Appeal admitted despite filing delay; Tribunal emphasizes fair hearings before enhancements or disallowances.

The appeal was admitted for disposal on merits despite a delay in filing, justified by the failure to serve notices. The Tribunal set aside the CIT(A)'s enhancement of income due to lack of proper hearing opportunity and remanded the matter for a fresh decision. Adhoc disallowances made by the Assessing Officer and upheld by the CIT(A) were also set aside for lack of a reasonable opportunity for the assessee. The Tribunal stressed the necessity of fair hearings before making any enhancements or disallowances in assessments, allowing the appeal for statistical purposes.

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Issues Involved:
1. Maintainability of the appeal due to delay in filing.
2. Validity of the enhancement of income by the CIT(A).
3. Adhoc disallowances made by the Assessing Officer and upheld by the CIT(A).

Issue 1: Maintainability of the appeal due to delay in filing:
The appeal by the assessee was challenged for being filed after a delay of more than 2 ½ years from the date of the CIT(A) order. The Department contended that the appeal was not maintainable as it was barred by limitation. However, the assessee explained the cause of delay, stating that they were not served with notices issued by the CIT(A) and the impugned order. The CIT(A) had passed an exparte order confirming adhoc additions and enhancing the income without serving a show cause notice. The Tribunal found that the delay in filing the appeal was justified due to the failure in serving notices and providing an opportunity for hearing. Consequently, the appeal was admitted for disposal on merits.

Issue 2: Validity of the enhancement of income by the CIT(A):
The CIT(A) enhanced the assessment from &8377; 3,37,972 to &8377; 50 lac without serving the show cause notice on the assessee. The Tribunal observed that the enhancement was made without providing an effective opportunity of hearing to the assessee. As the show cause notice for enhancement was returned unserved, the Tribunal set aside the impugned order and remanded the matter back to the CIT(A) for a fresh decision after granting the assessee another opportunity of hearing. The Tribunal emphasized the importance of providing a fair hearing before making any enhancements to the assessment.

Issue 3: Adhoc disallowances made by the Assessing Officer and upheld by the CIT(A):
The assessing officer had made adhoc disallowances on various expenses, which were confirmed by the CIT(A). The Tribunal noted that the CIT(A) not only upheld the adhoc disallowances but also enhanced the income without a proper basis. The Tribunal found that the CIT(A) failed to provide the assessee with a reasonable opportunity before enhancing the assessment. Therefore, the impugned order was set aside, and the matter was remanded back to the CIT(A) for a fresh decision after granting the assessee another opportunity of hearing. The Tribunal directed the CIT(A) to reconsider the adhoc disallowances and the enhanced income in light of providing a fair hearing to the assessee.

In conclusion, the Tribunal allowed the appeal for statistical purposes and emphasized the importance of providing a fair opportunity of hearing before making any enhancements or adhoc disallowances in assessments.

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