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Facts
The assessee, a partnership firm, failed to file a return for AY 2017-18. The AO issued notices under Section 142(1), which were not complied with. The AO made additions for cash deposits during demonetization and unexplained business profits, assessing total income under Section 144. The CIT(A) also decided the appeal ex-parte and upheld the AO's additions.
Held
The Tribunal condoned the delay in filing the appeal after noting the Ld. DR did not object. It was observed that the assessee relied on a legal consultant who defaulted in compliance. The matter was restored to the AO for fresh adjudication.
Key Issues
Whether to restore the matter to the AO for fresh adjudication due to lapses of the legal consultant and lack of proper representation by the assessee at assessment and appellate stages.
Sections Cited
250, 144, 139(1), 142(1), 69A
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Income Tax Appellate Tribunal, MUMBAI BENCH “E”, MUMBAI
Before: SHRI ANIKESH BANERJEE & SHRI PRABHASH SHANKAR
Date of hearing : 07/08/2025 Date of pronouncement : 11/08/2025 O R D E R Per Anikesh Banerjee (JM):
The instant appeal of the assesse is filed against the order of the National Faceless appeal Centre (NFAC), Delhi [(in short, ‘the Ld. CIT(A)] passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’) for Assessment Year 2017-18, date of order 31/05/2023. The impugned order emanated from the order of the Learned Income-tax Officer, Ward 28(2)(1), Mumbai [in short, the “Ld. AO”] passed under section 144, date of order 27/11/2019.
The appeal was filed with a delay of 676 days. A duly notarised affidavit, executed on 04/04/2025, was placed on record. In the said affidavit, Shri Nikhil A.
2 ITA 2465/Mum /2025 M/s Karam Corporation Bhanushali, partner of the assessee-firm, affirmed that the delay in filing the appeal occurred due to the lapse on the part of the legal consultant. He further stated that despite diligent efforts, the said legal consultant could not be traced, whereupon the partner himself executed the affidavit seeking condonation of delay. The Ld. DR did not raise any objection to the submissions of the assessee. Accordingly, the delay of 676 days is condoned, and the matter is admitted for adjudication on merits.
The brief facts of the case are that the assesse is a partnership firm and during the impugned assessment year the assessee had not filed any return under section 139(1) of the Act. As per information available on the ITBA portal of Actionable Information Monitoring System (AIMS), it was found that the assesse deposited cash in bank accounts during the demonetization period. In this impugned assessment year, the Ld.AO issued the notice under section 142(1), but none of the notices was complied with. The Ld.AO found that the assesse has deposited cash of Rs.1,78,16,500/- in bank account maintained with Vishweshwar Sahakari Bank and HDFC Bank during the period of demonetization. Further, the assessee has also deposited cash of Rs.10,94,31,570/- other than the period of demonization in the bank accounts and there are other credits to the tune of Rs.48,97,69,815/- which comes to total amount to Rs.61,70,17,885/-. But the Ld.AO issued several notices under section 142(1) of the Act and finally, the assessment was framed exparte under section 144 of the Act. The addition was made related to cash deposit in demonetization period which comes to Rs.1,78,16,500/- under section 69A and further the addition was made of unexplained business profit related to business turnover amount to R.59,90,01,385/- and profit was taken at 2% which comes to Rs.1,19,84,028/-. So 3 ITA 2465/Mum /2025 M/s Karam Corporation the total income was determined amount to Rs.2,98,00,528/-. The aggrieved assesse filed an appeal before the Ld. CIT(A). However, the assessee remained absent despite service of hearing notices issued by the Ld. CIT(A). Consequently, the appeal was decided ex parte on the basis of the material available on record, and the Ld. CIT(A) upheld the addition made by the Ld. AO. Aggrieved thereby, the assessee has preferred the present appeal before us.
The Ld. AR submitted that the assessee was unable to represent the matter either before the Assessing Officer or before the appellate authority due to lapses on the part of the legal consultant. It was stated that the said consultant did not properly apprise the assessee regarding the progress of the appellate proceedings. In these circumstances, the Ld. AR prayed that the matter be restored to the file of the Ld. AO for fresh adjudication.
The Ld. DR did not raise any serious objection to the submissions advanced by the Ld. AR.
We have heard the rival submissions and perused the material available on record. From the affidavit placed before us, it is evident that the assessee had entirely relied upon the legal consultant, who had defaulted in compliance before both the authorities. The additions in the impugned assessment comprise (i) total cash deposits during the demonetisation period amounting to Rs.1,78,16,500/-, and (ii) net profit on turnover amounting to Rs.1,19,84,028/-. At both the assessment and appellate stages, the assessee failed to furnish any documentary evidence in support of its claims. Accordingly, in the interest of justice, we deem it appropriate to restore the matter to the file of the Ld.AO. The assesse is directed to furnish all relevant documents and evidence, if any, before the Ld.AO. the Ld.AO shall consider all such documents and evidence in accordance with law and decide