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Facts
The assessee, a PWD contractor, did not file his return of income and failed to respond to notices issued by the AO regarding substantial cash deposits during demonetisation. The AO made a best judgment assessment, which was upheld by the CIT(A) after condoning a delay. The assessee's main contention was lack of proper notice.
Held
The Tribunal noted that notices were sent to an outdated email ID of the assessee's former Chartered Accountant's employee, and the assessee did not have a proper opportunity to appear. The Tribunal set aside the CIT(A)'s order, directing the CIT(A) to decide the appeal on merits after the assessee pays Rs. 10,000 as cost.
Key Issues
Whether the assessee was provided with a proper opportunity of being heard given the circumstances of notice issuance, and if not, what is the appropriate remedy.
Sections Cited
142(1), 69, 144
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Income Tax Appellate Tribunal, ‘SMC’ BENCH : BANGALORE
Before: SHRI LAXMI PRASAD SAHU & SHRI SOUNDARARAJAN K.
ORDER PER SOUNDARARAJAN K., JUDICIAL MEMBER
This is an appeal filed by the assessee challenging the order of NFAC, Delhi dated 09/12/2024 in respect of A.Y. 2017-18.
The assessee is a PWD contractor and had not filed his return of income. The AO based on the information that the assessee had made substantial cash deposits during demonetisation period had issued notices u/s. 142(1) of the Act. The assessee had not responded to the notices and therefore the AO had treated the cash deposits made during the demonetisation period as unexplained investment u/s. 69 of the Act. The AO also estimated the business income and made the assessment u/s. 144 of the Act. As against the said order, the assessee filed an appeal before the Ld.CIT(A) with a delay of 113 days. The Ld.CIT(A) condoned the said delay in filing the appeal but dismissed the appeal because the assessee had not responded to any of the notices issued by him.
As against the said ex-parte order, the assessee is in appeal before this Tribunal.
At the time of hearing, the Ld.AR submitted that the notices issued by the AO were not viewed by the assessee since he is not well versed in operating the computer systems. The Ld.AR further submitted by way of synopsis that the various hearing notices were sent to the email ID of the erstwhile employee of the Chartered Accountant office and therefore the assessee has no knowledge about the hearing notices sent by the Ld.CIT(A). The Ld.AR also submitted that the email ID of the assessee was now updated in the income tax portal and also filed the copies of the print out from the portals. The Ld.AR further submitted that the assessee is having all the records in support of his case that there are sources available for the cash deposits made during the demonetisation period. The Ld.AR further submitted that the AO had not followed the circular issued by the CBDT about the cash deposits made during the demonetisation period and prayed that one more opportunity may be granted to appear before the AO.
The Ld.DR relied on the orders of the lower authorities and submitted that no lenience could be shown on the assessee.
We have heard the arguments of both sides and perused the materials available on record.
7. We have perused the synopsis filed by the assessee and the copy of the notice sent through the portal to the email ID of the erstwhile employee of the Chartered Accountant’s office. We have also perused the print out taken from the portal updating the email ID of the assessee. From the above said facts, we came to know that the notices were issued by the Ld.CIT(A) to the email ID of the erstwhile employee of the Chartered Accountant’s office, who is not in service. The print out taken from the portal of the assessee shows the updated email ID of the assessee and therefore the assessee was not having proper opportunity to appear before the Ld.CIT(A). We have also considered the submission made by the assessee that the AO had also not followed the circular issued by the CBDT in respect of the cash deposited during the demonetisation period.
The assessee not only appeared before the Ld.CIT(A) but also before the AO and therefore the AO made a best judgment assessment u/s. 144 of the Act. In such circumstances, to give another opportunity to the assessee, we are inclined to set aside the order of the Ld.CIT(A) on condition that the assessee should pay a sum of Rs. 10,000/- by way of cost to be paid to the Income Tax Department. On such payment and the proof being filed before the Ld.CIT(A), we direct the Ld.CIT(A) to decide the appeal on merits and in accordance with law after hearing the assessee.
In the result, the appeal filed by the assessee is partly allowed. Order pronounced in the open court on 25th July, 2025.