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Nav Bharat Trading, Allahabad vs Assistant Commissioner Of Income Tax - (Income Tax Appellate Tribunal) (17 Mar 2021)

Once assessee has raised a legal issue challenging validity of notice under Section 148 of IT Act irrespective of non-appearance of assessee, Commissioner of Income Tax has to adjudicate legal issues


Direct Taxation

The Assessing Officer while passing the order under Section 147 read with Section 143 (3) of Income Tax Act, 1961 (IT Act) has made an addition of Rs. 11,87,228 on account of disallowance of purchases wrongly claimed by the assessee. The Assessing Officer conducted enquiry by issuing letters under Section 133 (6) of IT Act to the suppliers from whom the assessee, claimed to have made purchases. However, there was no response to the notice issued by the Assessing Officer and further, the assessee has also not submitted the confirmation from some of the parties. Thus, the Assessing Officer treated the claim of purchases as bogus/wrong. The assessee challenged the action of the Assessing Officer before the Learned CIT (A) however, despite the number of opportunities, the assessee did not attend any of the hearing and consequently, the CIT (A) has dismissed the appeal while passing the impugned ex-parte order.

It is manifest from the record that, the assessee has not produced the supporting invoices for the claim of purchases as recorded in the books of account. The Assessing Officer also issued notices under Section 133 (6) of IT Act to Sharda Steel Industries, P.D. Enterprises and Sahib Brick Field requiring confirmation of transactions entered with the assessee during the year under consideration. In response to the notice under Section 133 (6) of IT Act, a reply was received only from Sahib Brick Field, and there was no response or confirmation in respect of the other parties. The Assessing Officer accordingly treated the purchases to tune of Rs. 11,87,228 as wrong claim of the assessee and has added same to the total income of the assessee. It is clear from the assessment order that, there is a failure on the part of the assessee to substantiate the claim of the purchases. The assessee challenged the order of the Assessing Officer before the Learned CIT (A) including the validity of re- opening of the assessment for want of service of notice under Section 148 of the IT Act.

The Learned CIT (A) stated in the impugned order that, several notices was given to the assessee, however the assessee has neither attended the proceedings nor submitted any written submissions or supporting documents. Accordingly, the Learned CIT (A) has confirmed the addition made by the Assessing Officer. It is pertinent to note that, once the assessee has raised a legal issue challenging the validity of the notice under Section 148 of the IT Act irrespective of non-appearance of the assessee, the CIT (A) ought to have decided the said issue on merits. Since, the Learned CIT (A) has not decided the appeal of the assessee by speaking order and the legal issue raised by the assessee has not been adjudicated, therefore, the impugned order of the Learned CIT (A) suffers from error and illegality. Accordingly, the impugned order is set aside and the matter is remanded record of the Learned CIT (A) for re-adjudication of the appeal of the assessee on merits by a speaking order. The appeal of the assessee is allowed.


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