Loading judgment…
Facts
The assessee, engaged in iron and steel trading, filed returns under presumptive provisions for AY 2017-18 and 2018-19. The Assessing Officer initiated reassessment based on undisclosed/unexplained bank transactions and non-compliance with statutory notices, leading to best judgment assessments under Section 144 and additions.
Held
The Tribunal noted the assessee's consistent non-compliance with notices and failure to present effective arguments before lower authorities. However, considering the COVID-19 pandemic period and the interest of substantial justice, the Tribunal set aside the CIT(A) orders and restored the matters for fresh adjudication.
Key Issues
Whether the assessee's non-compliance and failure to provide evidence warrant setting aside the orders and granting a fresh opportunity for adjudication, subject to costs.
Sections Cited
143(2), 142(1), 144, 69A
AI-generated summary — verify with the full judgment below
Order PER BENCH: These two appeals filed by the assessee are directed against the separate orders passed by the Ld. Commissioner of Income Tax 2 791 & 792-CHD-2025 (Appeals), National Faceless Appeal Centre (NFAC), Delhi, both dated 25.02.2024, pertaining to assessment years 2017–18 and 2018–19. Since common issues are involved, both appeals were heard together and are being disposed of by way of this consolidated order.
The Registry has pointed out that there is a delay of 04 days in filing the present appeal.
During the course of hearing, the Ld. AR made an oral request for condonation of the said delay.
The Learned Ld. DR raised no objection to the condonation of the delay.
Considering the submissions made and in view of the absence of any objection from the Ld. DR, the delay of 04 days in filing the appeal is hereby condoned. Accordingly, the appeal filed by the assessee is admitted for adjudication.
At the outset, the Ld.AR sought an adjournment on account of preoccupation with year-end proceedings. However, considering the fact that sufficient opportunities had already been granted at various stages and that the appeals have remained pending for a considerable period, the request for adjournment was declined, and the matters were heard on the merits.
3 791 & 792-CHD-2025 7. Brief facts of the case are that the assessee is an individual engaged in the business of trading in iron and steel. For the relevant assessment years, the assessee filed returns of income under the presumptive provisions. Subsequently, on the basis of information available with the department, the cases were taken up for scrutiny/reassessment. The Assessing Officer noted that the assessee had carried out substantial financial transactions in certain bank accounts that were either not disclosed or not properly explained in the return of income.
During the course of assessment proceedings, several statutory notices issued under sections 143(2) and 142(1) of the Act remained uncomplied with. Even the final show cause notices were not responded to. In the absence of any explanation or supporting evidence from the assessee, the Assessing Officer proceeded to complete the assessments under section 144 of the Act. In A.Y. 2017–18, the Assessing Officer treated the bank credits as business turnover and estimated income @ 8%, resulting in addition to the returned income. In A.Y. 2018–19, the Assessing Officer noticed that the assessee had withdrawn cash aggregating to Rs. 22,99,23,723/- from multiple bank accounts maintained with Axis Bank, Yes Bank and ICICI Bank, which were not disclosed in the 4 791 & 792-CHD-2025 return of income, and in the absence of any explanation, treated the same as unexplained money under section 69A of the Act.
Aggrieved by the assessment orders, the assessee preferred appeals before the Ld. CIT(A). However, even during the appellate proceedings, the assessee failed to make any effective compliance despite several opportunities. The Ld. CIT(A), therefore, proceeded to decide the appeals on the basis of material available on record and confirmed the additions made by the Assessing Officer, holding that the assessee had failed to discharge the onus cast upon him.
Before us, the Ld. AR submitted that the assessee could not properly represent the case before the lower authorities due to circumstances beyond control and requested that the matter be restored to the file of the Assessing Officer or the Ld. CIT(A) for fresh adjudication after providing one more opportunity.
Per contra, the Ld. DR strongly opposed the contentions of the assessee and relied upon the orders of the lower authorities. It was submitted that the assessee has consistently failed to comply with statutory notices issued during the course of assessment and appellate proceedings. The Ld. DR further submitted that the Assessing Officer had issued multiple notices under sections 143(2) and 142(1), followed by a final show cause notice, but the assessee
1. 5 791 & 792-CHD-2025 failed to furnish any explanation, compelling the Assessing Officer to complete the assessment under section 144 of the Act.
1. 11.1 The Ld. DR further elaborated that the Assessing Officer, on the basis of information gathered, found that the assessee had carried out substantial financial transactions through undisclosed bank accounts. In particular, for A.Y. 2018–19, the assessee had made cash withdrawals aggregating to Rs. 22,99,23,723/- from various bank accounts, the details of which are duly recorded in the assessment order. It was submitted that the assessee neither disclosed these bank accounts in the return of income nor furnished any explanation regarding the source of deposits leading to such withdrawals.
1. 11.2 It was further contended by the Ld. DR that the primary onus to explain the nature and source of such substantial transactions was upon the assessee, which remained undischarged. In the absence of any explanation, the Assessing Officer rightly invoked the provisions of section 69A of the Act and treated the amount as unexplained money. It was submitted that the Assessing Officer has passed the order after detailed examination of available material
1. 6 791 & 792-CHD-2025 and in accordance with law, and the Ld. CIT(A) has rightly confirmed the additions.
We have heard the rival submissions and perused the material available on record. It is an admitted position that the assessee has not complied with the notices issued by the Assessing Officer during the assessment proceedings. Further, even before the Ld. CIT(A), the assessee failed to make any effective representation or file any supporting evidence. The Ld. CIT(A) has recorded a categorical finding regarding non-compliance and has decided the appeals on merits based on the material available on record. Admittedly no evidence has been filed before us, by the assessee nor an application for filing the additional evidence has been filed.
1. 12.1 At the same time, we also note that a substantial part of the assessment proceedings falls within the period affected by the COVID-19 pandemic. It is also a settled principle that the appellate authority is required to adjudicate the issues on merits by passing a reasoned and speaking order. Further, in the interest of substantial justice, an opportunity should ordinarily be granted to the assessee to present its case, particularly where large additions are involved.
7 791 & 792-CHD-2025 12.2 Considering the entirety of facts and circumstances of the case, and balancing the principles of natural justice with the conduct of the assessee, we deem it appropriate to set aside the impugned orders of the Ld. CIT(A) for both the assessment years and restore the matters to the file of the Ld. CIT(A) for fresh adjudication on merits after affording a reasonable opportunity of hearing to the assessee. The assessee is directed to fully cooperate and furnish all necessary evidence in support of its case.
12.3 However, considering the repeated non-compliance on the part of the assessee, we impose a cost of Rs. 2,00,000/- (Rupees Two Lakhs only) in each appeal, which shall be deposited in the “Poor Relief Fund”, PGI, Chandigarh, within 30 days from the date of receipt of this order. Proof of such a deposit shall be furnished before the Ld. CIT(A) at the time of hearing, failing which the Ld. CIT(A) shall be at liberty to proceed in accordance with the law.
12.4 In the event the assessee fails to deposit the aforesaid cost within a period of one month from the date of this order, the present order shall not be given effect to, and the order passed earlier by the Ld. CIT(A) shall stand revived and be treated as valid in accordance with law.
8 791 & 792-CHD-2025 13. In the result, both the appeals of the assessee are allowed for statistical purposes. Order Pronounced in the open Court on 06/04/2026.