2021 (2) TMI 572 - AT - Income Tax

ITAT Mumbai Rules in Favor of Assessee on Income Enhancement Issue

The Appellate Tribunal ITAT Mumbai allowed all appeals filed by the assessee for Assessment Years 2009-10 to 2011-12 for statistical purposes. The ... Enhancement of income u/s 251(1)(a) by CIT-A - Enhancement of disallowance @ 100% of the alleged bogus purchases - HELD THAT:- We notice that Ld. CIT(A) has adjudicated the issue on merit and also enhanced the income without giving proper opportunity to the assessee. Ld. CIT(A) should not have enhanced the income without hearing to the assessee. Since the issue was decided ex-parte and now assessee is in appeal before us raising the grounds of appeal, therefore for the sake of natural justice, we remit the issues raised by the assessee to the file of Ld. CIT(A) to adjudicate the issue on merit as per law after giving proper opportunity of being heard to the assessee and we also direct the assessee to properly represent the case before first appellate authority. Accordingly, the grounds raised by the assessee are allowed for statistical purposes. Issues:Assessment Year 2009-10 to 2011-12 - Appeal against order of Ld. CIT(A) - Alleged bogus purchases - Enhancement of income without proper opportunity - Adjudication on merit - Natural justice - Remittance of issues to Ld. CIT(A) - Opportunity of being heard - Representation before first appellate authority - Grounds allowed for statistical purposes.Analysis:The Appellate Tribunal ITAT Mumbai heard three appeals filed by the assessee against the order of the Ld. Commissioner of Income Tax for Assessment Years 2009-10 to 2011-12. The issues raised in all the appeals were identical, so they were clubbed and disposed of by a consolidated order. The lead case was ITA No. 4816/Mum/2019 for Assessment Year 2009-10. The assessee, an individual, had filed its return of income for 2009-10, which was later reopened under section 147 of the Act based on information from the Sales Tax Department regarding accommodation entries. The Assessing Officer estimated the income at 12.5% of alleged purchases from 18 dealers. The assessee appealed before the Ld. CIT(A) who, after issuing notices and no compliance from the assessee, dismissed the appeal and enhanced the disallowance to 100% of the alleged bogus purchases.During the Tribunal's consideration of the matter, it was observed that the Ld. CIT(A) had adjudicated the issue on merit and enhanced the income without giving the assessee a proper opportunity to be heard. The Tribunal held that the Ld. CIT(A) should not have enhanced the income without hearing the assessee and remitted the issues back to the Ld. CIT(A) for adjudication on merit after providing a proper opportunity of being heard. The Tribunal directed the assessee to represent the case before the first appellate authority. Consequently, the grounds raised by the assessee were allowed for statistical purposes.The Tribunal also noted that the grounds of appeal for Assessment Years 2010-11 & 2011-12 were similar to the appeal for 2009-10. Therefore, the grounds raised in these appeals were also allowed for statistical purposes with the same direction. In the final outcome, all the appeals filed by the assessee were allowed for statistical purposes. The orders were pronounced in the open court on 04.01.2021.