SHRI ABDUL AZIZ DAR, SRINAGAR V. INCOME TAX OFFICER WARD-1, SRINAGAR

ITA 61/ASR/2023

AI Insights

The case involves Abdul Aziz Dar, the proprietor of M/s Al-Hilal Brick Kiln, who appealed against the order of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC). The appeal was in response to an ex parte assessment order under section 144 of the Income Tax Act, which was passed without a proper hearing or consideration of the merits of the case. The primary contention was that the addition made by the AO was based on an ex parte assessment, violating the principles of natural justice. The assessee argued that the cash amount of Rs. 61,96,090 deposited in the bank was from the sale proceeds of his brick kiln business, which was not adequately considered by the AO or the CIT(A). The Tribunal, referencing various judicial precedents, including the Supreme Court's decision in Tin Box Company vs. CIT and the Delhi High Court's judgment in Bharat Aluminium Company Ltd. vs. Union of India, emphasized the mandatory nature of a personal hearing in such assessments and remanded the case for a fresh assessment with proper opportunity for the assessee to be heard.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 114651 (ITAT-AMRITSAR)
• Duration Of Justice: 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 28-05-2023
• Assessment Year: 2016-2017
• Appeal Filed On: 19-02-2023
• Other Referred Cases: Bharat Aluminium Company Ltd. vs. Union of India, Abdul Hamid Malik vs. DCIT, Tin Box Company vs. CIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Principle of natural justice; Additional evidence; Question of law
• Section: 147; 144; 260A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. ANIKESH BANERJEE, JUDICIAL MEMBER I.T.A. No. 61/Asr/2023 Assessment Year: 2011-12 Abdul Aziz Dar Prop. M/s Al-Hilal Brick Kiln Yari Kalan Road, Chadura, Budgam, Jammu and Kashmir PAN: ANZPD9001G The ITO Ward 1, Srinagar, Jammu & Kashmir (Appellant) (Respondent) Appellant by Shri. Abhinav Vijh, CA Respondent by Shri Amit Jain, Sr.DR Date of Hearing : 29/05/2023 Date of Pronouncement : 09/06/2023 ORDER Per Dr. M. L. Meena, AM: The Captioned appeal has been filed by the assessee against the order dated 22/12/2022, passed by the Ld. Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), in respect of 2 Assessment Year: 2011-12, challenging therein the orders of the authorities below passed ex parte qua the assesse. 2. At the outset, the Ld. Counsel submitted that the Ld. CIT(A)/NFAC has grossly erred in confirming the addition without going into merits of the case and that the said addition was made by the AO in an ex parte assessment order passed u/s 144 of the act in violation of principles of Natural Justice. He further submitted that the worthy CIT(A) has grossly erred in confirming the same without appreciating the facts on merits of the case that the assesse was running a Brick kiln business under a Government License and the disputed amount of cash Rs. 61,96,090/- was deposited in the bank account out of the sale proceeds of Brick Kiln business. He contended that neither the AO nor the Ld. CIT(A) has addressed the relevant matter regarding appellants claim of source being the cash sale proceeds of Brocks being deposited in the current account are nothing but business receipts which goes to the root of the matter. Accordingly, he pleaded that the matter may be remanded back to the AO to pass de novo assessment after granting adequate opportunity of being heard and to consider documentary evidences (APB, Pgs. 1 to 40) filed on record and to be filed in the fresh assessment proceeding in support of its 3 claim of business receipt from cash sales of bricks. In support, he placed reliance on Judgement of Delhi High Court in the case of “Bharat Aluminium Company Ltd. vs.Union of India”, [2022] 134 taxmann.com 187 (Delhi) where it was observed that Assessee would have a vested right to personal hearing in faceless assessment proceeding under section 144B and granting of personal hearing would not be discretionary as per individual facts of each case. He has further relied on Coordinate Amritsar Bench Decision in the case of “Abdul Hamid Malik vs. DCIT”, in ITA No. 236/ASR/2022 dated 17/03/2023. 3. Per contra, the Ld DR although supported the impugned order, however, he has no objection to the request of the appellant in view of principles of natural justice. 4. Heard rival contentions, perused the material on record, impugned order, written submission and case law cited before us. Admittedly, the revenue authorities have passed orders ex parte qua the assesse. The Ld. AR argued that the worthy CIT(A) decided the case exparte without granting opportunity of the hearing against the ex parte assessment order passed under section 144/147 of the act and that while deciding the case ex-parte, the Ld. CIT(A) has not appreciated the facts of the case and 4 arbitrary confirmed the assessment order passed u/s 144 r.w.s. 147 of the I.T. Act. It is seen that neither the AO nor the Ld. CIT(A) has addressed the relevant issue on merits of the case that the assesse was running a Brick kiln business under a Government License and the disputed amount of cash Rs. 61,96,090/- was deposited in the current bank account out of the sale proceeds of Brick Kiln business. It is seen that neither the AO nor the Ld. CIT(A) has addressed the relevant matter regarding appellants claim of source of cash deposit in its current bank account was being the business receipts from the cash sale proceeds of Bricks. In support, the Ld. AR filed statement of account with documentary evidence to establish its claim as an additional evidence under Rule 29 of the ITAT Rules 1963 (APB, Pgs. 1- 40) which goes to the root of the matter and hence, admitted on record. 