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Facts
The assessee filed an income return for AY 2010-11, which was processed under Section 143(1). The case was selected for scrutiny, and notices were issued. The Assessing Officer (AO) proceeded under Section 144, making additions for unexplained cash deposits and interest income, as the assessee allegedly failed to comply with notices. The CIT(A) dismissed the assessee's appeal.
Held
The Tribunal held that the CIT(A) erred in dismissing the appeal without considering the submissions and documentary evidence filed by the assessee. The Tribunal found that the assessee had indeed provided submissions and evidence, and the CIT(A)'s observation that the assessee did not respond was an infirmity violating natural justice. The CIT(A)'s order was set aside.
Key Issues
Whether the CIT(A) was justified in dismissing the appeal for non-compliance without considering the evidence submitted by the assessee, and whether the AO had valid jurisdiction to pass the assessment order under Section 144 without proper service of notice under Section 143(2).
Sections Cited
144, 143(2), 142(1), 69A, 143(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, Hyderabad ‘SM’ Bench, Hyderabad
करदाताका"ितिनिध"/ : Sri A. Harish, Advocate Assessee Represented by राज"का"ितिनिध"/ : Ms. V. Koteswaramma, Sr. AR Department Represented by सुनवाईसमा"होनेकीितिथ/ : 25/09/2025 Date of Conclusion of Hearing घोषणा की तारीख/ : 30/09/2025 Date of Pronouncement ORDER
PER RAVISH SOOD, JM:
The present appeal filed by the assessee is directed against the order passed by the Additional/Joint Commissioner of Income-Tax (Appeals), Ranchi, dated 25/02/2025, which in turn arises from the order passed by the Assessing Officer under Section 144 of the Income Tax Act, 1961 (for short, “Act”), dated 25/03/2013 for A.Y. 2010-11. 2 Vidyavathi Paluru vs. ITO 2. The assessee has assailed the impugned order on the following grounds of appeal before us:
Succinctly stated, the assessee had filed her return of income for the AY 2010-11, dated 25/03/2011, declaring an income of Rs. 62,750/-. The return of income filed by the assessee was processed as such U/s. 143(1) of the Act. Subsequently, the case of the assessee was selected for scrutiny assessment and notices U/s. 143(2) & 142(1) of the Act, 3 Vidyavathi Paluru vs. ITO dated 30/08/2011 and 18/06/2012 are stated to have been issued to the assessee.
Ostensibly, as the assessee had failed to comply to the aforesaid notices, therefore, the Ld. AO, in the absence of the requisite details as were called for by him was constrained to proceed with and frame the assessment to the best of his judgment U/s. 144 of the Act, dated 25/03/2013, wherein he held the cash deposits of Rs. 19,40,315/- made by the assessee in his bank account during the subject year as having been sourced out of his unexplained money U/s. 69A of the Act. Also, the unaccounted interest income on the aforesaid bank account of Rs.20,000/- was also added to the assessee’s returned income. Accordingly, the AO vide his order passed U/s. 144 of the Act dated 25/03/2013 determined the income of the assessee at Rs. 20,03,065/-.
Aggrieved, the assessee carried the matter in appeal before the CIT(A), but without success. For the sake of clarity, the observations of the CIT(A) are culled out as under:
4 Vidyavathi Paluru vs. ITO 5 Vidyavathi Paluru vs. ITO 6 Vidyavathi Paluru vs. ITO
The assessee being aggrieved has carried the matter in appeal before us.
We have heard the Learned Representatives of both the parties, perused the orders of the lower authorities and material available on record.
7 Vidyavathi Paluru vs. ITO 8. Sri A. Harish, Advocate, Learned Authorized Representative for short “Ld. AR”) for the assessee, at the threshold of the hearing of the appeal assailed the validity of the jurisdiction that was assumed by the AO for framing the impugned assessment vide his order passed U/s. 144 of the Act, dated 25/03/2013. Elaborating on his contention, the Ld. AR submitted that as the AO had at no stage served any notice U/s. 143(2) of the Act upon the assessee, therefore, he had wrongly assumed jurisdiction and framed the assessment. The Ld. AR to buttress his aforesaid submission had drawn our attention to the assessment order, and submitted, that the AO had though observed that notices U/s. 143(2) and U/s. 142(1) of the Act, dated 30/08/2011 and 18/06/2012 were issued to the assessee, but he had nowhere stated that the same were duly served upon him with the stipulated time period.
