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Facts
A survey under Section 133A found on-money of Rs. 2,99,10,000/-, which the assessee's partner admitted and offered as additional income. The Assessing Officer (AO) added Rs. 3,00,00,000/- as unexplained cash credit under Section 68 and Rs. 79,48,000/- under Section 43CA for difference in property valuation. The CIT(A) dismissed the assessee's appeal ex-parte due to alleged non-compliance, but the assessee claimed notices were sent to an incorrect email ID and the phone number belonged to a retired partner, leading to a delay in filing the ITAT appeal.
Held
The Tribunal condoned the delay in filing the appeal, finding it not deliberate. It noted that the CIT(A) passed the ex-parte order without proper notice to the correct email address, violating the Principle of Natural Justice. Therefore, the matter was remanded back to the CIT(A) for fresh adjudication on merits, providing the assessee a proper opportunity of hearing.
Key Issues
Whether the CIT(A) was justified in dismissing the appeal ex-parte without proper notice, and the validity of additions made by the AO under Section 68 (unexplained cash credit) and Section 43CA (property valuation difference).
Sections Cited
68, 133A, 139(1), 271(1)(c), 43CA, 43CA(2), 143(2), 142(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “F” BENCH, MUMBAI
Sumatinath Builders, Vs. The Assistant Commissioner Shop No.1, of Income Tax, Jay Vijay Nagari-1, Circle-4, Virar Link Road, Thane. Nallasopara, Vasai-Virar Dist. Thane-401209. Maharashtra. [PAN :ABDFS6440 E] (Appellant) .. (Respondent) Appellant by : None Respondent by: Ms Kavitha Kaushik, Sr. DR Date of Hearing 09.09.2025 Date of Pronouncement 15.09.2025 O R D E R PER SUCHITRA KAMBLE, JUDICIAL MEMBER:
This appeal is filed by the Assessee against the appellate order dated 12.09.2023 passed by the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre(NFAC) Delhi, relating to the Assessment Year 2015-16.
The assessee has raised the following grounds of appeal:
- 2– 1. The Hon. CIT (A), National Faceless Appeal Centre (NFAC), Delhi erred in dismissing the appeal ex-parte, for alleged non-compliance to appeal notices, when in reality, written submission along with documentary evidences was already filed on 24.10.2018 before the Hon. CIT(A) 3, Thane, the appeal was physically heard on the said date by the Hon. CIT(A) 3, Thane and therefore the order dismissing the appeal for non-attendance is not justified and may kindly be over turned and set aside.
2. The Hon. CIT (A), National Faceless Appeal Centre (NFAC), Delhi erred in dismissing the appeal ex-parte, for alleged non-compliance to appeal notices, when the appellant was not aware of such notices issued and for this reason, the order dismissing the appeal for non-attendance is not justified and may kindly be quashed/set aside.
3. The Hon. CIT(A) erred in upholding the action of the Id AO in making addition of Rs.3,00,00,000/- u/s. 68 of the IT Act, 1961 as unexplained cash credit (after first reducing the same from declared income), not appreciating that the said additional income was declared by the appellant in the course of survey action u/s 133A on 20.11.2014, credited to the profit and loss account and offered to tax as part of income tax return filed u/s 139(1) of the I. Tax Act, 1961 and therefore the action of the Id AO in re-computing the said income and initiating penalty u/s 271(1)(c) thereon as confirmed by the Hon. CIT(A) is not justified and bears to be deleted.
4. The Hon. CIT(A) erred in upholding the addition of Rs.79,48,000/- u/s 43CA of the 1.T Act 1961, on account of difference between the value as per stamp valuation authority and actual sale consideration, in respect of one flat and three shops for which agreements for sale were executed with customers for the project Shalibhadra Classic, not appreciating that the appellant firm has recognized sale in its books of accounts as per revised sale consideration as mentioned in Deed of Rectification dt.13.03.2018 and accordingly there is no justification for making any addition u/s 43CA of the 1. T. Act 1961.
5. The Hon. CIT(A) erred in upholding the addition of Rs. 79,48,000/- u/s 43CA of the I.T Act 1961, by imposing the values as per stamp valuation authority to be the deemed sale consideration in respect of one flat and three shops, without referring the valuation to the valuation officer as provided u/s 43CA(2) of the 1.T Act 1961.
6. The appellant craves leave to add, alter, amend, delete and/or vary any of the above grounds of appeal at any time before the decision of the appeal.
