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Facts
The assessee's appeal was filed against an order by the NFAC which upheld the AO's order. The AO disallowed Rs.17,37,823/- as inflated sales and added Rs.55,021/- for personal use of a motor car. The assessee alleged that the CIT(A) passed an ex-parte order without a reasonable opportunity for hearing.
Held
The Tribunal held that the assessee was deprived of a chance to present its claim before the first appellate authority and that interest of justice would be served by remanding the matter back to the CIT(A) for consideration. The Tribunal did not express any view on the merits of the case.
Key Issues
Whether the assessee was denied a reasonable opportunity of hearing by the CIT(A), and if so, whether the matter should be remanded for fresh consideration.
Sections Cited
250, 139(1), 143(2), 142(1), 68, 143(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “J(SMC
Before: SHRI VIKRAM SINGH YADAV & SHRI ANIKESH BANERJEE
Per Anikesh Banerjee (JM): The instant appeal of the assessee was filed against the order of the National Faceless Appeal Centre, Delhi (NFAC) [in short, ‘Ld.CIT(A)’]passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’)for A.Y. 2017-18, date of order 28/02/2025. The impugned order emanated from the order of the Learned Income-tax Officer, Ward-23(1)(5), Mumbai (in brevity, ‘Ld.AO’) passed under section 143(3), date of order 26/12/2019.
2 ITA 1779/Mum/2025 Jatinder Singh (HUF) 2. When the appeal was called for hearing, none was present on behalf of the assessee. No adjournment petition was filed. Considering the merit of the case, we find that the appeal can be disposed of exparte qua for assessee, after hearing the Ld.DR.
We heard the Ld.DR and considered the documents available on the record. The assessee filed the return of income under section 139(1) declaring total income at Rs.29,75,705/-. The case was selected for complete scrutiny under CASS and notice under section 143(2) of the Act was served on the assessee. The assessee is a manufacturer and trader of cloths. The assessee is also proprietor of “Gee Tee Textiles”. During the impugned assessment year, it was found that the assessee deposited cash of Rs.44,85,500/- during the demonetization period. A notice under section 142(1) was issued. In response to the same, the assessee replied that the cash was out of cash balance and cash sales. Finally, the assessee was asked to place the comparative chart for financial years 2014-15 and 2015-16 and the Ld.AO found that there during the demonetization period the cash sales were unreasonably high at 62.41% compared to the corresponding period in the earlier years. It was also noticed that for the period November, in F.Y. 2016-17, the cash sales stood at 15.42%. After factual consideration, the Ld.AO disallowed Rs.17,37,823/- as inflated sales to accommodate unexplained cash and added the same to the total income of the assessee under section 68 of the Act and further, the Ld.AO added 10% of the total expenses claimed in relation to motor car in view of personal use and the disallowance was made amount to Rs.55,021/-. The aggrieved assessee filed an appeal before the Ld. CIT(A). But the Ld.CIT(A) issued the notice on different dates for hearing and there was no compliance from the end of the assessee. Even no adjournment application was filed before the 3 ITA 1779/Mum/2025 Jatinder Singh (HUF) appellate authority. Finally, the impugned assessment order was upheld by the order of the Ld.CIT(A). Being aggrieved on the impugned appeal order, the assessee filed an appeal before us.
The Ld.DR relied on the orders of the revenue authorities.
It emerges from the record that the assessee is aggrieved that the Ld.AO had erred in not considering the evidence which was submitted by the assessee such as VAT returns, quantity details of purchase and sales etc to substantiate sales made during the year and cash was deposited in the bank. But in any case, the Ld.CIT(A) passed the order exparte and the assessee was not getting a reasonable opportunity of hearing before the Ld.CIT(A). We found that the assessee was unable to submit the evidence in favour of its claim. So, the assessee was deprived of the chance to present its claim before the first appellate authority. We are, therefore, of the opinion that interest of justice should be served if the matter is remanded back to the file of the Ld.CIT(A) for consideration of assessee’s plea. The Ld.DR has not made any strong objection against the observation of the bench. We are not expressing any view on merits of the case so as to limit the appeal proceeding before the Ld. CIT(A). Needless to say, the assessee should get a reasonable opportunity of hearing for set aside appeal proceedings. On the other hand, the asessee should be diligent and cooperative in set aside appeal proceeding for expeditious disposal of the appeal.