Apart from that, the Ld. AR submitted that the CIT(A) had grossly erred in law and facts of the case in summarily dismissing the appeal filed by the assessee. Elaborating on his contention, the Ld. AR submitted that the hearing of the appeal was fixed by the CIT(A) on three occasions i.e., on 19/01/2024; 19/02/2024 and 23/01/2024. The Ld. AR submitted that on the first date i.e., on 19/01/2024, the assessee had filed an application seeking adjournment. Thereafter, the assessee had on 19/02/2024 further filed/uploaded his written submissions, affidavit, 8 Vidyavathi Paluru vs. ITO agreement of sale dated 08/04/2009, revenue stamped receipts dated 08/04/2009 and 07/09/2009 issued to the purchaser viz., Mr. M. Prabhakar Reddy etc., Page 2 to 3 of APB. Apart from that, the assessee on the next date of hearing had further filed/uploaded his written submissions along with supporting documents on 20/01/2025, Page-4 of the APB. The Ld. AR submitted that though it is a matter of fact borne from the record that the assessee had filed his written submissions along with documentary evidence, affidavit etc., before the CIT(A), but the latter had based on his perverse observations dismissed the appeal filed by the assessee for the reason that he had neither responded to the notices nor filed any written submissions in compliance to the same. The Ld. AR to support his aforesaid contention had taken us through Para 5.1 - Page 6 of the CIT(A)’s order. The Ld. AR submitted that as the assessee has been visited with a perverse order of the CIT(A), which clearly militates against the facts discernible from the record, therefore, the order so passed by him cannot be sustained and is liable to be set-aside.
Alternatively, the Ld. AR submitted that as the AO in the present case had failed to serve upon the assessee a notice U/s. 143(2) of the Act, which was the very foundation for valid assumption of jurisdiction for framing the assessment, therefore, the assessment on the said count itself was liable to be struck down.
9 Vidyavathi Paluru vs. ITO
Per contra, Ms. V. Koteswaramma, Learned Departmental Representative (for short “Ld. Sr. AR”) for the assessee relied upon the orders of the lower authorities.
The Ld. D.R, on being queried, that now when the assessee on the various dates on which the hearing of the appeal was fixed before the CIT(A) had filed his written submissions along with supporting documentary evidence, then on what basis he had dismissed the assessee’s appeal for the reason that the assessee had neither responded to the notices nor filed any written submissions, the Ld. Sr. DR failed to come forth with any reply.
We have thoughtfully considered the facts involved in the present case in the backdrop of the contentions advanced by the Learned Authorized Representatives of both the parties.
Admittedly, as it is a matter of fact borne from the record, that the assessee had in compliance with the notices intimating the fixation of the appeal before the CIT(A) i.e., on 19/02/2024 and 23/01/2025, filed his written submissions, supporting documentary evidence, affidavit etc., on 19/02/2024, 20/02/2024 and 21/01/2025, Pages 2 to 4 of the APB, therefore, we find it incomprehensible that on what basis the CIT(A) had 10 Vidyavathi Paluru vs. ITO observed that the assessee, despite having been afforded multiple opportunities, neither responded to the notices nor filed any written submissions. We are of the firm conviction that in the backdrop of the facts discernible from the record, the observation of the CIT(A), which had formed the foundation for the dismissal of the present appeal, suffers from a grave infirmity. As the assessee had furnished the written submissions, affidavit, supporting documentary evidence etc. in the course of the proceedings before the CIT(A), therefore, there was no justification for him to have discarded the said documents and dismissed the appeal based on his wrong observations. As the order passed by the CIT(A) suffers from a grave infirmity, which by no means but falls within the meaning of blatant violation of the basic principles of natural justice, i.e., condemning the assessee appellant unheard, i.e., without considering his submissions and supporting documentary evidence, therefore, we are unable to persuade ourselves to subscribe to the same. Accordingly, we herein set-aside the order passed by the CIT(A) and restore the matter to his file with a direction to re-decide the appeal based on a speaking and reasoned order after taking due cognizance of the material available on record. Needless to say, the CIT(A) shall, in the course of the set-aside proceedings, afford a reasonable opportunity of being heard to the assessee, who shall remain at liberty to substantiate 11 Vidyavathi Paluru vs. ITO his contentions based on any further documentary evidence, as per the extant law.
Resultantly, the appeal filed by the assessee is allowed for statistical purposes in terms of our aforesaid observations.