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Facts
The assessee declared income for AY 2018-19, claiming exemption for short-term capital gains on transactions subject to securities transaction tax. The AO reopened the case based on information about trading in specific shares, alleging bogus long-term capital gains and short-term capital loss. The AO made additions for alleged escaped income and unexplained investments.
Held
The Tribunal found that the CIT(A) dismissed the appeal ex parte without providing the assessee with adequate opportunity to present their case. Therefore, the Tribunal remanded the matter back to the Assessing Officer for a fresh examination on merits, giving the assessee a reasonable opportunity to be heard.
Key Issues
Whether the CIT(A) was justified in dismissing the appeal ex parte without providing the assessee a proper opportunity to present their case, and whether the matter should be remanded for a fresh assessment on merits.
Sections Cited
147, 148, 142(1), 144, 133(6), 69, 69A, 250, 250(6)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “C” BENCH KOLKATA
Before: Shri Rajesh Kumar & Shri Sonjoy Sarma
order
: January 27, 2025 आदेश / ORDER
Per Sonjoy Sarma, Judicial Member:
The present appeal has been preferred by the assessee against the order dated 29.04.2024 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’).
Brief facts of the case are that the assessee is an individual and filed her return of income for the assessment year 2018-19 by declaring total income of Rs.3,23,590/-. The Assessing Officer found the assessee has showed income under the heads of short-term capital gain and other sources. The assessee claimed exemption under the head of short-term capital gain from transaction on which securities transaction tax is paid. However, during the assessment proceedings, the department received information which indicated that the assessee had traded in shares of AMM Ltd. & EML scrip code (538653) to the Assessment Year: 2018-19 Arti Surana tune of Rs.3,52,000/- during the financial year 2017-18. These shares were identified as bogus stock which was used to purchase bogus long- term capital gain/ short-term capital loss. Based on this information, the Assessing Officer believed that the income had escaped assessment and reopened the case of the assessee u/s 147 of the Act. A notice u/s 148 of the Act was issued to the assessee but there was no response from the assessee. Subsequently, notice u/s 142(1) of the Act was issued and the assessment was completed ex parte u/s 144 of the Act. During the assessment proceedings, the Assessing Officer issued notice u/s 133(6) of the Act to the National Stock Exchange of India requisitioning details of assessee’s transaction for the relevant period. The Assessing Officer observed that the assessee had purchased equity shares of Rs.35,90,829/- and sold equity shares to Rs.46,92,179/- during the financial year 2017-18. However, the assessee declared short-term capital gain only Rs.1,27,774/- in her return of income while actual short-term capital gain was Rs.11,01,350/-. Accordingly, the Assessing Officer added the difference of Rs.9,73,576/- to the total income of the assessee. Additionally, the Assessing Officer treated the investment of Rs.35,90,829/- (used in equity shares) as unexplained investment u/s 69 of the Act as the assessee failed to provide the explanation regarding the same. Moreover, the Assessing Officer added an amount of Rs.3,52,000/- relating to trade in shares of AMM Ltd. EML scrip u/s 69A of the Act.
Aggrieved by the above order, the assessee went in appeal before the ld. CIT(A). Despite receiving three consecutive notices, the assessee failed to appear or present her case. Consequently, the ld. CIT(A) dismissed the appeal ex parte and sustained the addition made by the Assessing Officer.
Assessment Year: 2018-19 Arti Surana 4. Dissatisfied with the above order, the assessee filed an appeal before this Tribunal raising various grounds. However, the primary contention of the assessee is that the order passed by the ld. CIT(A) was ex parte order without providing proper opportunity to the assessee to present her case. The assessee requested before the Tribunal to provide another opportunity to substantiate her claim and has assured to fully comply to the notices that will be issued by the authorities.
On the other hand, the ld. DR opposed the prayer of the assessee citing the reason of assessee’s repeated non-compliance. However, he stated that in the interest of justice, the Tribunal may consider the remanding back the issue to the file of the Assessing Officer provided that the assessee must undertake full cooperation in de novo proceedings.
We, after hearing both the parties and reviewing the materials available on record, find that the order of the ld. CIT(A) is ex parte order without denying the adequate opportunity to present the case by the assessee. We note that the ld. CIT(A) dismissed the appeal of the assessee without going into merits and decided only on the ground of non-compliance on the part of the assessee. We, therefore, find that the dismissal of appeal solely on the procedural ground without examining the merits of the case which is essential u/s 250(6) of the Act, is not justified. In the interest of justice and fair play, we deem it fit to provide the assessee one more opportunity to substantiate her case to ensure just and fair assessment. We, therefore, remand back the issue to the file of the Assessing Officer with a direction to re-examine the case on merits after giving reasonable opportunity of being heard to the assessee to represent her case. We also direct the assessee to diligently comply Assessment Year: 2018-19 Arti Surana with the notices issued and promptly participate in the remand proceedings without any further delay.
In terms of the above, the appeal of the assessee is allowed for statistical purposes.
Kolkata, the 27th January, 2025.