2021 (3) TMI 4 - AT - Income Tax

Appeal dismissed due to non-appearance during pandemic, remanded for fair hearing, errors found, section 56(2)(vii)(b) not sustainable.

Mohd. Rizwan Khan Versus Income Tax Officer, Sultanpur

The appeal was dismissed by the CIT(A) due to non-appearance during the COVID-19 pandemic. The Tribunal remanded the matter back to the CIT(A) for a fresh ... Addition on protective addition - CIT(A) has dismissed the appeal of the assessee by exparte order - CIT(A) has confirmed the said addition without even considering the status and outcome of the substantive addition made by the Assessing Officer - HELD THAT:- Without knowing the status of the substantive addition made by the Assessing Officer the protective addition cannot be decided conclusively. The impugned order has been passed by the ld. CIT(A) due to non appearance of the assessee but the situation prevailing at that point of time when the hearing were fixed by the ld. CIT(A) was certainly inordinate situation of COVID-19, Pandemic and therefore, the assessee deserves one more opportunity of hearing to present his case. When the ld. CIT(A) has passed the impugned order without even considering the fate of substantive addition and the assessee has already explained the sufficient reason for not attending the proceeding before the ld. CIT(A) the impugned order of the ld. CIT(A) is set aside and matter is remanded to the record of the ld. CIT(A) for deciding the same afresh after giving one more opportunity of hearing to the assessee. Needless to say that the protective addition is dependent on the outcome of the case where the substantive addition was made by the Assessing Officer. Appeal of the assessee is allowed for statistical purposes. Issues:1. Dismissal of appeal by CIT(A) due to non-appearance during COVID-19 pandemic.2. Validity of notice under section 143(2) issued through CASS methodology.3. Decision on grounds of appeal in ex-parte order.4. Correctness of additions made by authorities.5. Interpretation of section 56(2)(vii)(b) regarding stamp duty valuation.6. Assessment order validity under section 143(3).7. Justification of specific additions made by assessing officer.8. Observations made by CIT(A) regarding grounds of appeal.9. Compliance with principles of natural justice.1. Dismissal of Appeal During COVID-19 Pandemic:The appeal was dismissed by CIT(A) due to non-appearance during the COVID-19 pandemic. The Tribunal noted that the situation was extraordinary, and the assessee was not given a fair opportunity to be heard. The matter was remanded back to CIT(A) for a fresh decision after providing the assessee with another hearing opportunity.2. Validity of Notice under Section 143(2):The appellant argued that the notice under section 143(2) issued through CASS methodology was invalid as it did not satisfy the requisites of the law. The Tribunal did not delve into this issue as the appeal was allowed on other grounds.3. Decision on Grounds of Appeal in Ex-parte Order:The Tribunal highlighted that even in an ex-parte order, the CIT(A) should have decided the grounds of appeal on merits based on available material. This was considered a procedural error.4. Correctness of Additions Made by Authorities:Various additions made by the authorities were challenged by the appellant. The Tribunal found errors in the assessment process and the basis for these additions, leading to the appeal being allowed for statistical purposes.5. Interpretation of Section 56(2)(vii)(b) on Stamp Duty Valuation:The Tribunal analyzed the application of section 56(2)(vii)(b) concerning the difference between stamp value and actual purchase consideration. It was found that the provisions were incorrectly applied, leading to the addition being deemed unsustainable.6. Assessment Order Validity under Section 143(3):The appellant argued that the assessment order passed under section 143(3) was invalid due to the issuance of a notice under section 144. This issue was not directly addressed in the final decision of the Tribunal.7. Justification of Specific Additions Made by Assessing Officer:The assessing officer's specific additions were contested by the appellant, questioning the legality and basis of these additions. The Tribunal found discrepancies in the assessment process, leading to the appeal being allowed.8. Observations by CIT(A) Regarding Grounds of Appeal:The CIT(A) made observations regarding the grounds of appeal presented by the appellant. However, these observations did not impact the final decision of the Tribunal.9. Compliance with Principles of Natural Justice:The overall order was challenged on the grounds of being contrary to law, facts, and principles of natural justice. The Tribunal's decision to remand the matter back to CIT(A) for a fresh decision addressed this concern by providing the assessee with another opportunity to present their case.