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Facts
The assessee, a firm engaged in building construction, real estate, and land development, failed to file its return of income for AY 2019-20. The department initiated proceedings under Section 147 based on information of interest income received. Upon notice, the assessee filed a return declaring income, but the AO disallowed expenses due to lack of vouchers and assessed total income, concluding the assessment under Section 147 r.w.s 144.
Held
The Tribunal noted that the assessee failed to participate in proceedings before the AO and the Ld. CIT(A), leading to ex-parte orders. While setting aside the order and remitting the matter to the AO for de novo assessment, the Tribunal levied a cost of Rs. 10,000 on the assessee for non-participation.
Key Issues
Whether the assessee's failure to participate in assessment and appellate proceedings justifies an ex-parte order and if a de novo assessment with cost is appropriate.
Sections Cited
147, 148, 144
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI
Before: SHRI S.S. VISWANETHRA RAVI & 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 2019-20, vide order dated 15.04.2025.
Brief facts of the case are that the assessee is a firm and carry on the business of building construction, real estate and land development and had not filed its return of income for the A.Y.2019-20. As per the information available with the department, the assessee had received interest income of Rs.11,48,679/- during the F.Y.2018-19. However, the assessee had failed to :-2-: ITA. No:1675/Chny/2025 file the return of income for the A.Y.2019-20. Therefore, as there is escapement of income, in order to assess the correct and exact income of the assessee, proceedings u/s.147 of the Act has been initiated after obtaining proper approval from the Higher Authorities and the notice u/s.148 of the Act was issued. In response to notice u/s.148 of the Act, the assessee filed return of income by declaring an income of Rs.1,82,075/-. The assessee shown sales of Rs.87,696/- and claimed related direct expenses of Rs.4,18,107/- and carriage expenses of Rs14,927/-. Since, the assessee has neither furnished purchase nor sales vouchers the AO disallowed the entire expenditure of Rs.4,38,107/-. Further, the AO based on the information found that the assessee has earned the interest from bank of Rs.11,48,679/- and claimed expenditure of Rs.6,16,193/-. The AO disallowed the said expenditure of Rs.6,16,193/-, as these expenditure are not related to earning of interest income and assessed the total income as Rs.12,36,375/- and concluded the assessment u/s.147 r.w.s 144 of the Act dated 25.01.2024.
Aggrieved by the order of the AO, the assessee preferred an appeal before the ld.CIT(A), NFAC.
At the outset, we observed that ld.CIT(A) has provided three opportunities for the assessee to appear for hearings as detailed in paragraph 7 of the ld.CIT(A) order to support the appeal of the assessee. 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 as deficient by confirming the order of the AO by passing an order dated 15.04.2025. The ld.AR submitted that the assessee had not regularly checked the income tax :-3-: ITA. No:1675/Chny/2025 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 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.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.
:-4-: ITA. No:1675/Chny/2025
In the result, appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the court on 02nd September, 2025 at Chennai.