Bangalore Krishnaiah Jagannath, Bengaluru V. Assistant Commissioner of Income-Tax, Circle-3(1)(1), Bengaluru

ITA 467/BANG/2023

AI Insights

The case involves an appeal by Shri Bangalore Krishnaiah Jagannath against the order of the National Faceless Appeal Centre (NFAC), Delhi, which upheld the addition of Rs.3,23,00,987 as long-term capital gain for the Assessment Year 2015-16. The appellant contested that both the AO and the CIT(A) had proceeded ex-parte without considering his adjournment requests due to health issues, thus violating the principles of natural justice. The Tribunal found that the adjournment applications were not properly considered and remitted the case back to the AO for a fresh assessment.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 124270 (ITAT-BANGALORE)
• Duration Of Justice: 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-09-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 03-09-2023
• Assessment Year: 2015-2016
• Appeal Filed On: 29-06-2023
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice
• Section: 143(3); 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH : BANGALORE BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND MS. MADHUMITA ROY, JUDICIAL MEMBER ITA No. 467/Bang/2023 Assessment Year : 2015-16 Shri Bangalore Krishnaiah Jagannath, No. 61/1, 1 st Cross, 1 st Main, K.H. Ranganatha Colony, J J Nagar, Bengaluru – 560 018. PAN: AANPJ6488L Vs. The Assistant Commissioner of Income Tax, Circle – 3(1)(1), Bangalore. APPELLANT RESPONDENT Assessee by : Shri Bhaskaran, Advocate Revenue by : Shri Nischal .B, Addl. CIT (DR) Date of Hearing : 04-09-2023 Date of Pronouncement : 04-09-2023 ORDER PER MADHUMITA ROY, JUDICIAL MEMBER The instant appeal filed by the assessee is directed against the order dated 03.05.2023 passed by the National Faceless Appeal Centre (NFAC), Delhi arising out of the order dated 30.09.2021 passed by the Ld.ACIT, Circle – 3(1)(1), Bangalore u/s. 143(3) r.w.s. 263 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for A.Y. 2015-16 whereby and whereunder the addition made by the Ld.AO to the tune of Rs.3,23,00,987/- on account of long term capital gain has been upheld. Page 2 of 6 ITA No. 467/Bang/2023 2. At the time of hearing of the instant appeal, the Ld.Counsel appearing for the assessee submitted before us that the order passed by the Ld.CIT(A) is practically an ex-parte order. Before the Ld.AO too he sought for adjournment of the hearing fixed on 28.09.2021 by way of a written application dated 27.09.2021 as the assessee was not well and the Ld.AR was not been able to communicate in regard to the matter to be taken up by the ITO. In spite of receipt of the said adjournment application, the Ld.AO proceeded with the matter and finalised the same upon making the impugned addition. On this aspect, he has drawn our attention to page 127 of the paper book filed before us where the notice dated 24.09.2021 issued by the ITO u/s. 142(1) of the Act has been annexed. He has further drawn our attention to pages 129 & 130 wherein the application seeking adjournment dated 27.09.2021 has been annexed and the communications thereof were made through the electronic media to the office of the ITO is evident. According to him, no opportunity of being heard to the assessee was given by the Ld.AO while proceeding with the matter. Further that the Ld.CIT(A) has also proceeded with the matter ex-parte. Before the Ld.CIT(A) also, he made an application for adjournment of hearing fixed on 18.02.2023 in response to the notice issued by the Ld.CIT(A) dated 24.01.2023 due to medical conditions and hospitalisation of the assessee. In this regard, he has drawn our attention to pages 131 & 132 of the paper book filed before us in order to substantiate such submissions. Page 3 of 6 ITA No. 467/Bang/2023 Since the Ld.CIT(A) has also not taken into consideration the application for adjournment made on behalf of the assessee on the medical ground and particularly the hospitalisation of the assessee and proceeded with the matter in upholding the addition made by the Ld.AO without granting an opportunity of being heard to the assessee, the principle of natural justice has been violated and thus the ultimate prayer made by the Ld.AR is to quash the order passed by the Ld.CIT(A) and to remit the issue to the file of the Ld.AR for reconsideration of the same afresh. 3. On the other hand, the Ld.DR relied upon the orders passed by the authorities below in finalizing the assessment by the Ld.AO upon making addition and confirmation of the same by the Ld.CIT(A) though both were ex-parte orders. 4. We have heard the rival submissions made by the respective parties and we have also perused the relevant materials available on record particularly the orders passed by the authorities below. 5. Upon perusal of the order passed by the Ld.AO, we find that the notice u/s. 142(1) was issued on 24.09.2021 directing the assessee to furnish the accounts and documents specified to the annexure before 28.09.2021 appearing at page 127 of the paper book filed before us. We further find that the assessee sought for adjournment of the matter on the ground of bad health of the assessee on 27.09.2021. Page 4 of 6 ITA No. 467/Bang/2023 However, such prayer was not taken into consideration with its proper perspective and the Ld.AO finally proceeded with the assessment proceeding and finalised the same upon making addition of Rs.3,23,00,987/- on account of long term capital gain. We have also perused the order passed by the Ld.CIT(A) wherefrom it appears that on three occasions the matter was fixed for hearing; on 05.09.2022, 23.01.2023 and 03.02.2023 though the matter was fixed, the assessee could not appear. However, we have come across with the adjournment application made by the assessee dated 02.02.2023 seeking adjournment of the hearing fixed on 18.02.2023 on account of medical condition and hospitalisation of the assessee. It further appears that the order impugned is dated 03.05.2023 passed by the NFAC but no further opportunity inbetween has been provided to the appellant by the Ld.CIT(A) in order to substantiate the case made out by the appellant before finalizing of the appeal. Instead, he proceeded with an observation that the appellant did not request for any adjournment. 6. Thus, having heard the Ld.Counsel appearing for the parties, having regard to the facts and circumstances of the case, we find that both the authorities below proceeded on wrong notion, without taking into consideration the adjournment applications made on behalf of the assessee by the Ld.AR on the health issue, instead proceeded with the same and finalised the assessment proceedings which was further confirmed by the First Appellate Authority. The entire Page 5 of 6 ITA No. 467/Bang/2023 proceeding initiated and finalised by the authorities below speaks of violation of the principle of natural justice. Assessee has the right to ventilate its grievance before the authorities below and to substantiate the case made out on merit before the order of assessment is made. Such right being violated, we in order to prevent the miscarriage of justice, remit the issue to the file of the Ld.AO upon setting aside the order of the Ld.CIT(A) with a further direction upon the Ld.AO to decide the issue afresh upon giving proper opportunity of being heard to the assessee and upon considering the evidence on record or any other evidences which the assessee may choose to file at the time of hearing of the matter and to pass a reasoned order. We, however, make it clear, that in the event the assessee does not cooperate with the authorities below, the Ld.AO would be at liberty to proceed with the matter and to finalise the same strictly in accordance with law. In the result, the appeal filed by assessee stands allowed for statistical purposes. Order pronounced in the open court on 04 th September, 2023. Sd/- Sd/- (CHANDRA POOJARI) (MADHUMITA ROY) Accountant Member Judicial Member Bangalore, Dated, the 04 th September, 2023. /MS / Page 6 of 6 ITA No. 467/Bang/2023 Copy to: 1. Appellant 2. Respondent 3. CIT 4. DR, ITAT, Bangalore 5. Guard file By order Assistant Registrar, ITAT, Bangalore