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Facts
The appeals were filed by the assessee against the appellate orders upholding additions made by the Assessing Officer (AO) under sections 144, 68, and 69C of the Income Tax Act, 1961. The assessee had failed to comply with notices and opportunities provided by the AO, leading to ex-parte assessment orders. The CIT(A) also dismissed the appeals due to non-response.
Held
The Tribunal noted that the lower authorities had not adjudicated the substantive issues due to the assessee's non-compliance. Considering the substantial interest of justice and the partner's affidavit attributing non-compliance to technical incompetence and reliance on a legal representative, the Tribunal set aside the appellate orders.
Key Issues
Whether the appeals should be set aside and remanded to the AO for fresh adjudication due to non-adjudication of substantive issues by lower authorities, despite the assessee's non-compliance and ex-parte orders.
Sections Cited
144, 68, 69C, 139(1), 133A, 148, 142(1)
AI-generated summary — verify with the full judgment below
Before: SHRI SAKTIJIT DEY & SHRI PRABHASH SHANKAR
Date of Hearing 16.07.2025 Date of Pronouncement 12.08.2025 आदेश / O R D E R PER PRABHASH SHANKAR [A.M.] :- The above captioned appeals arising from the appellate order of even date have been filed by the assessee against the order passed by the Learned Commissioner of Income-tax, Appeal, CIT(A) 51, Mumbai [hereinafter referred to as “CIT(A)”] pertaining to assessment orders passed u/s. 144 of the Income-tax Act, 1961 [hereinafter referred to as 3171/Mum/2024 A.Y. 2012-13, 2013-14 Evergreen Infrastructures, Mumbai “Act”] dated 21.03.2016 for the Assessment Year [A.Y.] 2012-13 and 2013- 14. Since the issues are common and also the fact that appeals were heard together, they are being taken up together for adjudication vide this composite order for the sake of brevity.
The grounds of appeal
are as under: ITA 3170/MUM/2024(A.Y. 2013-14)
1. The learned assessing officer erred in facts and law by adding Rs. 19,26,65,200/- and to that extent enhancing income of the appellant.
2. That the learned assessing officer erred in treating whole of the deposit of Rs. 76,08,000/-cash in the bank as the income of the appellant.
3. The learned assessing officer erred in treating whole of the amount of Rs. 16,55,68,200/- received by the appellant as unexplained and adding the same to the income of the appellant.
4. The learned assessing officer erred in treating Rs. 1,89,70,000/- received as introduction of capital from the partners as income of the appellant and adding it to income.
5. The learned assessing officer erred in adding the travelling expenses incurred by the appellant amounting to Rs. 5,19,000/-
6. The learned assessing officer erred in not granting proper opportunity of being heard to the appellant.
7. That the learned assessing officer erred in levying interest and penalties under various sections of the Income Tax Act.
3. It may be stated here that this is the second round of litigation before us as the earlier order passed by Bench in and 3170/Mum/2024 dated 19.08.2024,the appellate orders for both the years were passed on ex-parte basis by the Tribunal on account of 3171/Mum/2024 A.Y. 2012-13, 2013-14 Evergreen Infrastructures, Mumbai non compliance by the assessee during appeal proceedings. However, subsequently, both the orders were recalled vide MA No.36& 37/M/2024 dated 28.04.2025. Consequently, the appeals have been revived and were heard by us afresh.
4. The assessee had not filed its return of income u/s. 139(1) of the Act for A.Y 2012-13. A survey action u/s.133A of the Act was conducted on 07.10.2013 on the assessee firm. It filed return in response to notice u/s 148 of the Act declaring total income at Rs.2,08,29,240/-. The AO issued various notices u/s.142(1) from time to time to the assessee firm but it failed to comply with the same. Therefore, the AO issued a show-cause notice informing assessee that on failure to attend on the prescribed date, order u/s.144 of the Act will be passed and also a final opportunity was given to the assessee firm. However, the assessee firm failed comply to various notices leading to framing of ex parte assessment order.
5. In AY 2013-14, the AO made various additions on the basis of credit entries in certain bank accounts wherein the assessee had made cash deposits. The said deposits were not explained on account of non compliance leading to additions u/s 68 of the Act amounting to Rs. 76,08,000/-,Rs. 16,55,68,200/-and Rs. 1,89,70,000/-.Another addition 3171/Mum/2024 A.Y. 2012-13, 2013-14 Evergreen Infrastructures, Mumbai of Rs. 5,19,000/- made by the AO u/s 69C of the Act. The AO observed that the assessee firm had made payment to Zest Tours and Travels in cash amounting to Rs. 5,19,000/- on account of travelling which was treated as unexplained expenditure u/s. 69C of the Act on account of non compliance by the assessee.
During the course of the appellate proceedings, the assessee was given repeated opportunities to file its submissions in the above matters but no submission was made. Also, no documentary evidence had been filed to explain the relevant credits and unexplained expenditure. In the absence of any submission all the addition made by the AO u/s 68 and section 69C of the Act were upheld.
AY 2012- 13,similar additions were made on account of unexplained cash deposits in various bank accounts amounting to Rs Rs.2,76,86,000/- to the total income of the assessee firm being unexplained cash credit u/s.68 of the Act. Further, the AO noticed that during the year, the partner Mr. Aftab Shaikh had introduced Rs. 7,50,000/- as capital by depositing in the bank account of the firm. Therefore, the AO also added the said amount of Rs. 7,50,000/- u/s 68 of the Act also on account of non compliance.
3171/Mum/2024 A.Y. 2012-13, 2013-14 Evergreen Infrastructures, Mumbai 8. In the subsequent appeal filed, the ld.CIT(A) noted that hearing notices were issued from time to time. However, no response was made by the assessee. Accordingly, both additions were upheld dismissing the appeal for the AY 2012-13 as well.
In course of hearing before us, the ld.AR contented that the appellate orders were passed ex parte as the assessee being unfamiliar with the process of filing submissions online on e-portal, could not file the submissions leading to ex parte appeal order.
Apparently, in this case, none of the issues in both the aforesaid appeals have been adjudicated by the lower authorities as the assessment orders were passed u/s 144 of the Act and the subsequent appeals were also dismissed on account of non-prosecution. In an affidavit filed by the partner,it is submitted that non compliance is mainly attributed to lack of technical competence, being not very educated,he depended on the legal representative who did not inform of the income tax proceedings in time leading to non-compliance.
We have heard both the parties and perused the materials available on record. In the light of above observations and in the substantial interest of justice, we set aside the appellate ordersand restore the entire matter back to the AO for passing the assessment 3171/Mum/2024 A.Y. 2012-13, 2013-14 Evergreen Infrastructures, Mumbai ordersde novo. In case of any failure on the part of the assessee, he would be at liberty to pass order after considering the materials on record. The assessee will not seek any adjournment on frivolous ground and remain cooperative during the course of proceedings before the AO.
In the result, both the above appeals are allowed for statistical purposes. Order pronounced in the open court on 12.08.2025.