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Facts
The assessee, an individual, failed to file an income tax return and did not respond to notices. The Assessing Officer completed the assessment ex-parte under Section 144 based on available information, treating cash deposits during demonetization as unexplained investments and disallowing certain claims.
Held
The Tribunal held that since the assessee could not provide sufficient evidence and was also unable to appear before the lower authorities, the matter should be remanded to the Assessing Officer. This is to allow the assessee one more opportunity to present their case with written submissions and documentary evidence.
Key Issues
Whether the assessee should be granted another opportunity to present evidence before the Assessing Officer, especially when the lower authorities passed ex-parte orders due to non-compliance.
Sections Cited
250, 69, 139(1), 142(1), 133(6), 10(13A), 17(2), 10(14)(ii), 144
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘D’ BENCH, CHENNAI
Before: SHRI GEORGE GEORGE K., VICE- & SHRI S.R. RAGHUNATHA
O R D E R
PER S. R. RAGHUNATHA, ACCOUNTANT MEMBER:
This appeal filed by the assessee is directed against the order passed by the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, under section 250 of the Income Tax Act, 1961 [“Act” in short] dated 23.12.2024 pertains to the assessment year 2017-18.
The assessee raised 18 grounds of appeal, amongst which, besides challenging the exparte order of the ld. CIT(A), the assessee also agitated that the ld. CIT(A) is not justified in confirming the additions of ₹.27,31,000/- being the cash deposits made in SBNs during the demonetization period
:-2-: ITA. No: 307/Chny/2025 under section 69 of the Act,₹.5,48,161/- being estimated business income at 8% on the entire bank credit, denial of exemption of ₹.1,50,000/- claimed under section 10(13A) of the Act and denial of deduction of ₹.15,000/- claimed under section 17(2) of the Act in the given facts and circumstances of the case.
Brief facts of the case are that the assessee is an individual and not filed the return of income under section 139(1) of the Act. Thus, the Assessing issued notice under section 142(1) of the Act dated 31.01.2018 requiring the assessee to file the return of income. Since there was no response from the assessee, again the Assessing Officer issued notice under section 142(1) of the Act dated 25.04.2019 calling for certain details. Meanwhile, the Assessing Officer obtained bank statement under section 133(6) of the Act towards cash deposits made during demonetization period. Against the notices issued, the assessee appeared on 12.09.2019 before the Assessing Officer and furnished (i) bank book incorporating Axis Bank and Allahabad bank account, (ii) copy of IT return for the AY 2016-17 showing opening cash balance, (iii) audited return for YE 31.03.2017 and reasons for non-filing return and (iv) IT return which was filed and shows available cash balance. On perusal of the details filed by the assessee, the Assessing Officer noted that the assessee has not incorporated Corporation Bank details in his audited return and in the return of income filed for AY 2017-18 on 16.09.2019. Further, the Assessing Officer issued
:-3-: ITA. No: 307/Chny/2025 letter dated 14.11.2019 and 04.12.2019 to the assessee via e-mail and post to furnish the documentary evidences for the receipt of short term advances with name of the person, mode, date of receipt in the given format, however, the assessee has not filed any response to both the letters.
On perusal of the details furnished by the assessee, the Assessing Officer noted that the balance credits available in bank account is ₹.68,52,020/-, whereas, the assessee has admitted only ₹.1,96,200/- while computing the income from business. The Assessing Officer also noted that the assessee, either reconciled the difference or furnished any details regarding the credits. Hence, the Assessing Officer taken the turnover of the business at ₹.68,52,020/- and net profit at 8% on presumptive basis and worked out the net profit at ₹.5,48,161/- and added to the total income of the assessee. Further, the Assessing Officer observed that the assessee has not furnished any proof for the claim of HRA exemption of ₹.1,50,000/- under section 10(13A) of the Act and medical allowance of ₹.15,000/- under section 17(2) of the Act. Thus, by allowing conveyance allowance under section 10(14)(ii) of the Act of ₹.19,200/-, the Assessing Officer computed the income from salary at ₹.4,60,800/- against ₹.4,80,000/- claimed by the assessee.
Since the assessee could not furnish any proof for the cash deposits made during the demonetization period of ₹.27,31,000/-, the Assessing
:-4-: ITA. No: 307/Chny/2025 Officer treated the same as unexplained investments under section 69 of the Act and completed the assessment under section 144 of the Act dated 18.12.2019 by assessing total taxable income of the assessee at ₹.37,39,961/-. On appeal, the ld. CIT(A) dismissed the appeal of the assessee for want of prosecution since the assessee could not respond to various hearing notices issued by the ld. CIT(A) dated 14.02.2024, 19.07.2024, 27.08.2024 & 13.12.2024. On being aggrieved, the assessee carried the matter in appeal before the Tribunal.
The ld. AR Shri N. Arjun Raj, Advocate, submits that non-response to the hearing notices issued by the ld. CIT(A)is neither willful nor wanton, but, due to circumstances beyond his control, and prayed that the assessee may be afforded one more opportunity of being heard to the assessee to substantiate his case before the Assessing Officer.
The ld. DR Shri A. Sasi Kumar, CIT opposed the same and drew our attention to para 5.5 of the impugned order and argues that the ld. CIT(A) has given ample of opportunities to the assessee, but, it was not availed.
Heard both the parties and perused the material on record. We note that the assessment was completed under section 144 of the Act dated 18.12.2019. On perusal of the assessment order as well as impugned order, we note that there was no assistance from the :-5-: ITA. No: 307/Chny/2025 assessee to the notices issued by the Assessing Officer as well as hearing notices issued by the ld. CIT(A). Taking into consideration of the submissions of the ld. AR and the ld. DR and in the interest of justice, we deem it proper to remand the matter to the file of the Assessing Officer to decide the issue afresh by affording one more opportunity of being heard to the assessee after considering the written submissions/ documentary evidence as may be filed by the assessee to substantiate his claim. Thus, the grounds raised by the assessee are allowed for statistical purposes.
In the result the appeal of the assessee is allowed for statistical purposes. Order pronounced in the court on 17th April, 2025 at Chennai.