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Facts
The assessee, engaged in the business of hydraulic hoses, did not file a return of income. The department received information about a cash deposit of Rs.32,35,000/- during the demonetization period. Consequently, a notice under Section 142(1) was issued, and an ex-parte order was passed.
Held
The tribunal held that although the assessee had defaulted in appearing, principles of natural justice require granting another opportunity for hearing. The impugned order was set aside, and the appeal was restored to the AO for a de novo assessment.
Key Issues
Whether the assessee should be granted another opportunity to present their case, considering the non-receipt of notices and the principles of natural justice, despite prior defaults in appearance.
Sections Cited
142(1), 69A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘C’ BENCH, CHENNAI
Before: SHRI MANU KUMAR GIRI & SHRI S.R.RAGHUNATHA
the order of the Ld. Ld. Commissioner of Income Tax (Appeals)(NFAC) Delhi [CIT(A)] dated 24.12.2024 for Assessment Year 2017-18.
Brief facts are as under:
The assessee firm is engaged in the business of hydraulic hoses for rig units on retail basis under partnership. The assessee has not filed return of income for the year under consideration. As per information available with the department, Assessee had deposited cash of Rs.32,35,000/- in bank accounts during demonetization period. Therefore, notice u/s.142(1) was issued to the assessee requiring the assessee to file return of income and requisite details.
The AO being not satisfied with the reply furnished by the assessee proceeded to pass ex-parte order on best judgement basis and made addition of Rs.32,35,000/- on account of cash deposits made during demonetization period as unexplained money u/s.69A of the Act and estimated the business income @ 8% of total turnover amounting to Rs.34,62,382/-.
Aggrieved, the assessee challenged the assessment order before the CIT(A). However, the CIT(A) confirmed the order of the AO for non-compliance of the notices issued by CIT(A).
Aggrieved by the CIT(A) order, assessee is in appeal before us.
Before us, the ld. Counsel for assessee submitted that the CIT(A) has sent the notices which were inadvertently not received by the assessee, hence the assessee was prevented from appearance on the purported dates. Therefore, he prayed that the assessee may be provided an adequate and proper representation time to file evidence and documents, if any, to substantiate his explanation regarding addition. The ld.DR stated that the assessee has defaulted in appearing before the appellate authority hence, no lenient view is to be taken in this case and prayed for dismissal of appeal.
We have heard rival submissions and perused material on record. Though we concur with the submissions of Ld. DR, however, keeping in mind the principle of natural justice, we deem it appropriate to grant another opportunity of hearing to the assessee. We also find that assessee has not represented before the ld.CIT(A) despite notices for the reasons stated above. Even, assessment has been done on the basis of no explanation by the assessee.
Accordingly, the impugned order is set aside and the appeal is restored back to the file of Ld. AO for de novo assessment hearing, after affording proper opportunity of hearing to the assessee subject to cost of Rs.5,000/- which shall be deposited by the assessee within 30 days from the date of receipt of this order to ‘Tamil Nadu State Legal Services Authority’ at Hon’ble High Court of Madras. The proof of the same will be furnished by the Assessee before Ld.AO whose shall proceed for fresh assessment hearing after affording proper opportunity of hearing to the assessee. The assessee is directed to substantiate its case with all evidence and documents etc. if any, forthwith without any fail, failing which Ld.AO shall be at liberty to proceed with the assessment proceedings as per law. The ld. AR, who appeared also assured the bench that he will ensure that the assessee will prosecute his case diligently before the ld.AO.
In the result, appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on 23rd April, 2025