2014 (8) TMI 957 - AT - Income Tax

Disallowance of adjusted business loss - Held that - It is amply clear that the Appellant and Assessing Officer should be provided an opportunity of being heard which was not provided by the Ld. CIT(A) to the parties. Therefore the impugned order passed by the Ld. First Appellate Authority is contrary to the principles of natural justice as well as the provisions of section 250(2)(b) of the I.T. Act 1961 thus it is liable to be cancelled and we cancel the impugned order and also direct the Ld. First Appellate Authority to decide the issues in dispute afresh in accordance with law after giving the adequate opportunity to both the parties in terms of section 250(2)(b) of the Income Tax Act 1961. - Decided in favour of Revenue.

Summary

Issues:
Appeal against deletion of addition of business loss and addition under section 40A(ia) - Failure of assessee to attend hearings - Ex parte order by CIT(A) - Lack of opportunity for both parties to present their case - Violation of principles of natural justice - Appellate Tribunal directing CIT(A) to decide afresh.

Analysis:
The appeal before the Appellate Tribunal concerned the deletion of an addition of Rs. 20,28,801 made by the Assessing Officer on account of adjusted business loss and an addition of Rs. 22,000 under section 40A(ia). The Tribunal noted that the assessee and their authorized representative did not attend the hearing despite notices being issued. The CIT(A) had passed an ex parte order partly allowing the appeal of the assessee, which was challenged by the Revenue.

During the proceedings, the Tribunal observed that the CIT(A) had not provided sufficient opportunity to the assessee to substantiate their claim or to the Assessing Officer to counter the issues raised by the assessee. The Tribunal referred to Section 250(2)(b) of the Income Tax Act, emphasizing the right of both the appellant and the Assessing Officer to be heard during the appeal process. It was concluded that the impugned order by the CIT(A) was against the principles of natural justice and the provisions of the IT Act, thus directing the CIT(A) to decide the issues afresh after providing adequate opportunity to both parties.

Ultimately, the Tribunal allowed the appeal filed by the Revenue for statistical purposes, canceling the impugned order and instructing the CIT(A) to re-examine the issues in dispute in compliance with the law and principles of natural justice. The decision highlighted the importance of giving both parties a fair chance to present their case and be heard during the appellate proceedings, as mandated by the IT Act.

In summary, the Tribunal's judgment focused on the failure of the assessee to attend hearings, the issuance of an ex parte order by the CIT(A) without sufficient opportunity for both parties to present their case, the violation of natural justice principles, and the subsequent direction for a fresh decision by the CIT(A) in accordance with the law and after providing adequate opportunity to both the appellant and the Assessing Officer.