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Facts
The assessee filed an appeal for AY 2012-13 against an order that dismissed their appeal against the assessment order. The assessment order added ₹1,186,000 as unexplained investment and ₹11,86,363 as unproved creditors, treating them as income. This addition stemmed from a survey that revealed cash advances given by the assessee for immoveable property, which were not reflected in the return of income.
Held
The Tribunal restored the appeal to the file of the CIT(A) for a decision on merits. This was because the assessee had not appeared before the CIT(A), leading to an ex parte order. The Tribunal noted discrepancies in the amounts confirmed by the CIT(A) compared to the Assessing Officer and the lack of reference to issuing notices under Section 251.
Key Issues
Whether the ex parte order passed by the CIT(A) without proper opportunity for the assessee to present their case should be set aside and the matter restored for a decision on merits.
Sections Cited
148, 143(3), 69, 143(1), 133A, 68, 251
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “SMC” BENCH : BANGALORE
Before: SHRI PRASHANT MAHARISHI
This appeal is filed by late Gurupadappa Mallappa Havinal (the assessee/appellant) for the assessment year 2012-13 against the appellate order passed by the CIT(A)-1, Chandigarh [ld. CIT(A)] dated 13.8.2024 wherein the appeal filed by the assessee against the assessment order passed u/s. 148 r.w.s 143(3) of the Income-tax Act, 1961 [the Act] dated 31.3.2015 by the ITO, Ward 2, Gadag was dismissed.
In this appeal the assessee is aggrieved with the addition of ₹ 1,186,000 2. on account of the amount standing as credit of his son added under section 69 of the income tax act which is confirmed by the learned CIT – A ex parte.
The facts shows that the assessee is an individual and deriving income in the form of pension, interest on saving accounts. He has filed the return of income for the assessment year 2012-13 on 30-09-2012. The return of income filed was processed u/s. 143(1) of the Income Tax Act, 1961, accepting the returned income. Subsequently, a survey u/s.133A of the Income Tax Act, 1961, was conducted at the business premises of M/s. Hemagirish Krishi Kendra, Mundargi, owned by the assessee's son, Shri. Hemagirish.G. Havinal. During the course of survey, loose sheet bundle marked HKK-19 was impounded and on analyzing the loose sheets, it was found that the assessee has given cash advance for purchase of immoveable property. On cross verification of transactions entered in the loose bundle with reference to the return of income filed, it was found that the transaction was not reflected in the return of income.
In view of the above, notice u/s' 148 of the Income Taх Act 1961 was 4. issued reopening the assessments. There was no response from the assessee's side with reference to the notice issued. Further, notice
142(1) of the Income Tax Act, 1961, was issued and served on the assessee. During the course of assessment proceedings, on verification of return of income along with balance sheet filed by the assessee, it was found that the assessee has shown M/s. Hemagirish Krishi Kendra as creditor for Rs.11,86,363/-. However, on cross verification of return of income along with the enclosures filed for the assessment year 2012- 13 by M/s Hemagirish Krishi Kendra, Mundargi, it was found that the above party has shown the assessee as creditor for Rs.11,86,363/- resulting in the assessee not accounting debtor to the tune of Rs.11,86,363/- and showing non-genuine credits to the tune of Rs.11,86,363/-. In this regard, the authorised representatative present was asked to furnish explanation for the same. However, he has failed to furnish any explanation for the same. As the assessee has failed to furnish any explanation for the nature and source of investment in the above said debt amount and also the creditor shown is non-genuine, the amount of Rs.11,86,363/- is treated as unexplained investment and treated as income of the assessee u/s. 69 of the Income Tax Act 1961 and Rs.11,86,363/-. is treated as unproved creditors and treated as cash creditors and treated as income of the assessee u/s. 68 of the Act .
On Appeal Before the ld CIT (A) , assessee did not respond to several notices and therefore CIT (A) passed an ex parte order dismissing appeal of the assessee as under :-
"During the course of assessment proceedings, on verification of return of income along with balance sheet filed by the assessee, it was found that the assessee has shown M/s. Hemagirish Krishi Kendra as creditor for Rs.11,86,363/-. However, on cross verification of return of income along with the enclosures filed for the assessment year 2012-13 by M/s Hemagirish Krishi Kendra, Mundargi, it was found that the above party has shown the assessee as creditor for Rs. 11,86,363/- resulting in the assessee not accounting debtor to the tune of Rs.11,86,363/- and showing non-genuine credits to the tune of Rs.11,86,363/-. In this regard, the authorised representative present was asked to furnish explanation for the same. However, he has failed to furnish any explanation for the same. As the assessee has failed to furnish any explanation for the nature and source of investment in the above said debt amount and also the creditor shown is non-genuine, the amount of Rs.11.86,363/- is treated as unexplained investment and treated as income of the assessee u/s. 69 of the Income Tax Act 1961 and Rs.1 1.86,363/- is treated as unproved creditors and treated as cash creditors and treated as income of the assessee u/s. 68 of the Income Tax Act. 1961, and brought to tax accordingly, (total amount Rs.23,72,726/-)"
The assessee is aggrieved and in appeal before me. It was submitted that the assessee has passed away and the legal heirs have been brought on record. It was stated that the appeal of the assessee is disposed of by the learned CIT – A for non-prosecution in confirming the action of the learned assessing officer as per the reasons given in the assessment order. It was submitted that it's an ex parte order and therefore it needs
to be restored back to the file of the learned CIT – A so that proper explanation can be granted before him in the appeal can be decided on the merits.
In view of the above facts the learned departmental representative also submitted that the issue needs to be restored back to the file of the learned CIT – A.
We have carefully considered the rival contention and perused the orders of the learned lower authorities. Before the learned assessing officer the assessee got proper opportunity of hearing and therefore the assessment order was passed after considering the case of the assessee. However before the learned CIT – A the assessee did not appear and the order was passed ex parte. In such circumstances, the issue needs to be restored back to the file of the learned CIT – A to decide the issue on the merits of the case. This is also relevant for the reason that the learned assessing officer has made an addition to the extent of only ₹ 11 lakhs but the learned CIT – A has confirmed the addition of ₹ 22 lakhs. There is no reference of issuing of any notice under section 251 of the act also. Therefore in the interest of justice we restore the whole appeal back to the file of the learned CIT – A and direct the assessee to submit proper details and avail of the opportunity of hearing. The learned CIT – A may decide the issue after hearing the assessee on its merit in accordance with the law.
In the result appeal filed by the assessee is allowed for statistical purposes.
Pronounced in the open court on this 22nd day of December, 2025.