- 3–
The brief facts of the case are that a survey action u/s.133A of the Act was carried out in the case of M/s. Sumatinath Builders on 20.11.2014. During the course of survey action various incriminating documents relating to Financial year 2014-15 was found which was indicating receipt of cash/on-money amounting to Rs. 2,99,10,000/-. During the course of survey action, statement of Shri Dinesh Jain, one of the partner was recorded wherein he admitted the receipt of on-money based on the impounded material (Blue Colour Chairman Spiral Pad) and therefore, offered on money to the extent of Rs.2,99,10,000/- as additional income over and above regular income of the firm for Financial Year2015-16. The return of income was filed by the assesse- firm on 30.03.2016 for the Assessment Year 2015-16, thereby declaring total income at Rs. 3,11,14,710/-. The assessee’s case was selected for limited scrutiny to verify high increase in sundry creditors as compared to preceding year, high interest expenses as compared to business turnover, mismatch in sales turnover reported in Audit Report and ITR, high interest expenditure against new capital added in work progress or addition fixed assets. Accordingly, statutory notices were issued u/s.143(2) and 142(1) of the Act and duly served upon the assesse. In response to the said notices the Authorized Representative and CA attended the proceedings and submitted various details. The Assessing Officer observed that the assesse-firm is Builder and Developers. During the assessment proceedings the Authorized Representative of the assesse submitted information in support of his return of income viz.
- 4– acknowledgment of return, computation of income, Profit & Loss A/c., Balance sheet and other various details as per the requirement of assessment proceedings. At the time of assessment proceedings, the assessee also submitted the details of unsecured loan and confirmation from the parties. The Assessing Officer observed that the assesse-firm offered Rs.3,00,00,000/- on account of on-money received declared during the course of survey action during FY 2014-15. During the course of assessment proceedings, the assesse was asked to furnish the details of persons from whom the assesse-firm has received on-money against the booking of flats/shops which was admitted and declared by the assessee-firm, during the course of survey action. However, the assessee failed to submit such details and therefore, the Assessing Officer treated the said receipts as unexplained credit in the books of accounts of the assesse-firm and the amount of Rs.3,00,00,000/- was added u/s. 68 of the Act. The Assessing Officer, has given details of 4 units sales agreement which was entered by the assessee-firm, but no sales was booked in profit and loss accounts by the assessee-firm for the year under consideration. The reply of the assessee was that the assessee- firm is following Project Completion Method for the said project and therefore, all the sales will be booked at the time of completion of the project. Vide letter dated 24.11.2017, the assesse offered Rs.79,48,000/- as additional income over and above regular income for the year under consideration. Thus, the Assessing Officer treated the same as deemed income u/s.43CA of the Act.
- 5–
Being aggrieved by the Assessment Order, the assesse filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee.
At the time of hearing none appeared on behalf of the assesse. An affidavit for delay in filling the appeal has been filed by the partner of the assessee-firm thereby stating that the assessee could not respond to the notices of the CIT(A) which was sent to the email Id of taxauj@gmail.com. In fact, the said Email-Id is incorrect and hence the notices were not on the Email Id rdlukad@gmail.com which was mentioned in Form No. 35. As regards to the phone number mentioned in Form No.35, the same belongs to the partner of the assessee-firm who retired from assesse- firm in the month of October,2019 and the said notices were also not forwarded to the assessee. Therefore, the assessee could not represent his case before the CIT(A). The assessee in the said affidavit mentioned at para 11 that the assessee became aware of the passing of ex-parte order by the CIT(A) only when the assessee firm was in the receipt of demand recovery notice on 05.06.2025. There is a delay of 601 days in filling the appeal before the Tribunal. But after going through the details of the affidavit, it appears that the delay is not deliberate on the part of the assessee and hence the delay is condoned.
The Ld. DR relied upon the Assessment Order and the Order of the CIT(A).
- 6– 7. We have heard the Ld. DR and perused the affidavit filed by the assesse. It appears that the CIT(A) has passed ex-parte order and has not given proper notice at the correct email ID address and decided the matter ex-parte. Therefore, it will be appropriate to remand this matter to the file of the CIT(A) for proper adjudication of the issues contested by the assessee therein and decide the same on merit as per the Income tax statue. Needless to say, the assessee be given opportunity of hearing by following the Principle of Natural Justice. It is hereby directed to the assessee that the assessee should take utmost care while responding to the notices of hearing and co-operate fully with the appellate authorities without seeking any unnecessary adjournments. Hence, the appeal of the assessee is partly allowed for statistical purposes.
In the result, the appeal of the assessee is partly allowed for statistical purposes.
The order is pronounced in the open Court on 15.09.2025.