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.

The Tribunal set aside the orders of the Ld. CIT(A) in all issues and directed the matters to be restored for adjudication on merits after providing a ... Addition u/s. 41(1) - cessation of liability - AO observed from the schedule of sundry creditors that there were creditors whose outstanding balances as on 31/03/2012 & 31/03/2013 had remained the same - HELD THAT:- CIT(Appeals) observed that the assessee has not filed single submission to controvert the findings of the AO. In the statement of facts, the assessee has filed only the order of Assessing Officer without any new supporting documents to represent her case. This fact shows that the matter needs to be remanded to the file of Ld. CIT(Appeals) for adjudication on merits. Accordingly, in the interest of justice, we set aside the order of Ld. CIT(Appeals) and restore this issue i.e. with regard to the addition made u/s.41(1) of the Act back to the file of the Ld. CIT(Appeals) to adjudicate on merits after providing reasonable opportunity of hearing to the assessee. At the same time, we direct the assessee to appear before the Ld. CIT(Appeals) with relevant documents and evidences in support of her case and to represent the case on merits, immediately on receipt of this order. Any service of notice is dispensable. Appeal of the assessee partly allowed for statistical purposes. 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.