2019 (2) TMI 1900 - AT - Income Tax

Tribunal overturns CIT(A) orders, emphasizes assessee's right to fair hearing and evidence presentation.

Smt. Pramila Jayaram Sharma Versus The Assistant Commissioner of Income Tax, Circle-9, Pune.

Smt. Pramila Jayaram Sharma Versus The Assistant Commissioner of Income Tax, Circle-9, Pune. - TMI Issues:1. Dismissal of appeal by Ld. CIT(A) confirming additions made by A.O.2. Disallowance under Section 14A of the Act despite no exempt income earned.3. Addition made under Section 41(1) of the Act.4. Addition made based on information from creditors under Section 133(6) of the Act.Issue 1: The appeal by the assessee challenged the dismissal of the appeal by Ld. CIT(A) confirming the additions made by the Assessing Officer. The Ld. CIT(A) was criticized for not applying her mind to the facts of the case before dismissing the appeal. The Tribunal found that the order passed by the Ld. CIT(A) was ex-parte as the assessee had not complied with the notices issued, resulting in the rights and liabilities of the assessee not being adjudicated upon in the presence of the assessee. The Tribunal set aside the order and directed the matter to be restored back to the file of the Ld. CIT(A) for adjudication on merits after providing a reasonable opportunity of hearing to the assessee.Issue 2: The Ld. CIT(A) confirmed a disallowance made by the A.O. invoking Section 14A of the Act, despite no exempt income being earned by the assessee. The assessee argued for the deletion of the disallowance. However, the Tribunal found that the assessee did not file any submission to controvert the findings of the Assessing Officer. The Tribunal decided to set aside the order of the Ld. CIT(A) and restore the issue back to the file of the Ld. CIT(A) for adjudication on merits after providing a reasonable opportunity of hearing to the assessee.Issue 3: The addition of Rs. 15,66,027 was made under Section 41(1) of the Act. The AO observed that certain creditors' outstanding balances remained the same over two financial years. The assessee submitted that these balances were paid in subsequent years, providing ledger extracts and details of the creditors. The AO issued notices under Section 133(6) of the Act to verify the transactions with the creditors. The Ld. CIT(A) observed that the assessee did not file any submission to counter the AO's findings. The Tribunal set aside the Ld. CIT(A)'s order and directed the issue to be restored back for adjudication on merits, with the assessee instructed to appear with relevant documents.Issue 4: The addition made based on information from creditors under Section 133(6) of the Act was also challenged. The Tribunal found discrepancies in the information provided by the creditors and directed the issue to be remanded back to the Ld. CIT(A) for adjudication on merits after providing a reasonable opportunity of hearing to the assessee. The assessee was instructed to appear with relevant documents and evidences to support her case.