AO cannot make any addition without giving adequate opportunity to assessee

IN THE INCOME TAX APPELLATE TRIBUNAL

DELHI BENCH ‘H’: NEW DELHI

BEFORE SHRI G.D.AGRAWAL, VICE PRESIDENT AND

SHRI I.C.SUDHIR, JUDICIAL MEMBER

ITA No.3731/Del/2012

Assessment Year: 2007-08

M/s Wadhwa Brothers,

Plot No.29A, New Palam

Vihar Extension,

Dharam Colony,

Near Shiv Mandir,

Gurgaon – 122 001.

PAN: AAAFW6373Q.

(Appellant)

Vs.

Assistant Commissioner of

Income Tax,

Gurgaon Circle,

Gurgaon – 122 001.

 (Respondent)

Appellant by: Shri Inderjit Ahuja, Advocate.

Respondent by: Shri Tarun Seem, Sr.DR.

ORDER

PER G.D.AGRAWAL, VP:

This appeal by the assessee is directed against the order of learned CIT(A), Panchkula dated 14th February, 2011 for the AY 2007- 08.

2. The assessee has raised various grounds in its appeal. However, at the time of hearing before us, the main contention of the learned counsel for the assessee was for setting aside the matter to the file of the Assessing Officer or the CIT(A). He submitted that the Assessing Officer made the huge addition of `23,19,980/- on the ground that there was difference in the outstanding amount as per the confirmation of the debtors and the assessee’s balance sheet.

However, no opportunity was allowed to the assessee to explain or reconcile the difference. Similarly, the disallowance of salary paid to partners at `6 lakhs was made again without allowing adequate opportunity of being heard to the assessee. He further stated that on the first page of the learned CIT(A)’s order, it is mentioned that Shri Sanjay Mohanty appeared for the appellant. However, no such person named Sanjay Mohanty is engaged by the assessee as his representative. In fact, the assessee does not know any person named as Sanjay Mohanty. The partner of the assessee firm has furnished an affidavit in this regard. He also stated that the notice of hearing mentioned in learned CIT(A)’s order was never served upon the assessee. In fact, in respect of few notices, the CIT(A) himself has mentioned that the notice issued was returned unserved. There is no mention of service of any notice upon the assessee in the order of learned CIT(A). He, therefore, submitted that the order of both the

lower authorities should be set aside and the matter restored to the file of the Assessing Officer for making assessment afresh.

3. Learned DR, on the other hand, relied upon the orders of authorities below.

4. We have heard the arguments of both the sides and perused the material placed before us. With regard to addition of `23,19,980/-, we find that this issue is discussed at pages 2 & 3 of the assessment order. The Assessing Officer made a chart showing the balance as per the assessee’s balance sheet and the balance as per the debtors’ confirmation and difference. He made the addition for the difference. However, it is apparent from the assessment order that no opportunity was allowed to the assessee to reconcile the difference. Another significant addition is with regard to disallowance of salary paid to the partner. Here, from a perusal of the assessment order, it seems that an opportunity was allowed to the assessee to explain why the salary paid to the partner should not be disallowed. In reply to the same, the assessee submitted the supplementary partnership deed. Thereafter, the Assessing Officer disallowed the salary on the ground that the supplementary partnership deed was not furnished with the return of income. However, the Assessing Officer did not allow further opportunity to the assessee to explain why the supplementary partnership deed could not be furnished alongwith the return of income and whether even if the partnership deed is not furnished alongwith the return of income but furnished during the course of assessment proceedings, whether it is sufficient compliance of the provisions of the Income-tax Act. Considering the totality of facts, we are of the opinion that it would meet the ends of justice if the orders of authorities below are set aside and the matter restored to the file of the Assessing Officer for making assessment afresh de novo. We order accordingly and direct the Assessing Officer to make the assessment afresh after allowing adequate opportunity of being heard to the

assessee.

5. In the result, the appeal of the assessee is deemed to be allowed for statistical purposes.

Decision pronounced in the open Court on 22nd March, 2013.

Sd/- Sd/-

(I.C.SUDHIR) (G.D.AGRAWAL)

JUDICIAL MEMBER VICE PRESIDENT

Dated: 22.03.2013

VK.

Copy forwarded to: -

1. Appellant: M/s Wadhwa Brothers, Plot No.29A, New Palam Vihar Extension, Dharam Colony, Near Shiv Mandir, Gurgaon – 122 001.

2. Respondent: Assistant Commissioner of Income Tax, Gurgaon Circle, Gurgaon – 122 001.

3. CIT

4. CIT (A)

5. DR, ITAT

Assistant Registrar