Loading judgment…
Facts
The assessee, engaged in milk vending, filed a return for AY 2017-18. The case was selected for scrutiny, but the assessee did not comply with notices. The AO completed the assessment on a best judgment basis under Section 144, adding Rs. 14,12,335/- under Section 69A r.w.s.115BBE for cash deposits during demonetization.
Held
The Tribunal noted the ex-parte order of the First Appellate Authority and the AO's best judgment assessment. Considering the assessee's claim of ignorance regarding e-proceedings and the need for fair play, the Tribunal decided to set aside the FAA's order.
Key Issues
Whether the ex-parte assessment and appellate orders, based on non-compliance with notices, should be set aside to allow the assessee to present their case on merits, especially considering their claim of lack of knowledge of e-proceedings.
Sections Cited
250, 144, 69A, 115BBE
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI
Before: SHRI GEORGE GEORGE K & SHRI S.R. RAGHUNATHA
O R D E R
PER GEORGE GEORGE K, VICE PRESIDENT:
This appeal filed by the assessee is directed against the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, dated 30.01.2026 passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Year is 2017-18.
2 -: SA No.73/CHNY/2026 2. At the very outset, we notice that the First Appellate Authority’s (FAA) order is ex-parte, since there was no compliance from the assessee to the five notices issued from the office of the First Appellate Authority. Further, we also note that the assessment has been completed on best judgment basis u/s.144 of the Act.
The Ld. AR submitted that the assessee is engaged in the business of milk vending in Chennai and procures milk and milk products from M/s. Hatsun Agro Product Ltd., which are supplied to households and small retail outlets. It was submitted that for the assessment year 2017–18, the assessee filed his return of income declaring a total income of Rs.2,75,390/-. Subsequently, the case was selected for scrutiny under CASS and notices were issued by the AO. However, since the assessee did not comply with the hearing notices, the AO completed the assessment u/s. 144 of the Act on best judgment basis and made an addition of Rs.14,12,335/- u/s.69A r.w.s.115BBE of the Act towards the cash deposits made in the assessee’s bank account during the demonetization period. On appeal, the FAA confirmed the additions made by the AO on the ground that the assessee had not responded to the hearing notices nor filed any submissions or 3 -: SA No.73/CHNY/2026 documentary evidences in support of the grounds raised. The Ld.AR submitted that the cash deposits made during the demonetization period represented regular business collections received from customers on behalf of M/s. Hatsun Agro Product Ltd. It was further submitted that the assessee, being a small milk vendor and not well-versed with the income-tax e- proceedings, failed to respond to the notices during the assessment and appellate proceedings. Therefore, it was prayed that, in the interest of justice and equity, the matter may be restored to the file of the Assessing Officer to provide the assessee with one more opportunity to represent his case.
The Ld.DR submitted that adequate opportunities were provided from the offices of the AO and the CIT(A) and there is no violation of principles of natural justice. Therefore, it was prayed the appeal of the assessee may be dismissed.
We have heard rival submissions and perused the materials available on record. The AO completed the assessment u/s.144 of the Act on best judgment basis and made an addition of Rs.14,12,335/- u/s. 69A r.w.s.115BBE of the Act towards cash deposits made in the assessee’s bank account during the 4 -: SA No.73/CHNY/2026 demonetization period, since the assessee did not comply with the notices issued during the assessment proceedings. Even before the FAA, the assessee did not respond to the hearing notices and the appeal was decided ex-parte confirming the addition made by the AO. Before us, the Ld.AR submitted that the assessee is engaged in milk vending business and the cash deposits represented regular business collections made on behalf of M/s. Hatsun Agro Product Ltd., and further submitted that due to lack of knowledge of income-tax e-proceedings, the assessee could not respond to the notices issued during the assessment and appellate proceedings. Considering the facts and circumstances of the case and in the interest of justice and fair play, we deem it appropriate to set aside the order of the FAA and restore the issues to the file of the AO for fresh adjudication. The assessee is directed to furnish all necessary details and documentary evidences to substantiate the source of cash deposits. The AO shall examine the same and decide the issue in accordance with law after providing adequate opportunity of being heard to the assessee. The assessee is also directed to cooperate with the Revenue and shall not seek unnecessary adjournments. It is ordered accordingly.
In the result, the appeal filed by the assessee is allowed for statistical purposes and the stay application filed by the assessee is dismissed.
Order pronounced in the open court on 12th March, 2026 at Chennai.