By TIOL News Service

MUMBAI, MAR 16, 2017: THE issue is - Whether it is open to an assessee to challenge the revisional order passed u/s 263, when deficiencies in the materials on record were not answered though pointed out several times by CIT. NO is the answer.

Facts of the case:

The assessee preferred the present appeal challenging the order, whereby the CIT had passed a revision order u/s 263 without giving the assessee any opportunity of being heard and without there being impropriety in the assessment order and the assessment order not being erroneous and prejudicial to the interest of the revenue.

On appeal, the ITAT held that,

++ in the present case, the CIT(A) observed certain matters for which notice was issued with assessee. One of the issue related to discrepancy in confirmation of balance of loans. Differences were also noticed in the classification thereof and certain other discrepancies were also noted in the loan accounts. It will also observed that issues relating to 40A(2)(b) in respect of one of the parties was not examined by the AO. It will also noted that the purchases remained to be verified. It was further noted that issues relating to verification of sundry creditors, reduction in share capital were also not attended. Several other discrepancies and matters were noted in which the CIT(A) was of the opinion that the AO has not examined. However CIT(A) noted that despite several notices nobody attended. Hence CIT(A) concluded that: "....As no explanation has been received to the issues referred in show cause notice, there is no other option but to assume that assessee has nothing to say in this regard. I am of the considered opinion that the assessment order, in the light of the facts/deficiencies pointed out in para (i to x) above and in the context of the ratio of decisions cited above, is "erroneous" and "prejudicial" to the interst of the revenue". I, therefore, set aside the assessment order passed by the AO u/s 143(3) with a direction to the AO to redo the same afresh after giving reasonable opportunity to the assessee. The AO is directed to reframe the assessment order "denvo" in accordance with the provisions of the law and after giving reasonable opportunity of hearing to the assessee and after verifying the issues raised above in paras 2 (i to x)....";

++ it is found that at the outset assessee has raised the ground that CIT(A) has passed the order without giving the assessee proper opportunity of being heard. In this regard we find that the CIT(A) in his order has duly noted that on several occasion notices were issued but nobody attended. Before this court also despite several notices nobody has attended. Hence we do not find any cogency in this aspect of assessee submission that proper opportunity of being heard was not granted. As regards the merits of the order passed we find that CIT(A) has raised relevant issues on which the AO should have made enquiries, which are not emanating from the assessment order. Hence it was incumbent upon the assessee to prove that the AO has duly examined these aspects. In absence of any responses from the assessee in our considered opinion there is no infirmity in the direction of CIT(A) to the AO to examine the issues denovo. Accordingly, we do not find any infirmity in the order of CIT.

(See 2017-TIOL-305-ITAT-MUM)