Assessment referral for special audit leads to remand for de novo assessment after denial of reasonable opportunity, rights preserved.

Assessment under section 143(3) concerning the validity of a referral for a special audit was examined; the appellate body remanded the matter to the assessing officer for de novo framing of assessment on the basis that the assessee had been denied a reasonable opportunity to be heard, and directed that all rights and contentions of the assessee and Revenue remain open for fresh consideration. As all objections and contentions were left open on remand, the appeals did not raise any substantial question of law at that stage.

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Issues: (i) Whether the assessment should be restored to the Assessing Officer for de novo assessment because the order under Section 142(2A) was passed without affording a reasonable opportunity of being heard.

Analysis: The ITAT examined whether the statutory precondition of affording a reasonable opportunity of being heard before invoking Section 142(2A) was complied with and found that the proceedings did not show that a sufficient opportunity to reply and to be heard was granted. On that basis the ITAT concluded that the order under Section 142(2A) was vitiated and remanded the matter for de novo assessment, keeping all rights and contentions open to both sides. The High Court reviewed the ITAT's limited factual and procedural finding that the assessee had been denied a reasonable opportunity of hearing and observed that because the ITAT remanded for fresh assessment and kept all contentions open, no substantial question of law arises at that stage; the High Court directed the Assessing Officer to proceed in accordance with the ITAT's order and disposed of the appeals.

Conclusion: The matter is remanded to the Assessing Officer for framing a de novo assessment after affording the assessee a reasonable opportunity of being heard; the ITAT's order remanding the assessment is upheld and the appeals are disposed of accordingly.

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