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Facts
The assessee's case was reopened under Section 147 based on information from the investigation wing regarding bogus purchases. The initial assessment added a significant amount on account of these purchases. The CIT(A) deleted the addition, but the ITAT restored the matter for fresh adjudication. The assessee failed to provide evidence for the purchases in subsequent proceedings.
Held
The Tribunal held that the impugned order of the CIT(A) suffered from a violation of the principle of natural justice and non-conformity to procedural requirements. The order was passed ex-parte without proper reasons, resulting in a miscarriage of justice. Therefore, the order was set aside, and the case was restored to the CIT(A) for fresh adjudication.
Key Issues
Whether the CIT(A) order dismissing the appeal ex-parte without proper notice and reasons is sustainable and whether the assessee's failure to provide evidence due to personal circumstances warrants a restoration of the case.
Sections Cited
250, 147, 148, 143(3), 254, 133(6), 69C, 271(1)(c), 234A, 234B, 234C, 234D
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Income Tax Appellate Tribunal, MUMBAI BENCH “B”, MUMBAI
Before: MS. PADMAVATHY S & SHRI RAJ KUMAR CHAUHAN
O R D E R PER RAJ KUMAR CHAUHAN (J.M.): 1. Both the appeals are filed by the appellant/assessee against the impugned order of same date on similar issue passed by National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as the & 3462/Mum/2025 Binal Vikash Bhardwaj “CIT(A)”] under section 250 of the Income Tax Act, 1961 [hereinafter referred to as “the Act”] dated 24.03.2025 for the A.Y. 2010-11 and 2011- 12 respectively, wherein the Ld. CIT(A) has dismissed the appeals ex parte on account of non appearance of the assessee before him, however Ld. CIT(A) purportedly decided the appeal on merit and confirmed the order of AO with respect to addition made on account of bogus purchase.
2. Since the facts of both the appeals filed by the assessee are exactly same and parties are same, hence both the appeals are taken up together in order to avoid the multiplicity of the decision. First of all, we are taking AY 2010-11 as lead case.
The brief facts as culled out from the proceedings of lower authorities are that the assessee is proprietor of M/s National Paper Agency and Director of M/s. Pooja Paper Trading Co. Ltd. The assessee has e-filed the return of income on 28.09.2011 declaring income at Rs. 8,69,192/-. Subsequently, the case of the assessee was reopened u/s 147 of the Act, on the basis of information received from investigation wing based on the investigation carried out by Sales Tax Authorities, as the income chargeable to tax had escaped assessment for the year under consideration. A notice u/s 148 of the Act was issued on 11.03.2013 & 3462/Mum/2025 Binal Vikash Bhardwaj which was duly served upon the assessee. The assessment was completed on 24.03.2014 assessing the total income at Rs. 1,37,34,943/- and the addition of Rs. 1,28,61,030/- made u/s 69C on account of bogus purchases.
4. The assessee challenged the said order before the Ld. CIT(A) who vide order dated 07.10.2015 had deleted entire addition made on account of bogus purchases. The department had filed the appeal against the order of Ld. CIT(A) before ITAT. The ITAT vide order dated 08.11.2017 restored the matter to the file of AO for adjudicating de novo with proper appreciation of the facts and the assessee was also directed to substantiate the purchases with cogent material including demonstration of actual delivery of material and other evidences.
During the assessment proceedings u/s 143(3) r.w.s. 254 of the Act, various notices were served upon the assessee and sufficient time was given to the assessee to prove the genuineness of purchases, however the assessee has failed to prove the genuineness of the purchases. A notice u/s 133(6) of the Act was issued by the AO to all the 5 alleged hawala parties, which were being run by single person Shri Paras Gandhi, but notice were not served and the assessee has failed to prove the & 3462/Mum/2025 Binal Vikash Bhardwaj genuineness of the purchases during the assessment proceedings. Accordingly, the assessment was completed on 26.11.2019, assessing the income at Rs. 1,37,34,940/-, and addition of Rs. 1,28,61,030/- was made. Penalty proceedings were also initiated.
6. Aggrieved by the order of AO, assessee preferred the appeal before Ld. CIT(A). During the appellate proceedings, despite issuance of various notices on various dates as mentioned in para 4.1 of the order of Ld. CIT(A), the assessee has failed to respond and join the proceedings. Therefore, the Ld. CIT(A) proceeded to decide the appeal ex-parte on merit and dismissed the appeal of the assessee stating that “sufficient opportunities have been provided to the appellant for furnishing submission/ evidences in support of grounds of appeal. However, the appellant could not furnish any explanation/ evidences. Accordingly, it is clear that the appellant has not discharged the burden of proof as required under the respective provisions. Hence, the grounds of appeal are not allowed.”
7. Aggrieved by the impugned order the assessee filed the appeal before the Tribunal and has raised the ground with respect to addition made u/s 69C of the Act and initiation of penalty u/s 271(1)(c) of the Act with the prayer to delete the addition of Rs. 1,28,61,030/- on account of alleged non genuine purchases. Assessee further requested to delete the Page | 4 & 3462/Mum/2025 Binal Vikash Bhardwaj disallowance made u/s 234A, 234B, 234C and 234D of the Act and initiation of penalty u/s 271(1)(c) of the Act.
