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Facts
The assessee, an individual dealing in cement and hardware, failed to file his income tax return for AY 2017-18. The AO noticed substantial cash deposits during the demonetization period and other bank credits, treating them as unexplained investment and unaccounted business income respectively. The AO passed an ex-parte assessment order u/s.144.
Held
The Tribunal condoned the delay in filing the appeal due to the assessee's consultant's lack of awareness of the CIT(A) order. While noting the assessee's negligence in not responding to notices from both the AO and CIT(A), the Tribunal set aside the CIT(A)'s order to meet the ends of justice. The matter was remitted back to the AO for a fresh assessment after providing a reasonable opportunity to the assessee.
Key Issues
Whether the delay in filing the appeal can be condoned and whether the ex-parte assessment order should be set aside and the matter remitted for fresh adjudication after providing an opportunity to the assessee.
Sections Cited
144, 139, 69
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Income Tax Appellate Tribunal, ‘C’ BENCH, CHENNAI
Before: SHRI MANU KUMAR GIRI & SHRI S.R.RAGHUNATHA
आदेश / O R D E R PER S.R.RAGHUNATHA, AM.
This appeal by the assessee is arising out of the order dated 13.01.2025, passed by the Learned Commissioner of Income Tax (Appeal), NFAC, Delhi (in short “ld.CIT(A)”) for the assessment year (A.Y) 2017-18 against the order u/s.144 of the Income Tax Act, 1961 (hereinafter the ‘Act’) passed by the AO dated 01.11.2019.
At the outset, we find that there is a delay of 175 days before us in the appeal filed by the assessee, for which the assessee has filed affidavit stating the reasons for delay, wherein, it is submitted that tax consultant and the assessee were unaware of the order of the ld.CIT(A) uploaded in the Income-Tax e-filing portal due to lack of knowledge and the assessee became aware of the impugned order only on commencement of recovery proceedings by the Income Tax Department. Hence, there was a delay in filing the appeal by the assessee. After considering the Affidavit filed by the assessee and also hearing both the parties, we find that there is a reasonable cause for the assessee in not filing appeal on or before the due date prescribed under the law and thus, in the interests of justice, we condone delay in filing of appeals and admit the appeals filed by the assessee for adjudication.
Brief facts of the case are that the assessee is an individual, dealer in cement, electrical goods, steel, hardware etc., and had not filed his return of income for A.Y 2017-18. As per information available from the department, the AO noticed that the assessee has made cash deposits in SBNs to the tune of Rs.12,08,000/- into his bank account(s) during demonetization period from 08.11.2016 to 30.12.2016. Further, the AO observed that the total deposits including cash deposits for the period from 01.04.2016 to 31.03.2017 was Rs.1,02,00,370/-. The AO issued statutory notices to the assessee, however, the assessee neither filed his return of income u/s.139 of the Act nor responded to the statutory notices. Since, the assessee did not participate and furnished any details during assessment proceedings and the AO made an addition of Rs.12,08,000/- on account of cash deposit made during the demonetized period by treating it as unexplained investment u/s.69 of the Act. Further, the AO also considered that all the credits/deposits in the assessee bank accounts except cash deposits during demonetization period as the assessee’s business receipts, amounting to Rs.89,92,370/- (Rs.1,02,00,370-Rs.12,08,000/-) and 8% of such business receipts was adapted as unaccounted business income for A.Y.2017-18 which comes to Rs.7,19,389/-(8% of Rs.89,92,370/-) and brought to tax by passing an order u/s.144 of the Act dated 01.11.2019 based on material available on record.
Aggrieved by the order of the AO, the assessee preferred an appeal before the ld.CIT(A), NFAC, Delhi on 05.12.2019.
At the outset, we observed that ld.CIT(A) has provided three opportunities for the assessee to appear for hearings as detailed in paragraph 4.2 of the ld.CIT(A) order to support the appeal of the assessee. However, the assessee chose to be silent during the appellate proceedings also and did not respond to any of the notices and hence, the ld.CIT(A) confirmed the order of Assessing Officer with available details by passing an order dated 13.01.2025.
The ld.AR submitted that the tax consultant and the assessee were unaware of the notices issued during the assessment and appellate proceedings by the AO as well as ld.CIT(A) to the Email ID. Hence, the appeal was not prosecuted before the ld.CIT(A) and even the assessment order was passed exparte u/s.144 of the Act by the AO. Therefore, ld.AR prayed for one more opportunity to be provided to the assessee to represent his case before the AO in the interest of natural justice. Further, the ld.AR assured the bench that he will undertake to represent on behalf of the assessee before the AO, in case one more opportunity is provided.
Per contra, the ld.DR submitted that both the Assessing Officer and the ld.CIT(A) provided sufficient opportunity to appear before them. However, the assessee has been negligent in responding to the statutory notices and hence, prayed for confirming the order of the ld.CIT(A).
We have heard the rival parties and perused the material available on record and gone through the orders of the lower authorities. We note that the Assessing Officer has passed an exparte order by considering the information available with the department and the same has been dismissed by the ld.CIT(A), NFAC, Delhi due to non-participation of the assessee, both before Assessing Officer as well as the first appellate authority. Since the assessee has failed to participate both before the Assessing Officer as well as the appellate authority, we levy the cost of Rs.5,000/- to be paid to State Legal Aid Authority, Hon’ble High Court of Madras and produce proof of payment of cost to the Registry within 30 days from the date of receipt of this order.
9. In view of the above and to meet the ends of justice we set aside the order of ld.CIT(A) and remit the matter back to the file of AO and direct the AO to de novo frame the assessment order in accordance with law, after providing reasonable opportunity to the assessee. Needless to say, the assessee to be diligent and file written submissions and relevant documents if advised so.
In the result, appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on 12th December, 2025 at Chennai.