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Facts
The assessee, engaged in clearing and forwarding services, did not file a return for AY 2017-18 due to reduced turnover. The AO issued a notice, and upon non-compliance, made a best judgment assessment, adding unexplained cash and credit entries in the bank account. The CIT(A) dismissed the assessee's appeal ex-parte.
Held
The Tribunal condoned the delay in filing the appeal. Considering the assessee's submission that they were not given a proper opportunity to explain the cash and credit entries, the matter was restored to the AO for fresh adjudication.
Key Issues
Whether the assessee was provided with a proper opportunity of being heard before the assessment order and during the appellate proceedings? Whether the additions made to income were justified?
Sections Cited
144, 147, 250, 142(1), 144(1), 69
AI-generated summary — verify with the full judgment below
Before: SHRI BEENA PILLAI & SMT.RENU JAUHRI
Appellant by : Shri Ramesh Jain Respondent by : Shri Annavaran Kosuri- Sr. AR Date of Hearing 15.10.2025 Date of Pronouncement 31.10.2025 आदेश / O R D E R PER RENU JAUHRI [A.M.] :-
This appeal is filed by the assessee against the order of the Learned Commissioner of Income-tax (Appeals), Mumbai/National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”] dated 26.08.2024 passed u/s. 250 of the Income-tax Act, 1961 [hereinafter referred to as “Act”] for the Assessment Year [A.Y.] 2017-18.
“The appellant objects to the assessment order dated 28/10/2019 passed u/s. 144 r ws 147 of the 1.T. Act, 1961 by the Learned Income Tax Officer, Ward 2(3)(2), Mumbai (hereinafter referred to as the "Assessing Officer" for the Assessment Year 2017-2018 and as confirmed by learned NATIONAL FACELESS APPEAL CENTRE (NFAC) commissioner vide order dated 26/08/2024 vide Din ITBA/NFAC/S/250/2024-25/1067982105(1), on the following among other grounds:
1. 1. On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in confirming the action of re-opening of the assessment proceeding U/s 147 of the income Tax Act 1961.
2. On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in confirming the Order passed by the learned AO which, is illegal, bad in law, ultra virus and contrary to the provisions of the law and facts, since the order of the learned AO is passed without giving proper opportunity to the assesse of hearing and explaining the case.
3. On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in confirming the Order passed by the learned AO. The same is bad in law as proper service of the notices was not made to the assessee, the same is in violation of the principles of natural justice on various issues as stated herein.
4. On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in confirming the additions of Rs. 1,14,46,810/- comprising of the following amount, without affording proper opportunity of being heard to the assessee. a. Cash Deposits of Rs. 5,02,000/- b. Total Credit entries in the bank statements of Rs. 1,09,44,813/- The learned CIT (A) failed to appreciate that these credits represents various business transaction having debit & credit entries, which interlinked as well.
5. On the facts and in the circumstances of the case and in law, the Order passed by the learned CIT (A) is illegal, bad in law, ultra virus and contrary to the provisions of the law and facts, and the same is passed without application of mind and in violation of the principles of natural justice on various issues as stated hereinabove. The order so confirmed by the learned CIT (A) is without any basis and based on assumption, surmises, whims and suspicion. The learned CIT(A) passed the order in mechanical manner without giving proper opportunity to the assesse of hearing and explaining the case.
6. On the facts and in the circumstances of the case and in law the Hon'ble members are requested to condone the delay in filing the appeal before the Hon'ble ITAT.
7. The Appellant craves leave to add, to alter or to amend any of the ground of appeal mentioned hereinabove.
8. Each one of the above grounds of appeal is independent and without prejudice to each other.”
At the outset, it is seen that the appeal is delayed by 220 days. The assessee has filed an affidavit explaining the reasons of delay. As submitted, the appellate order u/s. 250 dated 26.08.2024 was delivered electronically but remained unnoticed by the assessee. Moreover, the assessee being not highly educated and unfamiliar with tax laws was dependant on his consultant. Owing to differences with the consultant, assessee was not properly informed by him about the appellate proceedings. Further, the assessee has shifted to his native placed in UttarPradesh due to which he could not properly co-ordinate the compliance to the tax notices. He has therefore, requested for condonation of delay which occurred due to genuine and bonafide reasons.
After considering the submissions of the assessee, we hereby condone the delay being on account of reasonable cause.
Brief facts of the case are that the assessee was engaged in the business of clearing and forwarding services. Due to reduced turnover, the total income of the assessee was below the taxable limit for A.Y. 2017-18 and therefore, no return was filed by him. Subsequently, a notice was issued by ld. AO u/s. 142(1) on 16.01.2018 requiring the assessee to furnish his return of income. As no compliance was made by the assessee, ld. AO proceeded to make a best judgment assessment u/s. 144(1) of the Act. Based on information gathered by the department, and in view of non- . compliance by the assessee to several notices issued by the ld. AO, assessment was completed ex-parte at an income of Rs. 1,14,46,810/- after adding the unexplained cash and credit entries in assessee’s bank account u/s. 69 of the Act.
4.2 Aggrieved, the assessee preferred an appeal before ld. CIT(A). In the absence of any compliance by the assessee to multiple notices issued by ld. CIT(A), the appeal was also dismissed ex-parte. Further aggrieved, the assessee has filed the present appeal before the Tribunal.
Before us, ld. AR, has submitted that assessee did not get proper opportunity to explain the sources of cash and credit entries in the bank account and therefore, requested to remand back the case to the ld. AO for proper verification. Ld. DR on the other hand has relied on the orders of lower authorities.
After hearing rival submissions and considering the material before us, we deem it appropriate to restore the matter to ld. AO for fresh adjudication after affording another opportunity to the assessee. The assessee is also directed to make the requisite compliance before the ld. AO.
Order Pronounced in Open Court on 31.10.2025