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Facts
The assessee firm filed its return of income for AY 2017-18. The Assessing Officer (AO) estimated the income at 8% of gross receipts due to the failure of the assessee to produce books of accounts. The CIT(A) upheld the AO's order as the assessee failed to appear before it despite multiple notices.
Held
The Tribunal held that while an appellant should be vigilant, compelling circumstances can lead to delays. The reasons provided for the delay were considered justifiable, and the matter was set aside to the CIT(A) for adjudication after proper notice.
Key Issues
Whether the delay in filing the appeal before the Tribunal was condonable and whether the CIT(A) was justified in dismissing the appeal ex-parte without proper intimation to the assessee.
Sections Cited
143(3), 145(3), 143(2), 114(g)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, Hyderabad ‘A’ Bench, Hyderabad
Before: Shri Manjunatha G. & Shri Ravish Sood
(निर्धारण वर्ा/Assessment Year: 2017-18) Touch Tone Teleservices, Vs. Income Tax Officer, H. No. 3-6-550/4, 1st Floor, Ward-4(1), Street No.7, Himayatnagar, Hyderabad. Hyderabad. PAN: AACFT5196N (Appellant) (Respondent) निर्धाररती द्वधरध/Assessee by: Sri S. Rama Rao, Advocate रधजस् व द्वधरध/Revenue by: Sri Gurpreet Singh, Sr.AR सुिवधई की तधरीख/Date of Hearing: 16/10/2025 घोर्णध की तधरीख/Date of 19/11/2025 Pronouncement: आदेश / ORDER PER. RAVISH SOOD, J.M: The present appeal filed by the assessee firm is directed against the order passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, dated 27/02/2025, which in turn arises from the order passed by the Assessing Officer under section 143(3) of the Income Tax Act, 1961 (for short, “the Act”), dated 27/12/2019. The assessee firm has assailed the impugned order on the following grounds of appeal:
“1. The order of the learned CIT (A) is erroneous both on facts and in law; 2. The learned CIT(A) erred in confirming the action of the Assessing Officer in rejecting the books of account by invoking the provisions of Section 145(3) of the Income- tax Act, 1961 without properly appreciating the facts and the submissions of the appellant.
The learned CIT(A) erred in law and on facts in estimating the appellant’s income at 8% of the gross receipts, which is arbitrary, excessive, and without any cogent basis.
The learned CIT(A) grossly erred in not excluding the service tax component from the gross receipts for the purpose of estimation of income, despite the fact that no profit element is embedded in the service tax collected and remitted to the government.
The learned CIT(A) erred in not allowing the claim of depreciation from the income estimated on gross receipts, which is against the settled position of law that depreciation is an allowable deduction even in cases of estimated income.
That the order of the learned CIT(A) is bad in law and liable to be quashed as it fails to deal with the specific contentions raised by the appellant in the grounds of appeal
and is not supported by appropriate reasoning.
7. Any other ground/grounds that may be urged at the time of hearing;”
2. Succinctly stated, the assessee firm had e-filed its return of income for AY 2017-18 on 17/10/2017, declaring an income of Rs. 96,95,570/-. Thereafter, the case of the assessee firm was selected for scrutiny assessment under section 143(2) of the Act.
3. As the assessee firm in the course of the assessment proceedings had failed to produce its books of accounts and supporting evidence, therefore, the AO was constrained to assess its income on an estimated basis. Thereafter, the AO estimated the net profit of the assessee firm @ 8% of its gross receipts of Rs. 2,23,17,95,428/-, and determined its income vide his order passed under section 143(3) of the Act, dated 27/12/2019, at Rs. 1,85,43,634/-.
