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  • - Additional Income under Section 68 of the Income tax Act was added to declared income of the assessee by the assessing officer without granting for the personal hearing of the assessee Where AO made addition to assessee's declared income under section 68 on account of unexplained unsecured loan, since it was found that assessee sought personal hearing before AO to establish genuineness of unsecured loan received by assessee which had not been granted by AO, assessee had been able to establish a prima facie case in its favour and thus impugned order is set aside to file of AO to consider assessee's reply

- Additional Income under Section 68 of the Income tax Act was added to declared income of the assessee by the assessing officer without granting for the personal hearing of the assessee Where AO made addition to assessee's declared income under section 68 on account of unexplained unsecured loan, since it was found that assessee sought personal hearing before AO to establish genuineness of unsecured loan received by assessee which had not been granted by AO, assessee had been able to establish a prima facie case in its favour and thus impugned order is set aside to file of AO to consider assessee's reply

  • vide Decision of High Court of Delhi in DJ Surfactants v. National E-Assessment Center, Income Tax Department, New Delhi

Facts of the case:

  1. The Assessing Officer(AO) has made an addition to the petitioner's declared income of Rs. 9,56,00,000/- under section 68 of the Income-tax Act, 1961 related to AY 2018-19. The addition has been made on account of purported unexplained, unsecured loans
  2. Show cause notice was issued to the petitioner on 1-3-2021, along with the draft assessment order of even date. As per the said show cause notice, the petitioner was required to file a response by 8-3-2021, as to why the assessment should not be completed as per the draft assessment order
  3. The petitioner sought a week's accommodation to respond, as the queries raised in the aforementioned show cause notice required time to gather the relevant material. This request was made on 8-3-2021.
  4. Since no response was received from the Assessing Officer, the petitioner, by way of abundant caution, filed a reply to the said show cause notice on 12-3-2021. Furthermore, in the reply, a request was made for grant of a personal hearing in the matter.
  5. The impugned assessment order was passed on 13-3-2021, without having regard to the aforesaid reply dated 12-3-2021 submitted by the petitioner
  6. Mr. Zoheb Hossain, who appears on behalf of the revenue, on the other hand, says that the addition was made to the petitioner's declared income because of the difference between the audit report and balance sheet of the petitioner concerning unsecured loans pertaining to the financial year in issue, i.e., 2017-2018.
  7. In this behalf, Mr. Hossain has drawn attention to impugned assessment order wherein, the unsecured loans, as per the audit report, are shown as Rs. 11,55,35,000/-, while unsecured loans in the balance sheet, are shown as Rs. 5,33,18,001/- in respect of FY 2017-18
  8. The AO has not taken into account the explanation and the material placed before him by the petitioner, along with its reply dated 12-3-2021. This aspect is brought to fore, if one were to peruse paragraph 4 of the impugned assessment order.
  9. The extract of the order is as follows: “Before finalizing the assessment, the assessee has been given one more opportunity and calling for the assessee's explanation by issuance of Show cause Notice as to why assessment should not be completed as per Draft Assessment Order vide notice: ITBA/AST/F/143(3)(SCN)/2020-21/1031115346(1)dated 1-3-2021 and compliance date was 8-3-2021. Since there was no compliance from the assessee, it is presumed that the assessee has nothing to say in the matter and accordingly assessment order has been passed based on the details available on record”.
  10. Furthermore, as noticed above, although, a personal hearing was sought by the petitioner, the same was not granted by the AO.
  11. The honorable court allowed for a counter affidavit to be filed by the respondent and in the meanwhile, there shall be a stay on the operation of the impugned assessment order till further orders of the Court.
  12. Therefore, the assessment order, passed under section 143(3) of the Act, dated 13-3-2021, is set aside.

Judgement:

The High Court of Delhi held the case as follows:

  1. The AO will be at liberty to pass a fresh order, after considering the reply/submissions, filed by the petitioner, dated 12-3-2021. The AO will accord a personal hearing to the authorized representative of the petitioner, and for this purpose, he/she will indicate, in writing, the date and time of the hearing. The AO will transmit this information via the registered e-mail ID of the petitioner. Furthermore, the A.O. will ensure that the link for the hearing is also sent to the petitioner.

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