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Facts
The assessee, an individual, filed a return of income for AY 2016-17. The assessment was reopened based on survey operations, and an addition of Rs. 10 lakhs was made for unexplained investment in building construction. The CIT(A) dismissed the appeal for non-prosecution.
Held
The Tribunal held that the CIT(A) dismissed the appeal for non-prosecution without proper opportunity of hearing, breaching the principles of natural justice. The order passed by the CIT(A) was quashed and set aside.
Key Issues
Whether the CIT(A) erred in dismissing the appeal for non-prosecution without affording a reasonable opportunity of being heard, thereby breaching the principles of natural justice?
Sections Cited
148, 147, 143(3)
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Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI
Before: HON’BLE SHRI GEORGE GEORGE K & HON’BLE SHRI INTURI RAMA RAO
Assessment Years: 2016-17 Allavudin Muhapadma Beevi, Income Tax Officer, No.14, Nallathsingal Street, Ward-1(2), Shevapet, Salem, Salem. Tamil Nadu-636 002. [PAN: AIMPM7048N] (अपीलार्थी/Appellant) (प्रत्यर्थी/Respondent) अपीलार्थी की ओर से/ Assessee by : Mr.T.Vasudevan, Advocate प्रत्यर्थी की ओर से /Revenue by : Ms.R.Anitha, Addl.CIT सुनवाई की तारीख/Date of Hearing : 16.12.2025 घोषणा की तारीख /Date of Pronouncement : 18.12.2025 आदेश / O R D E R PER INTURI RAMA RAO, A.M :
This appeal filed by the assessee against the order of the learned. Commissioner of Income Tax(Appeal), [‘CIT(A)’ in short], Addl/JCIT(A)-5, Kolkata, dated 22.09.2025 for AY-2016-17.
2.0 Briefly, the facts of the case are that the appellant is an individual deriving income from the business of dealing in groceries. The return of income for assessment year 2016-17 was filed on 25.10.2016, declaring a total income of Rs.5,76,800/-. Subsequently, the assessment was reopened based on the information unearthed during the course of survey operations conducted in the business premises of the appellant. Accordingly, a notice u/s 148 was issued on 02.07.2018. In response to notice us/148, the appellant filed the return of income on 13.07.2018 declaring income of Rs.5,76,800. Against the said return of income, the assessment was completed by the AO at a total income of Rs.15,76,800 vide order dated 17.12.2019 passed u/s 147 r.w.s. 143(3) of the income tax Act, 1961. While doing so, the assessing officer made addition of Rs. 10 lakhs on account of unexplained investment in the construction of building for the alleged failure of the appellant to explain the source of the cost of construction of the building.
3.0 Being aggrieved, an appeal was filed before the learned CIT(A) contending that the source of investment in the construction of building was properly explained and the assessing officer ought not to have made the addition on account of unexplained investment of Rs.10 lakhs and no addition could be made merely based on the statement of the appellant recorded during the course of survey proceedings. However, the CIT(A) dismissed the appeal for non-prosecution. Being aggrieved, the appellant is before us in the present appeal.
4.0 It is contended that the appellant had filed a detailed explanation in support of source of investment in the construction of building. It is further submitted that the amount of additional income declared during the survey proceedings, was offered to tax in the returns of income filed for the assessment year 2016-17, 2017-18 and 2018-19. Thus, it is prayed that the CIT(A) ought not to have sustained the addition.
Page - 2 - of 4 5.0 The learned Sr.DR vehemently opposed the above submissions made on behalf of the appellant.
6.0 We have heard the rival submissions and perused the material available on records. We find from the impugned order that the CIT(A) dismissed the appeal for no prosecution. We find from the impugned order at page 5.3 that NFAC had issued notices of hearing on 26.12.2020, 18.12.2021, 25.02.2022, 20.09.2022 and 25.09.2023. However, the impugned order came to be passed on 22.09.2025. There is nothing to indicate that the appellant was given opportunity of being heard before passing the impugned order on 22.09.2025. Thus, it is clear that the CIT(A) had not decided the matter on the last hearing date fixed by the hearing on 25.09.2023 nor notified next adjournment date. However, the CIT(A) passed the order without giving hearing notice to the appellant on subsequent dates. The CIT(A) fixed the matter for hearing for 29.09.2023, but not passed the order on that date. It was incumbent upon the CIT(A) either to pass the order on the last date of hearing or to fix another date and communicate the same to the appellant. By not passing the order on 25.09.2023 and not communicating the next date of hearing fixed in the proceedings and passing the impugned order on 22.09.2025 amounts to breach of principles of natural justice. The CIT(A) forced ex-parte nature of the order of the appellant by his own conduct. It amounts to breach of principle of natural justice and therefore the order passed by the CIT(A) is hereby quashed and set aside and the matter is restored to the file of NFAC for de novo disposal
Page - 3 - of 4 7.0 In this result, the appeal of the assessee is partly allowed for statistical purposes. Order pronounced on 18th , December-2025 at Chennai.