By TIOL News Service

CHENNAI, APRIL 14, 2018: THE ISSUE BEFORE THE DIVISION BENCH IS - Whether failure to submit objection to the pre-assessment notices, by itself gives a right to the AO to deny opportunity of personal hearing. NO IS THE VERDICT.

Facts of the case:

The Assessee is a manufacturer and trader of cotton yarn and waste cotton. Consequent to the completion of its assessment on the basis of the returns submitted by it, the premises of assessee was inspected by the Enforcement Wing officials, wherein certain incriminating materials were found, on basis of which the Officers arrived at a factual conclusion that assessee had not arrived at reversal of credit on ITC claim corresponding to exempted sale and sale on consignment basis. The Enforcement Wing officials therefore issued notice to the assessee to appear before them and show cause as to why the assessment should not be re-opened. In response, the assessee submitted its explanation, which was considered by Enforcement Wing and then forwarded to the ACCT for appropriate action in accordance with the provisions of the TNVAT Act. Consequent to the same, the ACCT issued pre-assessment notices. Since there was no response from the assessee thereafter, the ACCT completed the assessment ex parte.

High Court held that,

++ as far as ex parte assessment is concerned, the ACCT had initiated action for re-opening only on account of the report submitted by the Enforcement Wing. The Enforcement Wing forwarded the incriminating documents stated to have been seized from the premises of assessee along with the explanation given by assessee. Even though the ACCT considered the incriminating documents and the notices issued by the Enforcement Wing before issuing assessment notices, the fact remains that the explanation given by assessee on two occasions to the Enforcement Wing though available on file were overlooked by the AO. It is true that the assessee has not given any reply subsequent to the pre-assessment notices. However, that would not give a right to the ACCT to resort to the process of ex parte assessment in view of the explanation given by assessee to the Enforcement Wing, which is part of records. Therefore, the failure to consider the objections received by the Enforcement Wing and forwarded by them to the ACCT would vitiate the assessment orders;

++ as far as denial of personal hearing is concerned, the ACCT has denied the assessee opportunity of hearing only on the ground that objection was not given to the pre-assessment notices. Even if objection was not given, still the assessing authority was expected to post the matter for hearing by issuing notice to the assessee.

(See 2018-TIOL-688-HC-MAD-VAT)