NIRMAL PURSHOTAM BHATIA,ULHASNAGAR vs. INCOME TAX OFFICER, KALYAN

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ITA 3962/MUM/2024Status: DisposedITAT Mumbai25 March 2025AY 2013-146 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the impugned order of the CIT(A) was bad in law because an effective opportunity of hearing, which is a sine qua non for upholding the principle of natural justice, was not provided to the assessee. While the CIT(A) noted that notices were sent and the assessee repeatedly sought adjournments, ultimately deciding the appeal ex parte based on available material, the Tribunal found that this did not constitute an effective hearing. The Tribunal referred to Section 250(2)(a) of the Act, which grants the appellant the right to be heard. The Tribunal concluded that a miscarriage of justice had occurred and that the assessee should be given one more opportunity to represent its case. Therefore, the matter was restored to the file of the CIT(A) with a direction to provide an effective opportunity of hearing within 60 days. The impugned order was set aside, and the appeal was allowed in these terms.

What were the facts?

The assessee, Nirmal Purshotam Bhatia, filed an appeal against the order of the CIT(A)/NFAC, Delhi, for Assessment Year 2013-14. The assessee had initially filed a return of income declaring Rs. 2,46,186. After a notice under section 148, a revised return was filed declaring Rs. 2,46,190. The Assessing Officer (AO) completed the assessment on 28.09.2021, making an addition of Rs. 18,75,76,680 as unexplained bank deposits under section 69A, citing the assessee's failure to provide justification. The CIT(A) dismissed the assessee's appeal ex parte and confirmed the AO's addition. The assessee is now before the Income Tax Appellate Tribunal (ITAT).

What were the issues?

1. Whether the order passed by the Assessing Officer is bad in law, considering the facts and circumstances of the case and in law. 2. Whether the learned CIT(A) erred in upholding the addition of Rs. 18,75,76,680 made by the Assessing Officer as unexplained investment under section 69A of the Income Tax Act, 1961. The assessee contended that the AO passed the assessment order without providing a proper opportunity of hearing, and the CIT(A) also proceeded ex parte without giving an effective opportunity of hearing, rendering the impugned order illegal. The revenue, represented by the Ld. DR, supported the CIT(A)'s order, stating there was no merit in the appeal and it was liable to be dismissed.

Which sections of the Income-tax Act were involved?

Section 250,Section 143(1),Section 148,Section 142(1),Section 143(2),Section 69A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “B”, MUMBAI

Before: SHRI B R BASKARAN & SHRI RAJ KUMAR CHAUHAN

O R D E R PER RAJ KUMAR CHAUHAN (J.M.): 1. This appeal is filed by the appellant/assessee against the order of Learned Commissioner of Income Tax (Appeals) / National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as the “CIT(A)”], Page | 1 passed under section 250 of the Income Tax Act, 1961 [hereinafter referred to as “the Act”] dated 03.06.2024 for the A.Y. 2013-14, wherein the Ld. CIT(A) has dismissed the appeal ex parte and confirmed the addition made by the AO.

2.

The brief facts of the case are that, the return of income was filed on 5th August 2013 declaring total income of Rs. 2,46,186/-. The returned income was processed u/s. 143(1) of the Act and notice u/s 148 of the Act was issued on 26.02.2020. The return of total income in response to notice u/s 148 was e-filed on 15th May 2021 declaring total income of Rs. 2,46,190/- and necessary notices u/s. 142(1) and 143(2) were issued. A Show Cause Notice dated 24.09.2021 was also issued asking to file the response by 26.09.2021. However, the AO completed the assessment on 28.09.2021 by treating the entire bank deposits of Rs. 18,75,76,680/- as unexplained money u/s 69A of the Act as assessee has failed to give justification.

3. Aggrieved by the order of AO, assessee preferred the appeal before Ld. CIT(A) and Ld. CIT(A) has dismissed the appeal of the assessee ex-parte and confirmed the addition made by AO. Hence, the assessee is in appeal before us and Page | 2

1.

On the facts and circumstances of case and in law, the Order passed by learned Assessing Officer is bad in Law.

2. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in upholding the addition made of 18,75,76,680/-by Assessing Officer as unexplained investment u/s.69A of the Act.

3.

The appellant craves leave to add and/or amend the grounds of appeal before or at the time of hearing.

4.

We have heard Ld. AR and Ld. DR. It was argued on behalf of the appellant/assessee that the AO has passed the assessment order without giving proper opportunity of hearing to the assessee and Ld. CIT(A) proceeded ex parte and decided the appeal on merit without giving effective opportunity of hearing to the assessee. Therefore, the impugned order suffers from illegality and liable to be set aside. The Ld. DR on the other hand supporting the judgment of the Ld. CIT(A) stating that there is no merit in the appeal and same is liable to be dismissed.

5.

We have considered the rival submissions. Section 250 sub section 2(a) of "the Act" provides as under:

“Section 250 (2) The following shall have the right to be heard at the hearing of the appeal: - a. The appellant, either in person or by an authorised representative;”

6.

It is evident from the provision that the hearing to be given is not a formality but an effective hearing is sine qua non for the purpose of upholding the principal of natural justice. We have examined the impugned order of the Ld. CIT(A) who observed as under: -

5.1 It is pertinent that in order to deeide this appeal in a timely manner a number of notices/ communications through ITBA portal were sent to the appellant, viz. Communications dated 13.04.2023, 04.05.2023, 18.05.2023, 19.07.2023. The appellant in response to the notices repeatedly sought adjournments and had not made any submissions. Therefore, a final show cause notice was issued on 27.05.2024 asking the appellant that no adjournment shall be provided. There was no response to the notice and it is seen that the appellant is using the adjournments to frustrate the appellate proceedings. The appeal is decided on the basis of the material available on record.

5.2 However, there evidently has been no response from the appellant till date. There is no gainsaying that once the appeal is filed by the appellant, it is obligatory on its part to purposefully and co-operatively pursue the same in a worthwhile manner, which the appellant has evidently failed to do. It clearly appears that the appellant's compliance or rather lack of it, the appellant has not even bothered to pursue this appal in any productive manner. Hence, in view of the aforesaid total non-compliance/non prosecution of the instant appeal on the part of the appellant, the instant appeal is adjudicated and disposed of, as under, ex-parte, primarily on the basis documentation available on record.

5.3 xxx 5.4 xxx 5.5 xxx

5.6 Before parting, it is trite that an appellate authority is essentially called upon to balance the two sides of an argument presented before him as held in Nirmal Singh and Others of the Hon'ble Punjab and Haryana High Court [Cr No. 3791 of 2013 (O&M) dated 01.05.2014] and in the absence of any reasonable, cogent and valid arguments/contentions advanced by the appellant in the instant appeal to counter the AO's decision as contained in the assessment order, as mentioned earlier, the additions/disallowances made by the AO is sustained in terms of the observations herein-above.

7.

It is thus evident from the contents of the impugned order extracted above that no effective opportunity of hearing has been given to the assessee which is bad in law and the passing of impugned order resulting into miscarriage of justice and end of justice requires that assessee be given one more opportunity by the revenue to represent its case.

8.

For these reasons, we are of the considered opinion that the matter needs to be restored to the file of the Ld. CIT (A) with a direction to give effective opportunity of hearing to the assessee who shall present its case before him within 60 days. The impugned order is accordingly set aside and appeal filed by the assessee is allowed in above terms.

9.

In the result, appeal filed by the assessee is allowed for statistical purposes.

Order pronounced in the open court on 25.03.2025.

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