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Facts
The assessee, involved in the wholesale liquor business, filed a return declaring an income of Rs. 40,31,180/-. Due to non-compliance with notices, the Assessing Officer made an addition of Rs. 68,00,349/- estimating profit at 3% of stock put to use, leading to an assessed income of Rs. 1,06,68,442/-. The assessee's appeal before the CIT(A)/NFAC was dismissed ex-parte due to non-appearance.
Held
The Tribunal noted that both the assessment order and the first appeal order were passed ex-parte. Considering the submissions of the assessee's counsel regarding the circumstances leading to non-appearance, the Tribunal set aside the CIT(A)'s order. The matter was restored to the Assessing Officer for fresh assessment.
Key Issues
Whether the addition of Rs.68,00,349/- made by estimating profit at 3% of stock put to use was justified, especially when the assessee's books were audited and other relevant factors were not considered. Primarily, whether the ex-parte orders passed by the lower authorities should be set aside to provide a chance for adjudication on merits.
Sections Cited
143(2), 142(1), 144, 144B, 44AB
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Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE
Before: SHRI MANISH BORAD & SHRI VINAY BHAMORE
ORDER
PER VINAY BHAMORE, JM:
This appeal filed by the assessee is directed against the order dated 11.09.2025 passed by Ld. CIT(A)/NFAC for the assessment year 2022-23.
The appellant has raised the following grounds of appeal :-
1. Honorable CIT(A) and A.O. has erred in making addition of Rs.68,00,349/- without properly appreciating the facts of the case. Appellant prays for deletion of addition made.
2. Honorable CIT(A) and A.O. has erred in making addition of Rs.68,00,349/- by estimating profit @ 3% of the stock put to use without appreciating the fact that the Books of the assessee are audited U/s.44AB of the Income Tax Act, 1961 and the tax auditor has not raised any qualification. Appellant prays for deletion of addition made.
3. Honorable CIT(A) and A.O. has erred in making addition of Rs.68,00,349/- by estimating profit @ 3% of the stock put to use without appreciating the fact that the entire Purchase and Sales of the assessee are governed by the provisions of Tax Collection at Source. Appellant prays for deletion of addition made.
4. Honorable CIT(A) and A.O. has erred in making addition of Rs.68,00,349/- by estimating profit (@ 3% of the stock put to use without appreciating the fact that there is no decline in the Gross Profit and Net Profit Margins as compared to preceeding and succeeding years. Appellant prays for deletion of addition made.
5. Honorable CIT(A) and A.O. has erred in making addition of Rs.68,00,349/- by estimating profit @ 3% of the stock put to use without appreciating the fact that the assessee is required to maintain complete quantitative details of stock as per state excise act and there is no scope for estimation. Appellant prays for deletion of addition made.
6. Honorable CIT(A) has erred in dismissing the appeal without dealing with the merits of the issue. Appellant humbly prays to restore the matter to the file of the A.O.
7. Appellant prays to add, alter, amend and / or withdraw the Ground/s as the occasion may demand during appellate proceedings.”
Facts of the case, in brief, are that the assessee is an individual deriving income from wholesale liquor business and has furnished his return of income for the year under consideration on 19.09.2022 declaring an income of Rs.40,31,180/-. The case of the assessee was selected for scrutiny through CASS. Statutory notices u/s 143(2) and 142(1) of the IT Act and show-cause notice u/s 144 of the IT Act were issued to the assessee. The assessee did not comply to any of the above notices therefore the Assessing Officer vide assessment order dated 17.03.2024 completed the assessment proceedings u/s 144 r.w.s. 144B of the IT Act by determining income of the assessee at Rs.1,06,68,442/- as against the income of Rs.40,31,180/- returned by the assessee. The above assessed income includes addition of Rs.68,00,349/- on account of estimation of 3% net profit.
Being aggrieved with the above assessment order, the assessee preferred an appeal before Ld. CIT(A)/NFAC. Since the assessee remained absent, Ld. CIT(A)/NFAC dismissed the appeal filed by the assessee and confirmed the addition made by the Assessing Officer.
It is the above order against which the assessee is in appeal before this Tribunal.
We have heard Ld. counsels from both the sides and perused the material available on record including the paper book and additional evidences furnished by the assessee. In this regard, we find that the assessment order as well as first appeal order were passed ex-parte. It is the submission of the counsel of the assessee that the email belongs to erstwhile consultant who did not inform the assessee regarding date of hearing before the Assessing Officer. Regarding non-appearance before Ld. CIT(A)/NFAC, it was the contention that the Accountant who was looking after the tax matter and was assigned the work of first appeal, left the job due to which the unfortunate ex-parte order was passed. In sum and substance, it was the request of the counsel of the assessee that the matter may kindly be restored to the file of the Assessing Officer so that the assessee can substantiate its contentions in the light of various additional evidences such as audited books of accounts for the year under consideration and other years audited financials which could not be filed before the Assessing Officer, however now filed before this bench.
Considering the totality of the facts of the case and in the interest of justice and without going into merits of the case and with the consent of both parties, we deem it appropriate to set-aside the order passed by Ld. CIT(A)/NFAC and restore the matter back to the file of the Assessing Officer with a direction to pass assessment order afresh and as per fact and law after providing reasonable opportunity of hearing to the assessee. The assessee is also hereby directed to respond to the notices issued by the Assessing Officer in this regard without taking any adjournment under any pretext otherwise the Assessing Officer shall be at liberty to pass appropriate orders as per law. The assessee is further directed to