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Facts
The assessee preferred an appeal against the order of the CIT(A) which arose from an assessment order passed by the ACIT. The grounds of appeal contested the jurisdiction of the AO, additions made under Section 68 for unexplained cash credit, and disallowance of depreciation on a car. The assessee also raised issues regarding violation of natural justice and lack of opportunity to be heard.
Held
The Tribunal noted that the First Appellate Authority had proceeded ex parte and the assessee claimed lack of knowledge of notices. Considering this, the Tribunal granted further opportunity to the assessee to represent the case before the CIT(A) and remitted the issue for fresh consideration.
Key Issues
Whether the assessment order was passed without jurisdiction and in violation of natural justice? Whether additions under Section 68 and disallowance of depreciation were justified, and if the assessee was provided adequate opportunity to be heard?
Sections Cited
143(3), 68, 32, 271AAB(1A)(b)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH “F”: NEW DELHI
Before: Ms. MADHUMITA ROY & SHRI KHETTRA MOHAN ROY
O R D E R
PER Ms. MADHUMITA ROY, JM:
The instant appeal, preferred by the assessee, is directed against the order dated 14.08.2024 (DIN: ITBA/APL/M/250/2024-25/1067847146(1), passed by the Ld. CIT(A)-26, New Delhi, arising out of the order dated 24.03.2023, passed by ACIT, Central circle-15, New Delhi, under Section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for the Assessment Year 2021-22.
The assessee has raised the following grounds of appeal:
“1. BECAUSE The learned Assessing Officer lacked the appropriate jurisdiction to pass the impugned assessment order dated 24.03.2023 and,
2. The learned CIT (Appeals) and the Assessing Officer erred on facts and in law in making addition of Rs. 75,01,502/- under section 68 of the Act which is illegal, unjustified and therefore liable to be deleted:
I. Because the addition made by the learned Assessing Officer in complete violation of principles of natural justice and without affording reasonable time to the assessee deserves to be deleted. In the first appeal, the Ld. CIT (A) did not take into consideration the facts as submitted by the assessee and did not even verify the facts from the records of the department. П. Because the assessee was issued SCN dated 22-03-2022 (sent on 23.03.2023) and was given time till 11 a.m. on 24-03-2023 for making compliance. Further the amount proposed to be added was not mentioned/indicated by the Ld.AO in the SCN. In the first appeal, the CIT(A) completely ignored these facts and confirmed the addition without applying his mind.
III. Because on facts and in law and on grounds taken and basis adopted the addition of Rs.75,01,502/- u/s 68 of the Act on account of unexplained cash credit in respect of unsecured loans from (i) Mr. Sanjay Bansal Rs.23,88,302/-; (ii) Mr. Sidharth Negi Rs.1,13,200/- and (iii) Vishal Video Rs.50,00,000/- is totally unjustified and illegal as they were part of the opening balance of the unsecured loan. The Ld CIT(A) neither examined these facts nor pass a speaking order in this regard.
IV. Because neither the learned Ld. CIT(A) nor the Ld. AO take in consideration the copies of Balance Sheet as at 30.03.2019 and 30.03.2020 showing the unsecured loan from the aforesaid three parties and submitted during the course of assessment proceedings as Annexure-2 to the Letter dated 23.02.2023 and also ignoring the other material on record.
V. Because the learned AO did not allow opportunity to the assessee to explain full facts by giving reasonable time and opportunity of being heard. The Ld. CIT(A) ignored these facts completely in the Impugned Order.
3. The Ld. CIT (A) as well as the Ld. AO erred on facts in law by disallowing the claim of depreciation u/s 32 amounting to Rs.6,31,642/-on car used by the assessee for the purpose of earning taxable income under the head of profit and gains from business or profession which is liable to be deleted:
I. Because on the grounds taken and basis adopted and on facts and in law disallowance of depreciation amounting to Rs.6,31,642/- is illegal unjustified and unwarranted. The Mercedes car was used by the assessee for the purpose of the business of the assessee firm and the assessee offered full explanation for the same. Π. Because The Ld.AO disallowed the expenditure without any cogent material on record. In the first Appeal the Ld. CIT(A) did not take this ground into consideration.
The learned AO erred on facts in law in initiating the penalty proceedings u/s 271AAB(1A) (b) of the Income Tax Act.”
As per office report there is delay of 35 days in filing the appeal before the Tribunal. The assessee has filed condonation application describing the reasons for delay in filing the appeal. Considering the averments made in the condonation application the delay in filing the appeal before the Tribunal is condoned and the appeal is taken up for hearing.
4. Ld. Counsel appearing on behalf of the assessee at the outset submitted that the Ld. First Appellate Authority has proceeded with the appeal and finalized the same ex parte, qua the assessee. He submitted that no notice allegedly issued by the Ld. CIT(A) came to the knowledge of the assessee and therefore the assessee could not make submissions in relation to the alleged notices issued by the Ld. CIT(A). He prayed that to provide an opportunity to the assessee to represent his case before the First Appellate Authority the matter may be remitted to the Ld. CIT(A) to decide the issues involved on merits after providing an opportunity to the assessee of being heard. Considering this peculiar aspect of the matter this Bench deems it fit and proper to grant further opportunity of being heard to the assessee to represent his case before the First Appellate Authority effectively in order to prevent the miscarriage of justice. Thus, this appeal is disposed of by remitting the issue to the file of the Ld. CIT(A) for consideration of the same afresh and to pass a reasoned order by granting adequate opportunity of being heard to the assessee and upon considering the evidence on record or any other evidence which the assessee may choose to file at the time of hearing of the matter. It is also made clear that in the event the assessee does not cooperate with the Ld. CIT(A), the said authority would be at liberty to pass orders as it deems fit and proper, strictly in accordance with law. We order accordingly.
Assessee’s appeal is allowed for statistical purposes.
Order pronounced in open court on 03.06.2025.