2023 (1) TMI 1427 - AT - Income Tax

Tribunal Overturns Tax Order: Emphasizes Fair Hearing and Natural Justice, Case Sent Back for Fresh Review.

Mr. Sejal Nirman Kothari Versus Income Tax Officer, Ward 19 (3) (3), Mumbai

The Tribunal set aside the ex-parte order of the Commissioner of Income Tax (Appeals) due to a violation of the principles of natural justice, emphasizing ... Ex-parte order passed due to non appearance of the assessee - Addition being cash deposit in the bank account and taxing the same u/s 115BBE at the rate of 60% - HELD THAT:- As assessee submitted that the assessee has not received any notice. Even if the assessee is assumed to have been served the Ld. CIT (A) was required to dispose of the appeal on merits but he has merely dismissed the appeal for want of non-appearance of the assessee. Now assessee given undertaking that she will appear before the Revenue Authorities on each and every date of hearing in order to explain the cash deposit in her bank account. To impart the justice and to decide the issue once for all and in order to comply with the principle of natural justice adequate opportunity of being heard is required to be given to the assessee. So impugned order passed by the Ld. CIT (A) is hereby set aside and since the facts are required to be thrashed/verified by the AO first, the case is remitted back to the AO to decide afresh after providing opportunity of being heard to the assessee. Appeal filed by the assessee is allowed for statistical purposes. Issues:1. Upholding of addition of cash deposit by Assessing Officer2. Ex-parte order by Commissioner of Income Tax (Appeals)3. Violation of principles of natural justice4. Failure to dispose of appeal on merits5. Legality of assessment order under section 143(3)6. Time-barred assessment order under section 143(3)7. Charging of interest under section 234B & 234C8. Grounds of appeal being independent9. Opportunity to amend grounds of appealAnalysis:1. The appellant contested the addition of INR 20,00,000 as a cash deposit by the Assessing Officer under section 69A read with section 115BBE of the Income Tax Act, 1961, during demonetization. The appellant argued lack of documentary evidence and source details for the deposit.2. The Commissioner of Income Tax (Appeals) upheld the addition in an ex-parte order, citing non-prosecution by the appellant and failure to provide submissions during the appeal proceedings. The appellant was deemed to have received all notices electronically but did not engage in the process adequately.3. The appellant raised concerns about the violation of principles of natural justice, claiming inadequate opportunity to be heard. The Tribunal acknowledged the need for a fair hearing and set aside the Commissioner's order, emphasizing the importance of complying with natural justice principles.4. The failure of the Commissioner to dispose of the appeal on its merits was highlighted, leading to the Tribunal remitting the case back to the Assessing Officer for a fresh decision after providing a proper opportunity for the appellant to present their case.5. The legality of the assessment order under section 143(3) was questioned by the appellant, alleging it to be bad in law and time-barred. The Tribunal did not delve into these specific issues but focused on the procedural aspects of the case.6. The charging of interest under sections 234B & 234C by the Assessing Officer was also challenged, indicating a broader scope of financial implications in the case.7. The Tribunal acknowledged the independence of the grounds of appeal raised by the appellant and allowed for the flexibility to amend, alter, or modify them before the final hearing.8. Ultimately, the Tribunal allowed the appeal for statistical purposes, emphasizing the importance of providing a fair opportunity for the appellant to address the issues raised during the assessment process.This detailed analysis encapsulates the key issues and outcomes of the judgment, focusing on the procedural fairness and legal compliance aspects of the case.