Without specific communication of deficiency, there is no opportunity of being heard

Without specific communication of deficiency, no effective opportunity of being heard can be said to have been granted

In a recent judgment the ITAT has held that without specific communication of deficiency in submissions made, no effective opportunity of being heard can be said to have been granted to the assessee.

ABCAUS Case Law Citation
ABCAUS 3552 (2021) (09) ITAT

Important case law relied referred:
Amrik Singh Bhullar Vs. ITO
Harbans Lal vs ITO

In the instant case, the assessee had challenged the order passed by the CIT(A) in confirming the addition made by the Assessing Officer (AO) in ex parte order made u/s 147/144 of the Income Tax Act, 1961 (the Act).

The AO noticed that assessee had deposited large amount of cash in his bank account. The AO granted the opportunity ‘of hearing on multiple occasions. However, the assessee failed to appear and comply with the notices.

Therefore, the AO passed the ex parte order u/s 147/144 of the Act estimating 20 % of the cash deposits to be income of the assessee.

During the course of appellate proceedings, the appellant contended that the assessee was into the business of Truck Plying and was owning 8 trucks.

The CIT(A) in his order stated that no documentary evidences were furnished by the assessee in support of the truck playing business and the details of investment into the trucks owned by him.

The CIT(A) noted that the AO had not added the full deposits but had only applied a profit rate of 20% in absence of any explanation from the side of the appellant.

The CIT(A) held that the order of the AO was very reasonable and fair and he accordingly dismissed the appeal.

The Tribunal observed that the available record did not shows that the CIT(A) has given any opportunity to the assessee to substantiate his submissions.

The Tribunal stated that it is well settled that in case an adjudicating authority finds the written submissions are not sufficient and complete then necessarily the First Appellate Authority should put this deficiency to the notice of the appellant.  

According to the Tribunal that without any specific communication of the deficiency, it cannot be said in all fairness that an effective opportunity of being heard has been granted to the assessee.

Quoting the principles of natural justice, the Tribunal said that mere making available of the written submissions by an assessee cannot be unilaterly so interpreted to mean that right to be heard has been waived off. Audi alterem partem which is one of the foundational and fundamental bedrocks of natural justice means that no one should be condemned un-heard.

The Tribunal pointed out that a party may choose to waive the right to be heard and instead choose to rely on written submissions only.  However, it is the duty of the adjudicating authority to ensure that the waiver so made is consciously made and with full knowledge and understanding that the right to be heard exists.  

The Tribunal set aside the impugned order directing the assessee to place full facts, evidence alongwith supporting claims before the First Appellate Authority.

Thus, the appeal was allowed in favour of the assessee.

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