2020 (9) TMI 1008 - AT - Income Tax

Tribunal overturns tax assessment, emphasizes Assessee's right to substantiate claims. Fresh assessment ordered for compliance.

M/s Deluxe Alloys Pvt. Ltd. Versus DCIT, Circle 21 (1), New Delhi

The Tribunal set aside the assessment order under section 144 of the Income Tax Act for the assessment year 2013-14, emphasizing the importance of ... Best judgment u/s 144 - withdrawal of additional grounds of appeal - proof of service of notice issued u/s 143(2) - non-production of assessment records - HELD THAT:- There is no doubt that the AO has passed the assessment order u/s. 144 and the Ld. CIT(A) has also passed the impugned order exparte. As per record, the present appeal came up for hearing before the Bench on 07.12.2018 and adjourned many-times. On 27.11.2019 the Bench has directed the Departmental Representative to produce the records of assessment, but the Department did not produce the same. On 15.06.2020, Ld. DR also sought time to file the proof of service of notice issued u/s. 143(2) of the Act and case was adjourned for 30.07.2020. But again on 30.07.2020 DR did not produce the assessment records to prove the service of notice issued u/s. 143(2) of the Act and the case was adjourned for today i.e. 16.09.2020. Today also the record is not available. DR made a statement that, if the Counsel for the assessee withdraw the additional grounds of appeal filed vide letter dated 20.02.2020, then the issues involved in the present appeal may be set aside to the AO to decide the same afresh, as per law, after giving opportunity to the assessee. Assessee agreed to the same and filed a letter requesting for withdrawal of the additional grounds of appeal raised vide its letter dated 20.02.2020. Keeping in view the statement made by the Ld. Sr. DR for setting aside the issues in dispute to the AO and in view of the letter dated 16.09.2020 filed for the assessee for withdrawal of additional grounds of appeal and in view of the non-production of assessment records especially proof of service of notice issued u/s 143(2) of the Act by the Department, in our considered opinion, this matter requires thorough investigation at the level of the Assessing Officer. We set aside this matter to the AO with the directions to make the assessment, as per law.Assessee’s Appeal is allowed for statistical purposes. Issues:1. Validity of assessment order under section 144 of the Income Tax Act.2. Compliance with the principle of natural justice in assessment proceedings.3. Disallowance of specific additions made by the Assessing Officer.4. Request for additional grounds of appeal related to the service of notice under section 143(2) of the Income Tax Act.Issue 1: Validity of assessment order under section 144 of the Income Tax Act:The appeal challenged the order passed by the Ld. CIT(A)-28, New Delhi regarding the assessment year 2013-14. The Assessee contended that the assessment under section 144 was invalid due to various reasons, including lack of natural justice and errors in confirming certain additions made by the Assessing Officer. The Assessee also raised concerns about the best judgment assessment and the denial of adjustments in the assessment order. The Tribunal acknowledged the non-cooperation of the Assessee during the assessment proceedings but decided to set aside the matter to the Assessing Officer for a fresh assessment in accordance with the law. The Tribunal emphasized the importance of providing the Assessee with a full opportunity to substantiate claims during the reassessment process.Issue 2: Compliance with the principle of natural justice in assessment proceedings:The Assessee argued that the assessment order was invalid due to a lack of compliance with the principle of natural justice, specifically related to the service of notice under section 143(2) of the Income Tax Act. The Assessee contended that the notice was not served within the stipulated period, rendering the assessment unlawful. The Tribunal noted the withdrawal of additional grounds of appeal by the Assessee and decided to send the issues back to the Assessing Officer for fresh adjudication, emphasizing the need for cooperation from both parties in the assessment process.Issue 3: Disallowance of specific additions made by the Assessing Officer:The Assessee challenged specific additions made by the Assessing Officer, including disallowances related to gross profit rates, adjustments against capital gains and other sources, and indexed cost of acquisition. The Tribunal recognized the contentions raised by the Assessee but opted to set aside the matter for reassessment by the Assessing Officer to ensure a fair and thorough investigation into the disputed additions.Issue 4: Request for additional grounds of appeal related to the service of notice under section 143(2) of the Income Tax Act:The Assessee sought permission to raise additional grounds of appeal concerning the service of notice under section 143(2) of the Income Tax Act. Despite the non-cooperation of the Assessee during the assessment proceedings, the Tribunal decided to send the issues back to the Assessing Officer for fresh adjudication, emphasizing the need for adherence to legal procedures and principles of natural justice in the assessment process.In conclusion, the Tribunal allowed the Assessee's appeal for statistical purposes and set aside the matter to the Assessing Officer for a fresh assessment, highlighting the importance of providing full opportunities for the Assessee to present their case and cooperate in the reassessment process.