8. We have heard Ld. AR and Ld. DR and examined the record. At the very outset, Ld. AR on behalf of the assessee argued that the impugned orders passed by Ld. CIT(A) are ex-parte as no notices of the hearing were served upon the assessee either through E-mail or by physical mode, as a result of which, the assessee could not join the appellate proceedings and failed to comply the notices issued. It is further argued by Ld. AR that Ld. CIT(A) has decided the appeal on merit, but has not given any reason for the dismissal of the appeal, therefore deciding the case ex- parte and without giving reason, resulted into miscarriage of justice and also suffers from illegality and assessee be given opportunity to pursue his case and the matter be restored to the file of Ld. CIT(A) for deciding afresh. Ld. AR further submitted that the business was being done by the father of the assessee who has expired and after his expiry, her mother suffered from cancer, therefore the assessee was under depression and could not take necessary steps with respect to assessment proceedings as well as appellate proceedings in both the assessment years. Accordingly, Ld. AR submitted that holistic a approach may be taken while allowing & 3462/Mum/2025 Binal Vikash Bhardwaj the appeal by restoring to the file of Ld. CIT(A) for fresh adjudication. In support of these arguments, assessee has filed an affidavit and the contents of the affidavit are reproduced as under:-
“1. This is an additional Affidavit in continuation of my original Affidavit dated 12.07.2025 as directed by the Bench of ITAT, Mumbai on 17-7-2025
I am Indian Citizenaged 37 years as on date.
3. The AO added 100% of the purchase value in the first round and 2% of purchase value was sustained by the CIT [A] in 1st round of first appeal.
Vide order dated 08.11.2017 the matter was restored to the AO by The Hon ITAT.
5. In 2(nd) round, the AO again added @ 100% of the purchase value as against 2% sustained by the CIT [A] in 1st round of first appeal.
Due to non-compliance to the notices, the ex parte order was thereby passed by the CIT[A] NFAC and addition was confirmed on account of purchases for A Y2010-11 in second round of 1st appeal.
Second round of 1st Appeal before CIT[A] was filed by the ex-consultants of my father with my signature on form 35. However, due to my state of depression, notices were never tracked by me. Moreover, all the three email ids were belonging to ex-consultants and or other relatives who did not communicate the notices of 1st appeal in the second round to me. Nor was my mother capable or fit enough to track my appeal. Besides, my sister being a handicapped lady, was totally unaware of these notices of hearing in second round of 1st appeal. Due to such typical family circumstances and health issues, notices remained unattended.
Thus reason for non-compliance to the said notices was that I was not aware of any Appellate proceedings in progress as email id mentioned in appellate order are as & 3462/Mum/2025 Binal Vikash Bhardwaj i. Prajapatia63@gmail.com [belongs to Consultant] ii. kaysan@vsnl.net [belongs to Consultant] iii Damji boricha@yahoo.com [belongs to Relative] Further no physical notices were ever received by me.
9. I became aware of the appellate order of the NFAC CIT(A) only when recovery and other proceedings started.
10.I have a sister who is physically challenged and is paralyzed. My father have expired 12.06.2008 and I have no brother or other immediate male family member to assist in this matter.
11. Thereafter, my mother is also suffering from cancer since FEBURARY 2025 till today and bed ridden and cannot look after this cases.
12. Even I was also suffering from depression during August 2021 to till date
Hence I was unable to look after this case.
In view of the above, I state that the notice u/s 250 as well as order u/s 250 passed are ex parte and without my knowledge and hence may be restored to the CIT[A] NFAC.
15. Whatever is stated above in Para no 1 to 15 is true to my knowledge and belief; 16.1 therefore request Your Honour to kindly quash this second order and oblige.
Solemnly declared this 21st day of July 2025.”
The Ld. DR on the other hand argued that the assessee deliberately chosen not to appear during the appellate proceedings and therefore the assessee does not deserve any leniency. Ld. DR has also filed a written & 3462/Mum/2025 Binal Vikash Bhardwaj submission contradicting the averments of Ld. AR as stated above and prayed that the assessment order as well as impugned order is legally right and the appeal is liable to be dismissed.