4. Aggrieved, the assessee firm carried the matter in appeal before the CIT(A). As the assessee firm, despite having been put to notice about the fixation of appeal on three occasions, i.e., vide notices dated 31/12/2020, 06/09/2023, and 23/09/2024, failed to participate in the appellate proceedings, therefore, the CIT(A), finding no reason to interfere with the view taken by the AO, upheld his order and dismissed the appeal. For the sake of clarity, we deem it apposite to cull out the observations of the CIT(A) as under:
“The following notices of hearing are issued and served on the email address of appellant as under: S.No Date of Compliance Remarks issue date 1. 31/12/2020 15/01/2021 The appellant did not respond 2. 06/09/2023 21/09/2023 The appellant did not respond 3. 23/09/2024 08/10/2024 The appellant did not respond There was no compliance on the part of the appellant after filing of first appeal and no communication was received from the appellant during course of this appellate proceeding till date. In view of the facts and circumstances mentioned hereinabove it is legitimate to infer that the appellant is not interested in the prosecution of the appeal. Section 114(g) of Indian Evidence Act, 1872 lays a presumption that evidence which could be and is not produced when, If produced, be unfavorable to the person who withholds it. In the appellate proceedings, burden of proof lies on the assessee to prove that facts and findings of the AO are incorrect. If the assessee fails to disprove or rebut with cogent evidence such facts and findings, no interference is required. In this case, the assessee did not choose to avail several opportunities at the appellate proceedings which entails conclusion that he had no evidence or say or explanation against the order of the AO. Ex-parte assessment/other order has its own inherent limitations as to its scope and extent. Hence, the assessee should not be allowed to be enriched or benefited unjustly for act of his own wrongs i.e. noncompliance of hearings. The appellant remained non-compliant all through the appellate proceedings. It is seen that appellant has not submitted any reply in support of appeal. This shows that appellant is not interested in prosecuting the appeal or has nothing to say in support of appeal. Judgment on the issue of apathy of appellant to prosecute appeal and issue of non-compliance by appellant at appellate stage has been considered and decided in various cases by the Hon’ble Supreme Court and Various High Courts. Some of landmark decisions on this issue is as under: The decision of the Hon’ble High Court of Mumbai in the case of M/s Chemipol v/s. Union of India [Central Excise Appeal No.62 of 2009] clearly states that every court, judicial body or authority, which has a duty to decide a matter between two parties, inherently possesses the power to dismiss the case in default. For the sake of reference, the relevant extract of the judicial pronouncement rendered by the Hon’ble High Court of Mumbai quoting decision of Hon’ble Supreme Court in case of Nandramdas Dwarkadas, AIR 1958 MP 260, is reproduced below: “Now the Act does not give any power of dismissal. But it is axiomatic that no court or tribunal is supposed to continue a proceeding before it when the party who has moved it has not appeared nor cared to remain present. The dismissal, therefore, is an inherent power which every tribunal possesses.” The principle that every court that is to decide on a matter of dispute, inherently possesses the power to dismiss the case for default, has been upheld by the Hon’ble Supreme Court in case of Dr. P. Nalla Thampy Vs. Shankar (1984 (Supp) SCC 63 and the case of New India Assurance vs. Srinivasan (2000) 3 SCC 242. In the later case, the Apex Court has held as under:- “That every court or judicial body or authority, which has a duty to decide a list between two parties, inherently possesses the power to dismiss a case in default. Where a case is called up for hearing and the party is not present, the court or the judicial or quasi-judicial body instituted ligation to keep the matter pending before it or to pursue the matter on behalf of the complainant who had instituted the proceedings. That is not the function of the court or, for that matter, of a judicial or quasi-judicial body. In the absence of the complainant, therefore, the court will