2017 (2) TMI 1470 - AT - Income Tax

Tax Tribunal overturns Commissioner's order, citing lack of specificity and emphasizing natural justice

The Tribunal set aside the Commissioner of Income Tax's order under section 263 of the Income Tax Act, finding it non-speaking and lacking specificity on ... Revision u/s 263 - assessee submitted that a reasonable and proper opportunity of being heard was not provided by the ld. CIT - HELD THAT:- CIT in the body of the impugned order categorically stated that the assessment order passed by the Assistant Commissioner, Circle-2, Meerut appears to have been passed without proper investigation and inquiry from that observation. From the said observation of the ld. CIT, it is clear that he was not sure how and in what manner the assessment order passed was without investigation and inquiry done by the AO, the word “it appears” used by him shows that he was not sure. CIT stated that Sh. Rajiv Jain, CA attended on behalf of the assessee with whom the issues were discussed. Nowhere it is stated that what were the submission of the assessee and why those were not accepted. CIT admitted that the assessee had furnished the details relating to admissibility of expenses on foreign tour, repairs & maintenance, account of vehicles but no findings have been given on the said details, neither any remand report was sought, it is also not directed which inquiry was to be made by the AO. He simply directed the AO to examine the issue again and to pass a fresh order. In our opinion, the order passed by the ld. CIT is a non-speaking order. We, therefore, deem it appropriate to set aside the impugned order to the file of the ld. CIT for deciding the issue afresh in accordance with law - Appeal of the assessee is allowed for statistical purposes. Issues: Proper opportunity of being heard not provided by CIT under section 263 of the Income Tax Act, 1961.In this case, the assessee filed its return of income, which was later scrutinized by the Assessing Officer (AO) resulting in an addition of certain expenses. Subsequently, the Commissioner of Income Tax (CIT) invoked section 263 of the Income Tax Act, deeming the assessment order erroneous and prejudicial to the revenue's interest. The CIT directed the AO to reexamine the issue. The assessee appealed, arguing that proper opportunity was not provided during the proceedings. The Tribunal noted that the CIT's order lacked specificity on why the assessment order was erroneous and failed to provide adequate reasoning. The Tribunal found the CIT's order to be non-speaking and set it aside, instructing a fresh decision with proper opportunity for the assessee to be heard.The main issue in this judgment revolved around the CIT's failure to provide a proper opportunity for the assessee to be heard during the proceedings under section 263 of the Income Tax Act. The Tribunal emphasized the importance of providing a reasonable opportunity for the assessee to present their case and be heard before passing any order that could impact their tax liabilities. The Tribunal highlighted that the CIT's order lacked clarity and specificity on the reasons for deeming the assessment order as erroneous, leading to the decision to set aside the order and direct a fresh decision with proper opportunity for the assessee. This case underscores the fundamental principle of natural justice, ensuring fair treatment and procedural fairness in tax proceedings.