ITAT emphasizes due process in tax assessment, remits case for fair hearing

The ITAT remitted the case back to the CIT(A) for reconsideration due to the procedural lapse of not providing a written notice to the assessee before enhancing income. The ITAT directed the CIT(A) to issue a notice to the assessee, allowing them to present objections. Emphasizing the importance of due process, the ITAT highlighted the need for the assessee to have a fair opportunity to be heard. The appeal was allowed for statistical purposes, emphasizing the significance of ensuring fairness in tax assessment proceedings.

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Issues:
Assessment of income based on Form-26AS, enhancement of income without notice, rejection of accounts, reconciliation of turnover, consideration of previous year's income, failure to consider grounds of appeal.

Analysis:
The appeal concerned the assessment year 2016-17 where the Assessing Officer (AO) noted a variance between the total receipts offered by the assessee and those in Form-26AS. The AO considered the turnover per Form-26AS as gross receipts and estimated net profit at 8% for taxation. The assessee appealed to the CIT(A) who increased the income without prior notice to the assessee. The grounds of appeal included errors in law and facts, lack of notice, rejection of accounts, failure to consider reconciliations, and the impact of the previous year's income on the current assessment.

During the hearing, it was revealed that the CIT(A) did not provide written notice of the income enhancement to the assessee, which was acknowledged by the Departmental Representative (DR) as well. Considering this procedural lapse, the ITAT decided to remit the issue back to the CIT(A) for reconsideration in compliance with the law. The ITAT directed the CIT(A) to issue a written notice to the assessee if income enhancement was still deemed necessary, allowing the assessee to present objections in writing. The ITAT emphasized the importance of providing a fair opportunity for the assessee to be heard in such proceedings.

Ultimately, the ITAT allowed the appeal of the assessee for statistical purposes, highlighting the procedural irregularity in the CIT(A)'s failure to provide a written notice before enhancing the income. The judgment underscored the significance of adhering to due process and ensuring that the assessee is afforded a fair opportunity to present their case and objections in tax assessment proceedings.

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