GOLDIE SUD,MUMBAI vs. ITO WARD 24(1)(1), MUMBAI

The brief facts of the case are that the assessee is an individual and for the year under consideration did not file his return of income. On the basis of the AIR information, it was revealed that the assessee has deposited cash of more than Rs. 10 lakhs during the year in a savings account. As the assessee did not file his return of income, accordingly notice under section 148 of the Act was issued to the assessee on 20/03/2014 and proceedings under section 147 of the Act were initiated. As per the AIR information, the assessee deposited Rs. 56,15,500 in Punjab National Bank and Rs. 63,22,000 in Bank of India, during the year under consideration. In the absence of any response from the assessee pursuant to the notice issued under section 148 of the Act, statutory notices under section 142(1) of the Act and a final show cause notice were also issued to the assessee. However, the same were returned undelivered, and there was no S.A. No. 56/Mum/2025 compliance on behalf of the assessee. Accordingly, the Assessing Officer (“AO”) proceeded to complete the assessment on a best judgment basis based on the material available on record. Vide order dated 31/03/2015 passed under section 144 read with section 147 of the Act, assessed the total income of the assessee at Rs. 1,19,37,500.

The learned CIT(A), vide impugned order, dismissed the appeal filed by the assessee ex parte in the absence of any reply from the assessee in response to the notices issued during the hearing. Being aggrieved, the assessee is in appeal before us.

During the hearing, the assessee, appearing in person, submitted that notices as mentioned on page 6 of the impugned order were never served on him. It was further submitted that since the assessee did not have access to the Income Tax Portal, therefore, he had no knowledge about any of these notices being issued by the learned CIT(A). By referring to the communication dated 31/10/2022, on page 126 of the appeal set, the assessee submitted that the communication window with the learned CIT(A) was enabled only from 31/10/2022, and therefore, the claim that the notices, i.e. 16/07/2020 and 29/12/2020, were issued and served on the assessee by the learned CIT(A) has no basis. During the hearing, the assessee submitted that the learned CIT(A), prior to the migration of S.A. No. 56/Mum/2025 his appeal, filed on 28/09/2015, to the National Faceless Appeal Centre in terms of the Notification dated 08/03/2016, issued notice on 14/03/2017, forming part of the appeal set on page 111, wherein the learned CIT(A) specifically note that the assessee attended his office on 22/02/2017. Further, by referring to the letter dated 11/04/2018 by the learned CIT(A) to the ITO-24(1)(4), Mumbai, forming part of the appeal set on page 117, the assessee submitted that the learned CIT(A) sought the remand report from the AO in response to the submission dated 14/06/2017 filed by the assessee. During the hearing, the assessee also referred to his letter dated 27/10/2021, whereby he prayed the learned CIT(A) to decide his appeal in the absence of the remand report from the AO, since 3 years have elapsed and no remand report has been filed by the AO despite specific direction by the learned CIT(A).

Having considered the submissions and perused the aforesaid documents as placed on record by the assessee, it is evident that the learned CIT(A), while passing the impugned order, has not considered any of the submissions as filed by the assessee before migration of the appeal to the National Faceless Appeal Centre. It is further evident from the perusal of the impugned order that there is no reference to the notices issued during the physical hearing and the submissions filed by the assessee. We further find that the learned CIT(A) in limine dismissed the appeal filed by the assessee, placing S.A. No. 56/Mum/2025 reliance upon the decision of the Hon’ble Supreme Court in B.N.Bhattacharjee, 118 ITR 461 (SC), merely on the basis of non- compliance with notices by the assessee without adjudicating the grounds raised by the assessee on merits, as required under section 250(6) of the Act.

From the perusal of the record, it is further evident that the assessment was also concluded on a best judgment basis under section 144 of the Act in the absence of a response/details being filed by the assessee. In view of the above, we are of the considered opinion that in the interest of justice, the assessee should be granted one more opportunity to represent its case on merits before the AO. Consequently, we deem it fit and proper to set aside the impugned order and restore the matter to the file of the AO for de novo adjudication with a direction to the assessee to furnish all the details/submissions in support of its claim. We order accordingly. Needless to mention, no order shall be passed without affording the reasonable and adequate opportunity of hearing to the assessee. As the matter is being restored to the file of the AO for adjudication afresh, 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.

Since the appeal by the assessee has been decided, the stay application filed by the assessee, being S.A. No.56/Mum/2025, for the assessment year 2009-10, has become infructuous and therefore is dismissed. As the matter is being restored to the file of the AO for adjudication afresh, the AO is also directed to reconsider the assessee’s submission in respect of the notice issued under section 226(3) of the Act.

To sum up, the appeal by the assessee is allowed for statistical purposes, while the stay application is dismissed as infructuous. Order pronounced in the open Court on 21/05/2025