No Order shall be passed without affording Reasonable Opportunity of being heard to Assessee: ITAT set aside Order of CIT(A) [Read Order]

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) held that no order shall be passed without affording reasonable opportunity of being heard to the assessee and hence set aside the order of the Commissioner of Income Tax (Appeal) [CIT(A)].

The assessee is an individual and has shown income from salary, income from sources, and agricultural income. The assessee filed his return of income declaring a total income of Rs.9,76,310 and agricultural income of Rs.1,84,47,847. The return was processed under Section 143(1) of the Income Tax Act.

The proceedings under Section 147 of the Income Tax Act were initiated on the basis of the information received from the office of the Directorate of Income Tax, New Delhi that the assessee has shown agricultural income and the same has been claimed as exempt.

It was also mentioned that the assessee showing agricultural income of more than Rs.1 crore is engaged in routing their unaccounted/illegal money in the garb of agricultural income, thereby not only claiming exemption on such income but also engaged in the money laundering activities.

The notice under Section 148 of the Income Tax Act was issued to the assessee after recording the reasons for reopening. During the proceedings under Section 147 of the Income Tax Act, statutory notices under Section 143(2) as well as Section 142(1) of the Income Tax Act were issued and served on the assessee.

The assessee was asked to produce transportation receipts, octroi receipts, weight bridge receipts for transportation, and weighing agricultural produce. The assessee was asked to submit information supporting his claim that he has earned an exempt income of Rs.1,84,47,847.

The assessee was also asked to show cause as to why the income of Rs.1,84,47,847 was not treated as income from unexplained sources and added to his total income. Vide notices under section 142(1) of the Income Tax Act, the assessee was once again asked to submit the above-said details.

The assessee didn’t produce any evidence and in the absence of originals/supporting documents, the Assessing Officer rejected the claim of exemption of agriculture income and treated the same as income of the assessee from undisclosed sources. Accordingly, the Assessing Officer added Rs.1,84,47,847 to the total income of the assessee under the head income from other sources.

The Authorized Representative referred to the statement showing income and expenditure in support of its plea that for cultivating the agricultural produce it had incurred expenditure on the purchase of seeds, fertilizers, diesel, power and fuel, repair and maintenance, salary and wages, water charges, sampling charges, purchase of plants, the land levelling charges, etc.

The two-bench member comprising of Amarjit Singh (Accountant member) and Sandeep Singh Karhail (Judicial member) held that the Commissioner of Income Tax (Appeal) rejected the evidence without calling for any further information from the assessee.

Thus, none of the authorities have properly examined the evidence so furnished by the assessee in respect of the claim of exemption of agricultural income.

The Assessing Officer was directed to conduct a thorough verification/examination of all the aspects pertaining to the claim of income as agricultural income and has the liberty to call for/summon any party from whom the assessee has claimed to have purchased various products in respect of its agricultural activity.

The assessee was also directed to furnish all the information/details as may be sought by the Assessing Officer. Therefore, remanded this issue to the file of the jurisdictional Assessing Officer and set aside the impugned order.

Thus, all the appeals by the assessee are allowed for statistical purposes.

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