2022 (3) TMI 877 - AT - Income Tax

Tribunal emphasizes fair hearing and evidence consideration in tax assessment appeal

The Tribunal set aside the Ld. CIT(A)'s order in a case challenging an ex-parte assessment under Section 148, emphasizing the importance of a fair hearing ... Reopening of assessment u/s 147 - validity of the assessment framed in the absence of service of notice to the assessee by the AO - Addition of purchase of mutual funds and on account of interest income received by the Assessee - HELD THAT:- In the present case it is not in dispute that the AO framed the assessment ex parte u/s 144 of the Act and the assessee furnished the written submissions alongwith additional evidence before the CIT(A) who had discussed the submissions of the assessee in para 4 of the impugned order. However the Ld. CIT(A) acted upon the remand report dt. 23/12/2020 received from the A.O. but no opportunity was given to the assessee to comment upon the said report. It is also noticed that the CIT(A) neither rejected nor accepted the additional evidences furnished by the assessee first time before him. We therefore considering the totality of the facts deem it appropriate to set aside the impugned order and remand the issue back to the file of the CIT(A) to be adjudicated afresh in accordance with law after providing due and reasonable opportunity of being heard to the assessee.Appeal of the Assessee is allowed for statistical purposes. Issues:1. Validity of ex-parte assessment under Section 1482. Rejection of additional evidence by Ld. CIT(A)3. Addition of investment in mutual funds and interest incomeAnalysis:Issue 1: Validity of ex-parte assessment under Section 148The appeal challenges the ex-parte assessment framed under Section 148 without serving notice to the assessee, alleging violation of natural justice principles. The A.O. issued a notice based on information about mutual fund purchases and interest income. The assessee contended that incorrect addresses led to non-receipt of notices, affecting the assessment validity. The Ld. CIT(A) incorporated the written submissions, highlighting discrepancies in the A.O.'s approach. The A.O. failed to consider bank statements supporting investments and interest income. The Ld. CIT(A) sustained the additions without proper justification. The Tribunal noted the ex-parte assessment and the submission of evidence by the assessee. It set aside the Ld. CIT(A)'s order, emphasizing the need for a fair hearing.Issue 2: Rejection of additional evidence by Ld. CIT(A)The assessee challenged the rejection of additional evidence by the Ld. CIT(A), arguing that the A.O.'s remand report was accepted without giving the assessee a chance to respond. The Ld. CIT(A) neither accepted nor rejected the evidence submitted. The Tribunal found this approach lacking procedural fairness and remanded the issue for proper adjudication, stressing the importance of providing the assessee with a reasonable opportunity to present their case.Issue 3: Addition of investment in mutual funds and interest incomeThe dispute involved the addition of mutual fund investments and interest income. The assessee provided bank statements and explanations supporting the investments, which the A.O. overlooked. The Ld. CIT(A) sustained the additions based on the A.O.'s report, disregarding the evidence presented. The Tribunal found the assessment lacking proper consideration of the evidence and directed a fresh adjudication to ensure a fair hearing and examination of the submissions.In conclusion, the Tribunal allowed the appeal for statistical purposes, emphasizing the importance of procedural fairness and the need for a thorough review of evidence in tax assessments.