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Facts
The assessee filed an appeal against an order confirming additions made by the Assessing Officer for Assessment Year 2011-12. The additions were related to alleged commission income and interest income, based on an investigation report about accommodation entries. The assessee failed to appear before the AO and CIT(A), leading to ex-parte orders.
Held
The Tribunal condoned the delay in filing the appeal due to the advocate's illness. Observing that the assessee did not provide submissions before the AO or CIT(A) regarding the additions, the Tribunal restored the appeal to the CIT(A) for de novo adjudication with an opportunity for the assessee to be heard.
Key Issues
Whether the CIT(A) erred in confirming the additions made by the AO for commission and interest income without proper adjudication, and whether the assessee was provided adequate opportunity to present their case.
Sections Cited
250, 148, 144, 147, 194A
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Income Tax Appellate Tribunal, “J (SMC
Before: SHRI OM PRAKASH KANTSHRI SANDEEP SINGH KARHAIL
Date of Hearing – 29/07/2025 Date of Order – 31/07/2025
O R D E R PER SANDEEP SINGH KARHAIL, J.M.
The assessee has filed the present appeal against the impugned order dated 04/04/2024, passed under section 250 of the Income Tax Act, 1961 (“the Act”) by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, [“learned CIT(A)”], for the assessment year 2011-12.
From the perusal of the record, we find that despite receipt of notice of hearing issued by the registry of the Tribunal, there was neither any appearance on behalf of the assessee, nor was any application seeking adjournment filed. Accordingly, we proceed to decide the present appeal on the basis of the material available on record and after hearing the submissions of the learned Departmental Representative.
The present appeal is delayed by 347 days. Along with the appeal, the assessee has filed an affidavit seeking condonation of the delay in filing the present appeal. As per the assessee, after receipt of the impugned order, the same was handed over to her Advocate for further action. However, during that period, the Advocate was suffering from acute viral fever and was advised by the doctor to have complete bed rest. Accordingly, the advocate was neither able to file the appeal in time nor was in a position to inform the assessee about the same. Having considered the submissions of the assessee, we are of the considered view that there was sufficient cause which prevented the assessee from filing the present appeal within the limitation period. Accordingly, we condone the delay in filing the present appeal.
In this appeal, the assessee has raised the following grounds:
– “1. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax - Appeal erred in confirming the action of the Assessing Officer (AO) in issuance of notice u/s. 148 of the Income Tax Act.
2. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax - Appeal erred in confirming the action of the Assessing Officer (AO) to pass an order u/s. 144 r.w.s. 147 of the Income Tax Act.
3. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax - Appeal erred in confirming the action of the Assessing Officer in determining the income at Rs. 13,39,170/- as against the returned income of Rs. 3,90,510/-.
4. On the facts and in the circumstances of the case and in law, the the learned Commissioner of Income Tax erred in confirming the action of the Assessing Officer in determining and adding the commission income of Rs. 5,81,680/-
5. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax erred in confirming the action of the Assessing Officer in determining and adding the interest income of Rs. 3,66,977l-.”
The brief facts of the case are that the assessee is an individual and for the year under consideration filed her return of income on 09/05/2012, declaring a total income of INR 3,90,510. On the basis of the information received from the Joint Director of Income Tax (OSD) (Inv.) that enquiry was conducted on the entities engaged and controlled by Mr. Ritesh Burad and it was found that Mr. Ritesh Burad is engaged in providing accommodation entries on commission for non-genuine business activities through various companies manage and controlled by him and the assessee is one of the directors in one of the companies controlled and managed by Mr. Ritesh Burad, notice under section 148 of the Act was issued and proceedings under section 147 of the Act were initiated. During the reassessment proceedings, from the perusal of the bank account of the assessee with Kotak Mahindra Bank in the name of M/s Monk Exports, wherein the assessee was a proprietor, it was observed that there were various frequent credits followed by debits, leaving a minimum balance in the said bank account. It was observed that during the year under consideration, there were credit entries amounting to INR 72.71 lakh, which were not shown in the return of income. Accordingly, the source of credits aggregating to INR 72.71 lakh remained undisclosed. On verification of the return filed, it was noticed that the assessee has not offered the income on the said receipts in her return of income, and the credits made in the above-mentioned bank account are not commensurate with the details filed by the assessee in the return of income for the year under consideration.
Since as per the investigation report, the assessee was engaged in the activity of providing accommodation entries on commission for non-genuine business activities, in absence of any reply by the assessee in response to various statutory notices and show cause notice issued during the reassessment proceedings, the Assessing Officer (“AO”), vide order dated 29/12/2018 passed under section 144 read with section 147 of the Act made the addition on account of commission income at 8% of the amount credited in bank account of assessee’s proprietary concern. Further, as per 26AS data, the assessee had earned interest income of INR 3,66,977 on which TDS was deducted under section 194A of the Act and the same was not offered in the return of income, the AO made the addition of INR 3,66,977 on account of interest income received by the assessee.
In the appeal before the learned CIT(A), the assessee challenged the additions made by the AO as well as challenged the initiation of reassessment proceedings under section 147 of the Act. However, the assessee failed to respond to various notices issued by the learned CIT(A). Accordingly, the learned CIT(A) dismissed the appeal filed by the assessee, vide ex–parte order, in the absence of any material contrary to the findings of the AO. Being aggrieved, the assessee is in appeal before us.
Having considered the submissions of the learned Departmental Representative and perusal of the material available on record, we find that the addition on account of commission income was made by the AO by considering that the assessee was an accommodation entry provider. The AO made the addition at 8% of the amount credited in the assessee’s bank account, which was reduced to 5% by the learned CIT(A). It is evident from the record that neither before the AO nor before the learned CIT(A) did the assessee file any submission against the addition made on account of commission income. Further, there is also no submission by the assessee in respect of the addition on account of interest income on which TDS under section 194A of the Act has been deducted. Accordingly, in the larger interest of justice, we deem it appropriate to restore the appeal to the file of the learned CIT(A) for de novo adjudication after providing a reasonable and adequate opportunity of hearing to the assessee. Needless to mention, the learned CIT(A) shall have the liberty to call for any remand report from the AO in respect of any details/submission, which may be filed by the assessee. Further, the assessee is directed to appear before the learned CIT(A) on all the dates of hearing as may be fixed without any default. As the matter is being restored to the file of the learned CIT(A) for adjudication on merits, the other grievances raised by the assessee in the present appeal do not call for adjudication at this stage. Accordingly, grounds raised by the assessee are allowed for statistical purposes.
In the result, the appeal by the assessee is allowed for statistical purposes. Order pronounced in the open Court on 31/07/2025