Serving Notice to Assessee is not an ‘Empty Formality’: ITAT deletes a Revision Order passed Ex-parte [Read Order]

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While quashing an order of revision passed ex parte by the CIT under section 263 of the Income Tax Act, the ITAT Hyderabad held that serving of notice to assessee and giving him an opportunity to be heard is not an “empty formality”, but is a mandatory requirement under the Act.

Assessment under section 153C of the Income Tax Act was completed against the assesee following search. As per the order, AO accepted the return. However, the Commissioner of Income Tax re-opened the assessment by using his powers under section 263 on ground that certain materials seized during the search was not examined. Assessee claimed that no notice was served on them and the order was passed ex-parte. They came to know about the same only when the bank accounts were attached by the department.

Quashing the order, the bench said that the opportunity of being heard is little more than serving a notice on assessee and it is not an empty formality. “Without giving a proper opportunity to assessee, revision proceedings u/s. 263 cannot be finalized as the provisions of Section 263 mandates that the CIT may pass such orders after giving an opportunity of being heard. Since the mandatory requirement of opportunity of being heard has not been provided to assessee, the order passed by CIT is void ab-initio. Further as considered above, the record do indicate that AO has examined the issue and CIT was wrong in not examining the record properly and arriving at certain conclusions without any basis. Though revisional authority considers himself to be an extended arm of Revenue department in collection of correct tax, he does not get any leverage to exercise such jurisdiction, to do, so giving a go by to the established principles enunciated in law which are inbuilt checks provided in Section 263 itself. Justice should not only be done but it should also appear to be done. In this case the haste in which the proceedings are sought to be commenced and completed indicate that paramount importance is given to bring to tax the alleged tax as capital gains and there it can only be concluded that CIT has not followed the principles of natural justice. Thus, looking at from any angle it can be concluded that the order passed by CIT u/s 263 has not followed the prescribed provisions mandated and so the same cannot be upheld.”

Read the full text of the Order below.

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