Tribunal Dismisses Non-Service Issue, Allows Appeal on Capital Gain Addition

The Tribunal dismissed the issue of non-service of notice u/s. 143(2) of the Income Tax Act, 1961, as there was no statutory requirement to do so in the given scenario. However, the Tribunal allowed the appeal regarding the addition of Rs. 17,40,000/- as long term capital gain without proper opportunity of hearing. The Tribunal set aside the assessment order and directed a fresh assessment, emphasizing the importance of providing a reasonable opportunity to the assessee during assessment proceedings. The assessee agreed to produce necessary documents for reassessment, ensuring fair assessment procedures were followed.

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Issues:
1. Non-service of notice u/s. 143(2) of the Income Tax Act, 1961.
2. Addition of Rs. 17,40,000/- as long term capital gain without proper opportunity of hearing.

Issue 1: Non-service of notice u/s. 143(2)
The appeal was filed by the assessee against the order of Ld. CIT(A)-Shillong for the assessment year 2014-15, challenging the action of the AO for non-service of notice u/s. 143(2) of the Income Tax Act, 1961. The AO re-opened the assessment and issued notice u/s. 148 of the Act, which was served on the assessee. However, the assessee did not comply with the notice u/s. 148 and also did not respond to the notice u/s. 142(1) of the Act. Consequently, the AO proceeded to frame assessment u/s. 144 of the Act based on available information, as the assessee had not filed the return of income after the notice u/s. 148. The Tribunal held that the AO was justified in not issuing notice u/s. 143(2) as there was no statutory requirement to do so in this scenario. Therefore, this legal issue was dismissed.

Issue 2: Addition of Rs. 17,40,000/- as long term capital gain
The other ground of appeal by the assessee was against the addition of Rs. 17,40,000/- as long term capital gain without proper opportunity of hearing. The assessment order was passed after reopening u/s. 147 and framing the assessment u/s. 144 due to the assessee's alleged non-cooperation during the assessment proceedings. The assessee contended that due to health reasons, he could not respond to the notices u/s. 142(1) and u/s. 144. Citing the case of Tin Box Company vs. CIT, the Tribunal emphasized the importance of providing a reasonable opportunity to the assessee during assessment. As the AO framed the assessment without the assessee's participation and considering the need for the assessee to explain the deposited amount in his bank account, the Tribunal set aside the order of Ld. CIT(A) for a fresh assessment on the addition made by the AO. The assessee agreed to produce all necessary documents and submissions before the AO for the reassessment. Consequently, the appeal of the assessee was allowed for statistical purposes.

In conclusion, the Tribunal's judgment addressed the issues of non-service of notice u/s. 143(2) and the addition of long term capital gain without proper opportunity of hearing, ensuring that the principles of natural justice and fair assessment procedures were upheld throughout the legal proceedings.

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