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Facts
The assessee filed an income tax return for AY 2017-18, which was selected for scrutiny due to cash deposits. Despite multiple notices, the assessee failed to comply, leading the Assessing Officer to estimate income and make an addition of Rs.31,75,160/-. The CIT(A) subsequently dismissed the assessee's appeal ex-parte due to continued non-compliance by the assessee.
Held
The Tribunal condoned the 336-day delay in filing the appeal, finding reasonable cause. It set aside the CIT(A)'s ex-parte order, emphasizing the necessity of granting the assessee a reasonable opportunity of being heard. The matter was remanded back to the Assessing Officer for fresh adjudication on merits, with a direction for the assessee to cooperate.
Key Issues
Condonation of delay in filing appeal; ex-parte dismissal by CIT(A) without merits adjudication; granting reasonable opportunity of being heard to the assessee; estimation of income by the Assessing Officer due to non-compliance.
Sections Cited
250, 143(2), 142(1), 133(6)
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Income Tax Appellate Tribunal, “D” BENCH KOLKATA
Before: Shri Sonjoy Sarma & Shri Rakesh Mishra
order
: May 01, 2025 ORDER
Per Sonjoy Sarma, Judicial Member:
The present appeal has been preferred by the assessee against an order dated 21.11.2023 of the National Faceless Appeal Centre [hereinafter referred to as ‘CIT(A)’] passed u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’).
At the outset, the Registry has informed that there is a delay of 336 days in filing the present appeal. The assessee has filed an affidavit for condonation of delay stating reasons for such delay. After considering the application, we find reasonable cause and condone the delay in filing the appeal and adjudicate the appeal on merits of the case.
Brief facts of the case are that the assessee filed his return of income for the assessment year 2017-18 by declaring a total income of Rs.7,63,000/-. The case of the assessee was selected for scrutiny under Sandeep Kr. Gupta CASS primarily on the issue of cash deposits made during the assessment year. Accordingly, notice u/s 143(2) of the Act was issued but no compliance was made by the assessee. Thereafter, notice u/s 142(1) of the Act was also issued but again there was no response. Due to non-compliance, the Assessing Officer issued notices u/s 133(6) of the Act to the assessee’s bank and received a reply, wherein, it revealed from the bank statement that the total credit entries in the assessee’s account were Rs.6,75,02,796/-. The Assessing Officer compared the said amount with the total sales and the incentives income as submitted by the assessee in the return of income of Rs.63503203/- resulting in a discrepancy of Rs.39,99,593/-. As the assessee failed to furnish the transaction-wise details to reconcile the credits, the Assessing Officer proceeded to estimate the income @5% of the total credits of Rs.63503203/- resulting in an addition of Rs.31,75,160/- to the total income of the assessee. Consequently, the Assessing Officer assessed the income at Rs.70,59,864/-.
Dissatisfied with the above order, the assessee filed an appeal before the ld. CIT(A). However, on multiple occasions, the assessee did not appear or respond to the notices issued by the ld. CIT(A) and eventually, the ld. CIT(A) dismissed the appeal of the assessee by sustaining the order of the Assessing Officer. While passing the order, the ld. CIT(A) without going into the merits of the case or evaluating the grounds of appeal
dismissed the appeal of the assessee ex parte solely on account of non-compliance.
5. Aggrieved by the above order, the assessee is in appeal before this Tribunal raising various grounds. However, the primary contention of the ld. AR is that the earlier engaged counsel of the assessee failed to pursue the matter diligently and did not inform the assessee about the notice of hearing. As a result, the assessee was deprived of reasonable opportunity of being heard both before the Assessing Officer and ld.
Sandeep Kr. Gupta CIT(A). The ld. AR, therefore, prayed that the matter maybe remanded back to the file of the Assessing Officer for fresh adjudication.
On the other hand, the ld. DR opposed the above prayer of the ld. AR and submitted that the assessee was habitual defaulter and failed to comply with statutory notices, hence the lower authorities were justified in making the addition by dismissing the appeal.
We, after hearing the rival submissions and perusing the materials available on record, find that in the present case, although the assessee submitted a partial reply during the assessment proceedings, however, the assessee failed to furnish complete details as called for by the Assessing Officer and consequently, the Assessing Officer proceeded to estimate the income and made the impugned addition. Further, before the ld. CIT(A) though the assessee made plea for second opportunity, however, the ld. CIT(A) summarily dismissed the appeal without adjudicating the grounds on merits or without examining the correctness of the estimation of income as made by the Assessing Officer. In view of the above, we find that even if the assessee being negligent initially but the assessee should not be penalised indefinitely when plausible explanation has been provided. In the interest of justice and fair play, it is necessary to give another opportunity to the assessee. Therefore, we deem it appropriate to remand the matter back to the file of the Assessing Officer for fresh consideration. Accordingly, we set aside the order of the ld. CIT(A) and restore the matter back to the file of the Assessing Officer with a direction to reexamine the issue afresh by considering all documents or evidences as submitted by the assessee in support of his case after granting reasonable opportunity of being heard to the assessee. The assessee is also directed to appear and cooperate in the proceedings and respond to notices as and when will be issued by the Assessing Officer and if the assessee fails to comply the notices, the Assessing Officer may pass an appropriate order in accordance with law.
I.T.A. No.2/Kol/2025 Sandeep Kr. Gupta
In terms of the above, the appeal of the assessee is allowed for statistical purposes. Kolkata, the 1st May, 2025.