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Facts
The assessee, a partnership firm, failed to file its return for AY 2017-18. The AO completed the assessment ex-parte, making additions for cash deposits and unexplained investments. The CIT(A) also dismissed the appeal ex-parte due to non-participation.
Held
The Tribunal condoned the delay in filing the appeal and noted the assessee's failure to participate in proceedings before the lower authorities. The Tribunal set aside the order of the CIT(A) and remitted the matter back to the AO for denovo assessment, providing a reasonable opportunity to the assessee.
Key Issues
Whether the assessee was provided adequate opportunities to present its case before the AO and CIT(A), and whether the ex-parte assessment orders were justified.
Sections Cited
144, 69, 263, 115BBE, 68
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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 filed against the order of the learned Commissioner of Income Tax (Appeal), NFAC, Delhi, (in short Ld. CIT(A)) for the assessment year 2017-18, vide order dated 15.01.2025.
At the outset, we find that there is a delay of 119 days in appeal filed by the assessee, for which petition for condonation of delay along with reasons. The partner in the assessee’s firm submitted an affidavit for the delay stating that the assessee was a key partner of the firm, who was coordinating tax matters and he was unable to timely coordinate with its :-2-: ITA. No:2077/Chny/2025 authorized representative to initiate the process of filing the appeal due to his mother was lost during the relevant period, which led to significant personal and emotional hardship and hence there was a delay in filing the present appeal and prayed that the delay may please be condoned. After considering the petition 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 appeal and admit appeal filed by the assessee for adjudication.
Brief facts of the case are that the assessee is partnership firm engaged in business of food and beverages and had not filed its return of income for the A.Y.2017-18. As per information available with the department, the assessee made cash deposits to the tune of Rs.16,12,030/- during the demonetization period and there are credits of Rs.22,64,08,460/- in various bank accounts maintained by the assessee. The Assessing Officer completed the assessment proceedings u/s.144 of the Act on 23.09.2019, by making only addition of cash deposits of Rs.16,12,030/- made during the demonetization period.
Since, the Assessing Officer failed to verify and examine the source for the credit of Rs.22,64,08,460/- due to absence of proper evidence and the credits treated as unexplained investment u/s.69 of the Act, the PCIT, Chennai-3 invoked provisions of Section 263 of the Act and passed an order u/s.263 of the Act dated 29.03.2022 directing the Assessing Officer to reframe the assessment by setting aside the assessment order passed u/s.144 of the Act on 23.09.2019. Accordingly, the statutory notices were issued to the assessee to file the required details. Since, the assessee did not participate in the assessment proceedings by not responding to the statutory notices, the AO made an addition of Rs.22,64,08,460/- as :-3-: ITA. No:2077/Chny/2025 unexplained income and taxed u/s.68 r.w.s 115BBE of the Act and concluded the assessment u/s.144 r.w.s 263 of the Act dated 07.03.2023.
Aggrieved by the order of the AO, the assessee preferred an appeal before the ld.CIT(A), NFAC on 06.04.2023.
At the outset, we observed that ld.CIT(A) has provided five opportunities for the assessee to appear for hearings as detailed in paragraph 1.1 of the ld.CIT(A) order to support the appeal of the assessee from 03.10.2024 to 19.12.2024. However, the assessee chose to be silent and did not respond to any of the notices and hence, the ld.CIT(A), NFAC dismissed the assessee’s appeal by confirming the order of the AO by passing an order dated 15.01.2025. The ld.AR submitted that the assessee had not regularly checked the income tax portal and his email and hence he was not aware of the notices issued by the ld.CIT(A) and hence he could not appear both before the AO as well as the ld.CIT(A). In view of the above, the ld.AR prayed for one more opportunity before the AO, since the exparte order has been passed by the AO u/s.144 of the Act. Further, ld.AR assured the bench that the ld.AR will represent on behalf of the assessee before the AO to complete the assessment proceedings effectively.
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 AO 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 due to non-participation of the assessee before the first
:-4-: ITA. No:2077/Chny/2025 appellate authority. Since, the assessee has failed to participate both before the Assessing Officer and the ld.CIT(A), we levy the cost of Rs.10,000/- 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.
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 denovo frame the assessment order in accordance to 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 court on 13th October, 2025 at Chennai.