 1963 (APB, Pgs. 1- 40) which goes to the root of the matter and hence, admitted on record.

In view of the principles of natural justice, the authorities below ought to have disproved the claim of the assesse by way of rebutting its contention with support of corroborative documentary evidences on record after granting an adequate opportunity of being heard. The Hon’ble Supreme Court of India in the case of Tin Box Company vs. CIT reported in 249 ITR 216 in which their Lordships of Supreme Court of India observed as under:

The Hon’ble Delhi High Court in the case of “Bharat Aluminium Company Ltd. vs. Union of India”, (Supra) has held as under:

This Court is further of the view that a quasi-judicial body must normally grant a personal hearing as no assessee or litigant should get a feeling that he never got an opportunity or was deprived of an opportunity to clarify the doubts of the assessing officer/decision maker. After all confidence and faith of the public in the justness of the decision making process which has serious civil consequences is very important and that too in an authority/forum that is the first point of contact between the assessee and the Income-tax Department. The identity of the assessing officer can be hidden/protected while granting personal hearing by either creating a blank screen or by decreasing the pixel/density/resolution.

Consequently, this Court is of the view that the word "may" in Section 144B(viii) should be read as "must" or "shall" and requirement of giving an assessee a reasonable opportunity of personal hearing is mandatory. THE CLASSIFICATION MADE BY THE RESPONDENTS/REVENUE BY WAY OF A CIRCULAR DATED 23RD NOVEMBER, 2020 IS NOT LEGALLY SUSTAINABLE. AN ASSESSEE HAS A VESTED RIGHT TO PERSONAL HEARING AND THE SAME HAS TO BE GIVEN, IF AN ASSESSEE ASKS FOR IT. 23. The argument of the respondent/Revenue that personal hearing would be allowed only in such cases which involve disputed questions of fact is untenable as cases involving issues of law would also require a personal hearing. This Court is of the view that the classification made by the respondents/Revenue by way of the Circular dated 23rd November, 2020 is not legally sustainable as the classification between fact and law is not founded on intelligible differentia and the said differentia has no rational relation to the object sought to be achieved by Section 144B of the Act. 24. Also, if the argument of the respondent/Revenue is accepted, then this Court while hearing an appeal under section 260A (which only involves a substantial question of law)

In the instant case, the assessee could have placed evidences either before the AO or the first appellate authority, if he has been provided adequate opportunity of being heard. The argument of the Ld. DR that personal hearing would be allowed only in such cases which involve disputed questions of fact is untenable as cases involving issues of law would also require a personal hearing. In our view, the classification made by the Revenue by way of the Circular dated 23rd November, 2020 is not legally sustainable as the classification between fact and law is not founded on intelligible differentia and the said differentia has no rational relation to the object sought to be achieved by Section 144B of the Act.

In view of the principles of natural justice, we consider it deem fit to restore back the matter to the file of the Ld. AO to pass de novo assessment after considering the written submission and evidences filed on record and may be filed before him during the fresh Assessment Proceedings after granting sufficient opportunity of being heard to the assesse with a direction that the AO shall issue a Show Cause Notice and thereafter pass a reasoned order in accordance with law.

Accordingly, Assessment order set aside and matter remanded to assessing authority to pass de novo assessment as per law.

In the result, the appeal of the assesse is allowed for statistical purpose.