be will without its jurisdiction to dismiss the complaint for non-prosecution. So also, it would have the inherent power and jurisdiction to restore the complaint on good cause being shown for the nonappearance of the complainant.” In several judicial decisions it has been held that where in spite of notices issued, the appellant is persistently absent and the Tribunal on facts of the case, is of the view that the appellant is not interested in prosecuting the appeal, the court can exercise its inherent power to dismiss the appeal for non-prosecution. In the case of CIT Vs. B. N. Bhattacharya reported at 118 ITR 461, it was held that appeal does not mean merely filing of appeal but effectively pursuing it. The Hon’ble ITAT, Delhi (ITR No.2006/Del/2011 dt.19.12.2001) in the case of Whirlpool of India Ltd. vs. DCIT had dismissed appeal for nonattendance at hearings, inferring that assessee was not interested in prosecuting of appeal. In the case of Chadha Finlease Ltd. Vs ACIT (ITA No.3013/Del/2011 date of order 20.12.2011) the Hon’ble ITAT Delhi had dismissed the appeal for non-attendance at hearings. In the case of CIT v. Gold Leaf Capital Corporation Ltd. on 02.09.2011 (ITA No.798 of 2009), the Hon'ble High Court of Delhi had held that a negligent assessee should not be given many opportunities just because that quantum of amount involved is high. The necessary course of action is to draw adverse inference, otherwise it would amount to give premium to the assessee for his negligence. When the assessee is noncooperative, it can naturally be safely concluded that the assessee did not want to adduce evidence as it would expose falsity and non-genuineness. On similar facts in the case of PCIT vs. Ashokjichanduji Thakor 2018- TIOL-2244-HC-AHM-IT, the Hon’ble Gujrat High Court, has held that since from the very beginning i.e. the assessment proceedings, assessee was non cooperative and number of opportunities were given by the AO, however, assessee did not cooperate and even did not file any reply. Thus, considering the material on record, AO made the addition. Even before the learned CIT(A) also the assessee was non cooperative. Therefore, CIT (A) was justified in deciding the proceedings ex-parte. Further, this case has been upheld by Hon’ble Supreme Court in [2021] 130 taxmann.com 131 (SC), wherein Hon’ble supreme Court has supported the view that when the assessee himself is non-cooperative right from the assessment till appellate proceedings, then there is no infirmity in proceeding being decided ex- parte. In view of the facts and legal position discussed above, it is seen that appellant is not interested in pursuing the appeal and not having any documents, explanation and evidence in support of grounds of appeal raised and thus has not discharged onus to prove the genuineness of the fact raised in grounds of appeal. It is seen that the appellant has filed Statement of facts/Grounds of appeal along with Form 35, but no written submission has been filed till date. I have carefully gone through the grounds of appeal, statement of facts, assessment order and other material on record. In response to notice of hearing issued, the appellant has not made any submissions to corroborate the Grounds of Appeal. The appellant has not submitted any documentary evidences during the Appellate proceedings. The appellant has not uploaded even a single document in response to the above notices, in spite of multiple hearing opportunities (as above). The appellant failed to substantiate the claims made in grounds of Appealandthere is nothing available on record to rebut the Assessing Officer’s findings on merits. The appellant has not produced any material to controvert the finding of A O. Further, from the abovementioned conduct of the appellant, it is clear that the appellant is not interested in prosecuting its appeal. As no details are uploaded by the appellant, there is nothing available on record to rebut the Assessing Officer’s findings on merits. No purpose would be served by keeping this appeal pending. As per the details available on record, there is nothing to controvert the findings of the AO and therefore, all the grounds raised in appeal are hereby dismissed. In the event, I have no reason to interfere with the findings of the AO. Hence, the order of the Assessing Officer is confirmed and the appeal is dismissed.