We have considered the rival submissions and examined the record. To appreciate the arguments, we deem it fit to extract the relevant portion of the impugned order of Ld. CIT(A) in para no. 4.1, 4.2, 6 to 6.7 as under:- “4.1 During the appellate proceedings various notices have been issued vide which the appellant was requested to furnish written reply/information through e-filing portal. The details of the notices issued are as under:-
Sr. Date of Notice issued Remarks Notices sent to Mail_ids No. 1 02.02.2021 No Response prajapatia63@gmail.com, damji_boricha@gmail.com and kaysan@vsnl.net 2 09.02.2021 No Response -do- 3 08.09.2023 No Response -do- 4 02.11.2023 No Response -do- 5 12.06.2024 No Response -do- 6 07.02.2025 No Response -do- 7 17.02.2025 No Response -do- 4.2 It is clear from the above table that ample opportunities have been provided to the appellant during appellate proceedings, however, neither & 3462/Mum/2025 Binal Vikash Bhardwaj any written submission/ explanations nor any documentary evidence have been filed in support of the grounds of appeal
. It clearly shows that the appellant is not interested to pursue his appeal. In the absence of any reply from the appellant, the matter is being decided on the basis of material on record. 5. xxxxx
6. Without prejudice to the above, even if the case is considered on merit, where the facts are as follows:- 6.1 The brief facts of the case is that the appellant is a proprietor of M/s National Paper Agency and director of M/s Pooja Paper Trading Ltd. The appellant e-filed the return of income on 28.09.2011 declaring income at Rs. 8,69,192/-. The case of the appellant was reopened u/s 147 of the Act on the basis of information received from investigation wing based on the investigation carried out by Sales Tax Authorities. As per information, the income of the appellant chargeable to tax had escaped assessment for the year under consideration. A notice u/s 148 of the Act was issued on 11.03.2013 which was duly served upon the assesse. The assessment was completed on 24.03.2014 assessing total income at Rs. 1,37,34,943/-. The addition of Rs. 1,28,61,030/- made u/s 69C or account of bogus purchases. Aggrieved by the order of the AO, the appellant filed appeal u/s 246A before CIT(A). The CIT(A) vide order dated 07.10.2015 had deleted entire addition made on account of bogus purchases. The department had filed appeal against the order of CIT(A) before ITAT. The ITAT vide order dated 08.11.2017 restore the matter to the file of AO for adjudicating 'de novo' with proper appreciation of facts. The appellant was also directed to substantiate the purchase with cogent material including demonstration of actual delivery of material and other evidences During assessment proceedings u/s 143(3) r.w.s. 254 Various notices were issued and sufficient time was given to the appellant to prove genuineness of purchases. However, the appellant remained failed to prove genuineness of purchases. Accordingly, the assessment proceedings u/s 143(3) r.w.s. 254 of the Act were completed in Page | 9 & 3462/Mum/2025 Binal Vikash Bhardwaj this case on 26.11.2019 at assessed income of Rs.1,37,34,940/- and addition of Rs.1,28,61,030/- was made. During the entire appellate proceedings, the appellant remain non-compliant to the notices issued and did not furnish evidences in support of his grounds of appeal
. 6.2 During the appellate proceedings, sufficient opportunities have been provided to the appellant for furnishing submission/ evidences in support of grounds of appeal. However, the appellant could not furnish any explanation/ evidences. Accordingly, it is clear that the appellant has not discharged the burden of proof as required under the respective provisions. Hence, the grounds of appeal are not allowed.
7. As a result, the appeal of the appellant is dismissed.”
It is evident from the extracts of the impugned order that notice was allegedly issued on 7 times on different dates and the said notices were sent on E-mail mentioned therein but none of the Emails mentioned belongs to the assessee because the two emails belongs to the consultant of deceased father and third belongs to their relative. It was also submitted in the affidavit that no notices were served by physical mode and the contents of the affidavit in that regard remain un-rebutted as nothing contrary has been brought on regard by the revenue to show that affidavit filed by the assessee is false and fabricated. Hence we have no other option to believe the genuineness of the affidavit.
From the perusal of the observation of Ld. CIT(A) in para no. 6.1, we have noticed that it is simply narration of the facts of the case and there & 3462/Mum/2025 Binal Vikash Bhardwaj is no determination of points or the reason for the decision given by the Ld. CIT(A) before deciding the appeal as required by section 250(6) of the Act which provides as under:- “Section 250(6) in the Income Tax Act, 1961 “(6)The order of the Commissioner (Appeals) disposing of the appeal shall be in writing and shall state the points for determination, the decision thereon and the reason for the decision.”
13. As discussed above, the impugned order does not contain the points for determination, the decision thereon and the reason for the decision and as such the impugned order cannot be said to be a decision on merit. Therefore, we are of the considered opinion that impugned order suffers from the violation of principle of natural justice as well as non- conforming to the procedure laid down in section 250(6) of the Act while disposing the appeal on merit. We further notice that passing of the impugned order ex-parte and without reasons resulted into miscarriage of justice. For these reasons, we set aside the impugned order and restore the case to the file of Ld. CIT(A) to decide the matter afresh after giving effective hearing to the assessee who shall present its case before the Ld. CIT(A) within 60 days. Accordingly, the grounds raised
by the assessee are allowed in above terms. & 3462/Mum/2025 Binal Vikash Bhardwaj
2. (A.Y: 2011-12)
14. Since we have already decided the similar appeal by the assessee in AY 2010-11 and the facts of this appeal are exactly similar, therefore the findings in shall mutatis mutandis apply to this appeal also. Hence, the matter is also restored to the file of Ld. CIT(A) for deciding afresh after giving an effective hearing to the assessee and the assessee shall present its case before Ld. CIT(A) within 60 days.
In the result, both the appeals filed by the assessee are allowed for statistical purposes in above terms.
Order pronounced in the open court on 29.07.2025