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Facts
The assessee, a trust, did not file its income tax return for A.Y. 2017-18 and had deposited substantial cash during the demonetisation period. The Assessing Officer completed an ex-parte assessment under Section 144, making additions, including under Section 69. The CIT(A) subsequently dismissed the assessee's appeal ex-parte due to non-appearance, which the assessee attributed to their tax consultant not informing them of hearing notices.
Held
The Tribunal found that the ex-parte orders by both the AO and CIT(A) meant the case's merits were not decided. Acknowledging the assessee's claim about consultant negligence but also their own lack of follow-up, the Tribunal remitted the matter back to the AO for fresh adjudication on merits, conditional on the assessee paying a cost of Rs. 10,000/-.
Key Issues
The key issues were the validity of the ex-parte assessment and appeal dismissal, whether the assessee deserved another opportunity to present its case, and the correctness of cash deposit additions under Section 69.
Sections Cited
144, 142(1), 250, 69
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Income Tax Appellate Tribunal, ‘A’ 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 the NFAC, Delhi dated 29/11/2023 in respect of the A.Y. 2017-18 and raised the following grounds: “
1. The order passed by the Jurisdictional Assessing Office u/s 144 is against the facts and circumstances of the case and against the principle of natural justice.
2. On the facts and circumstances of the case and in the provisions of the law, the Assessing Officer erred in estimating the taxable income at 8%, on the gross deposits in the bank account, as against the facts, the said gross receipts are not the taxable income but source of the said gross receipts are pigmy collection from women flock of minority community of Muslim and repayment of loan amount received from borrowers, where the financial assistance given to weaker sections of Muslim community.
3. On the facts and circumstances of the case and in the provisions of the law, the Hon'ble CIT(A), NFAC erred in dismissing the appeal in limine for non-prosecution of appeal, as the Appellant/Trust was unaware of the notice issued u/s 250, as the secretary of the Appellant/Trust, not the tech-savvy and not in the habit of using the computer.
4. On the facts and circumstances of the case and in the provisions of the law, the order passed by the Assessing Officer is against the principle of natural justice, as the Appellant/Trust filed a manual return of income in the course of assessment proceedings, which is in the form of computation of income and made the submission regarding the nature of activities of the trust and source of deposits in the bank account. Hence, the Assessing Officer's action is against the principle of natural justice.
5. On the facts and circumstances of the case and in the provisions of the law, the Assessing Officer erred in making the addition of Rs.27,37,000/- u/s 69 for the cash deposits made during the demonetisation period, as there was no bar in accepting the demonetisation currency during the demonetisation period prior to 30-12-2016, in view of special banking note prohibition Act 2016.
6. For these and other reasons which may be adduced at the time of the hearing, the Appellant/Trust prays before this Hon'ble Bench to set aside the order of the Assessing Officer for Denovo assessment for providing one more opportunity to the Appellant/Trust to submit its substantive submission effectively.
9. The appellant craves permission to add, to alter, to amend and to delete any of the grounds at the time of the hearing.”
2. The assessee is a trust and for the A.Y. 2017-18, the assessee had not filed their return of income and therefore based on the information received that the assessee had deposited substantial cash in bank accounts during the demonetisation period, notice u/s. 142(1) was issued but the assessee AO had passed an order u/s. 144 of the Act by making three types of additions. Challenging the said order, the assessee filed an appeal before the Ld.CIT(A) and raised several grounds on merits but unfortunately the assessee had not appeared before the Ld.CIT(A) on five occasions and therefore the Ld.CIT(A) had decided the appeal ex-parte and dismissed the appeal.
As against the said order, the assessee is in appeal before this Tribunal.
At the time of hearing, the Ld.AR submitted that the notices issued by the Ld.CIT(A) to the email address given in form 35, it is the email ID of their tax consultant, but he had not brought to the notice of the trustees and therefore they were not able to appear before the Ld.CIT(A) and prayed to grant one more opportunity by sending the notices to the present email address mentioned in form no. 36.
The Ld.DR submitted that the assessee had not filed their return of income and also not replied to the notice issued by the AO as well as the Ld.CIT(A) and prayed that no leniency could be shown on the assessee and prayed to dismiss the appeal.
We have heard the arguments of both sides and perused the materials available on record.
We have considered the facts that the assessment was made u/s. 144 of the Act and also the Ld.CIT(A) had passed an ex-parte order and therefore the merits of the case was not decided by any of the authorities. We have also considered the reasons stated by the assessee that the tax consultant had not informed the various hearing notices issued by the Ld.CIT(A) and we feel that for no fault of the assessee, they should not be penalised. We are also of the view that the assessee had also not followed up the matter with the tax consultant and therefore the assessee could not blame the tax consultant alone. In such circumstances, in order to render substantial justice, we remit this issue to the file of the AO on condition that the assessee has to pay a cost of Rs. 10,000/- under the Major Head Income Tax (Other than companies) 0021, Minor Head other receipts (500) on or before 05/03/2025 and produce the proof of payment before the AO and thereafter the AO is directed to decide the issue afresh on merits and in accordance with law after hearing the assessee.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on 24th February, 2025.