8. In result, appeal filed by the appellant is “dismissed.”.
5. The assessee firm, being aggrieved with the order of the CIT(A), has carried the matter in appeal before us.
6. Sri S. Rama Rao, Advocate, the Learned Authorized Representative (for short “Ld. AR”) for the assessee firm, at the threshold of the hearing of the appeal, submitted that the present appeal involves a delay of 34 days. Elaborating on the reasons leading to the delay in filing the appeal, the Ld. AR submitted that the same had crept in for the reason that the Accounts in charge of the assessee firm, viz. Sri P. Srinivasa Rao had discontinued his services with the assessee firm, and no new incumbent was appointed in his place. The Ld. AR further submitted that the CIT(A) order had come to the knowledge of the assessee firm only in the last week of May, 2025, when the assessee’s staff member had approached its Chartered Accountant for filing the return of income for AY 2024-25. Thereafter, without any further delay, the assessee firm had consulted an Advocate on 02/06/2025 and got the appeal prepared, which was filed before the Tribunal on 03/06/2025, involving a delay of 34 days. The Ld. AR submitted that as the assessee firm had for bonafide reasons delayed the filing of the present appeal, therefore, the same in all fairness be condoned. The Ld. AR in support of his aforesaid contention had drawn our attention to the application filed by the assessee firm seeking condonation of the delay along with a supporting “affidavit”, dated 04/09/2025.
Per contra, the Learned Departmental Representative objected to the seeking of condonation of the delay involved in the filing of the present appeal by the assessee firm.
We have heard the Learned Authorized Representatives of both parties on the issue of the delay involved in filing the present appeal. Although we are clear in our mind that an appellant ought to be vigilant regarding filing of the appeal within the prescribed time limit contemplated under law, but at the same time, cannot remain oblivion of certain compelling circumstances which could lead to a delay in filing the appeal. We are of the view that, as in the present case before us, there are justifiable reasons leading to the delay of 34 days in filing of the appeal by the assessee firm, therefore, the same merits to be condoned. Our aforesaid view is supported by the recent decision of the Hon'ble Supreme Court in the case of Vidya Shankar Jaiswal vs. The Income Tax Officer, Ward-2, Ambikapur in Special Leave Petition (Civil) Nos. 26310-26311/2024, dated 31st January, 2025. The Hon'ble Apex Court while setting aside the order of the Hon'ble High Court of Chhattisgarh, that had approved the declining of the condonation of delay of 166 days by the Income Tax Appellate Tribunal, Raipur Bench, had observed, that a justice oriented and liberal approach should be adopted while considering the application filed by an appellant seeking condonation of the delay involved in filing of the appeal.
Apropos, on merits of the case, we have heard the Learned Authorized Representatives of both parties, perused the orders of the lower authorities and the material available on record.
Admittedly, it is a matter of fact borne from record that the assessee firm, despite having been put to notice about the hearing of the appeal on three occasions, failed to participate in the proceedings before the CIT(A). However, we find substance in the Ld. AR’s claim that as the assessee firm in its Memorandum of Appeal, i.e., “Form-35” had specifically opted out of receipt of notices/communications from the CIT(A) office through email, but a perusal of the CIT(A) order reveals that on all the three occasions the notices, i.e., dated 31/12/2020, 06/09/2023 and 23/09/2024 were forwarded through e-mail.
Considering the facts of the case, we find substance in the Ld. AR’s claim that as the assessee firm despite having opted out of the service of the notice through e-mail and having provided a specific address at Sl.No.17 in “Form-35”, at which it had sought for the service of notices, was never validly intimated about the fixation of the appeals on the aforementioned three days, therefore, it had remained divested of an opportunity to participate in the appellate proceedings and prosecute its matter before the First Appellate Authority.
We thus, in terms of our aforesaid observations, are of the considered view that, the matter in all fairness, be set aside to the file of the CIT(A) with a direction to adjudicate the matter afresh after validly putting the assessee firm to notice about the fixation of the appeal.
Before parting, we may herein observe that the e-mail address provided by the assessee firm, i.e., “touchstone2000@yahoo.com” in its Form-35, as accepted before us by the Ld. AR shall hereinafter be taken as the address for service of the notice in the course of the set aside proceedings, and no objection regarding the same shall be raised.
Resultantly, the appeal filed by the assessee firm is allowed for statistical purposes in terms of our aforesaid observations.
Order pronounced in the open court on 19th November, 2025.