5. In view of the principles of natural justice, the authorities below ought to have disproved the claim of the assesse by way of rebutting its contention with support of corroborative documentary evidences on record after granting an adequate opportunity of being heard. The Hon’ble Supreme Court of India in the case of Tin Box Company vs. CIT reported in 249 ITR 216 in which their Lordships of Supreme Court of India observed as under: 5 “Assessment - Opportunity of being heard - Setting aside of assessment - Assessment order must be made after the assessee has been given reasonable opportunity of setting out his case - Same not done - Fact that the assessee could have placed evidence before the first appellate authority or before the Tribunal is really of no consequence for it is assessment order that counts — Assessment order set aside and matter remanded to assessing authority for fresh consideration.” 6. The Hon’ble Delhi High Court in the case of “Bharat Aluminium Company Ltd. vs. Union of India”, (Supra) has held as under: 21. This Court is further of the view that a quasi-judicial body must normally grant a personal hearing as no assessee or litigant should get a feeling that he never got an opportunity or was deprived of an opportunity to clarify the doubts of the assessing officer/decision maker. After all confidence and faith of the public in the justness of the decision making process which has serious civil consequences is very important and that too in an authority/forum that is the first point of contact between the assessee and the Income-tax Department. The identity of the assessing officer can be hidden/protected while granting personal hearing by either creating a blank screen or by decreasing the pixel/density/resolution. 22. Consequently, this Court is of the view that the word "may" in Section 144B(viii) should be read as "must" or "shall" and requirement of giving an assessee a reasonable opportunity of personal hearing is mandatory. THE CLASSIFICATION MADE BY THE RESPONDENTS/REVENUE BY WAY OF A CIRCULAR DATED 23RD NOVEMBER, 2020 IS NOT LEGALLY SUSTAINABLE. AN ASSESSEE HAS A VESTED RIGHT TO PERSONAL HEARING AND THE SAME HAS TO BE GIVEN, IF AN ASSESSEE ASKS FOR IT. 23. The argument of the respondent/Revenue that personal hearing would be allowed only in such cases which involve disputed questions of fact is untenable as cases involving issues of law would also require a personal hearing. This Court is of the view that the classification made by the respondents/Revenue by way of the Circular dated 23rd November, 2020 is not legally sustainable as the classification between fact and law is not founded on intelligible differentia and the said differentia has no rational relation to the object sought to be achieved by Section 144B of the Act. 24. Also, if the argument of the respondent/Revenue is accepted, then this Court while hearing an appeal under section 260A (which only involves a substantial question of law) 6 would not be obliged in law to grant a personal hearing to the counsel for the Revenue! 25. Consequently, this Court is of the opinion that an assessee has a vested right to personal hearing and the same has to be given, if an assessee asks for it. The right to personal hearing cannot depend upon the facts of each case. 7. In the instant case, the assessee could have placed evidences either before the AO or the first appellate authority, if he has been provided adequate opportunity of being heard. The argument of the Ld. DR that personal hearing would be allowed only in such cases which involve disputed questions of fact is untenable as cases involving issues of law would also require a personal hearing. In our view, the classification made by the Revenue by way of the Circular dated 23rd November, 2020 is not legally sustainable as the classification between fact and law is not founded on intelligible differentia and the said differentia has no rational relation to the object sought to be achieved by Section 144B of the Act. 8. In view of the principles of natural justice, we consider it deem fit to restore back the matter to the file of the Ld. AO to pass de novo assessment after considering the written submission and evidences filed on record and may be filed before him during the fresh Assessment Proceedings after granting sufficient opportunity of being heard to the 7 assesse with a direction that the AO shall issue a Show Cause Notice and thereafter pass a reasoned order in accordance with law. 9. Accordingly, Assessment order set aside and matter remanded to assessing authority to pass de novo assessment as per law. 10. In the result, the appeal of the assesse is allowed for statistical purpose. Order pronounced in the open court on 09/06/2023 Sd/- Sd/- (Anikesh Banerjee) (Dr. M. L. Meena) Judicial Member Accountant Member A.G Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The DR, I.T.A.T. True Copy By Order