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Facts
The assessee, a partnership firm engaged as a commission agent, did not file its income tax return for AY 2017-18. Based on information of significant cash deposits and withdrawals, the Assessing Officer reopened the assessment under Section 147 and completed a best judgment assessment under Section 147 read with Section 144, determining an income of Rs.16,82,307/-, as the assessee did not respond to notices. The CIT(A) sustained this ex-parte order, as the assessee failed to appear or submit documents during the first appeal, claiming non-receipt of notices.
Held
The Tribunal condoned a 22-day delay in filing the appeal, finding a bona fide reason for the assessee's non-appearance before lower authorities due to alleged non-receipt of notices, which led to a violation of natural justice. The Tribunal set aside the CIT(A)'s order and remitted the matter back to the CIT(A) to provide the assessee a fresh opportunity of hearing, with the assessee directed to pay a nominal cost of Rs.5,000/- to the Prime Minister's Relief Fund for prior negligence.
Key Issues
Whether the ex-parte assessment and first appellate orders violated principles of natural justice due to the assessee's alleged non-receipt of notices, and whether a fresh opportunity of hearing should be granted.
Sections Cited
147, 148, 142(1), 144, 250
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, HYDERABAD “SM-A” BENCH: HYDERABAD
Before: SHRI VIJAY PAL RAO & SHRI MANJUNATHA G
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD “SM-A” BENCH: HYDERABAD BEFORE SHRI VIJAY PAL RAO, VICE PRESIDENT AND SHRI MANJUNATHA G, ACCOUNTANT MEMBER ITA.No.489/Hyd./2025 Assessment Year 2017-2018 Dhanalaxmi & Company, The Income Tax Officer, Hyderabad – 500 036. vs. Ward-9(1), PAN AAFFD2691B Hyderabad – 500 004. (Appellant) (Respondent) For Assessee : CA, KA Sai Prasad For Revenue : MS. Helen Ruby Jesindha, Sr. AR Date of Hearing : 28.07.2025 Date of Pronouncement : 31.07.2025 ORDER PER MANJUNATHA G. :
The above appeal has been filed by the Assessee against the Order dated 17.12.2024 of the learned CIT(A)- National Faceless Appeal Centre [in short “NFAC], Delhi, relating to the assessment year 2017-2018.
At the very outset, there is a delay of 22 days in filing the appeal before the Tribunal. The assessee had filed an affidavit explaining the reasons for not filing the appeal
2 ITA.No.489/Hyd./2025 within the prescribed time limit contending, inter alia, that, the tax consultant due to his family trip to New Zealand in the month of March could not prepare the appeal papers in time resulting in the delay of 22 days in filing the present appeal before the Tribunal. He, therefore, submitted that, since the circumstances are beyond it’s control and there was a ‘sufficient and reasonable cause’, the delay of 22 days in filing the present appeal before the Tribunal may please be condoned in the interest of justice.
MS. Helen Ruby Jesindha, learned Sr. AR for the Revenue, on the other hand, did not strongly object to the reasons explained by the assessee.
We have heard both the parties and perused the affidavit filed by the assessee explaining the reasons for the delay in filing the appeal within the prescribed time limit before the Tribunal. We are satisfied with the explanation furnished by the assessee and, therefore, condone the delay of 22 days in filing the appeal before the Tribunal and admit the appeal for adjudication.
3 ITA.No.489/Hyd./2025 5. Briefly stated facts of the case are that, the assessee is a partnership firm engaged in the business of Commission Agent under the license issued by the Agriculture Market Committee, Hyderabad. The assessee derives income out of 4% commission on agriculture produce sold on behalf of the agriculturists. The assessee did not file it’s return of income for the assessment year 2017-2018. As per the information available with the Department, the assessee made several cash deposits/credits in the accounts maintained by it to the tune of Rs.1,61,47,400/- along with cash withdrawals aggregating to Rs.1,52,13,902/- during the financial year 2016-2017 relevant to assessment year 2017-2018. The Assessing Officer after obtaining the necessary approval from the Competent Authority has reopened the assessment u/sec.147 of the Income Tax Act, 1961 [in short “the Act”] and a notice u/sec.148 of the Act was issued on 31.03.2021 and served upon the assessee calling the assessee to furnish relevant information. Further, the Assessing Officer issued notices u/sec.142(1) of the Act from time to time.
4 ITA.No.489/Hyd./2025 However, there were no response from the side of the assessee. During the course of assessment proceedings, the Assessing Officer has obtained the bank account statement of the assessee and after verification of the details and in absence of any supporting documents and return of income, the Assessing Officer determined the total income of the assessee at Rs.16,82,307/- by best judgment vide order dated 19.03.2022 passed u/sec.147 r.w.s.144 of the Income Tax Act, 1961.
Aggrieved by the assessment order, the assessee preferred an appeal before the learned CIT(A). Before the learned CIT(A) also, despite several notices issued u/sec.250 of the Act, the assessee neither appeared nor filed his submissions to substantiate it’s case. Therefore, the learned CIT(A) has sustained the income determined by the Assessing Officer.
CA, K A Sai Prasad, Learned Counsel for the Assessee claims that, notices issued by the Assessing Officer were not served upon the assessee because, the said notices were sent to the email ID which is not given by the 5 ITA.No.489/Hyd./2025 assessee either in the PAN data or in the return of income. Further, during the appellate proceedings before the learned CIT(A) are also ex-parte because, the assessee neither appeared nor furnished any details. Once again the assessee claims that, although, the assessee in Form-35 stated that, notice of hearing is required to be sent through post, but, not through email ID, but, the learned CIT(A) claims to have served notice through email ID given in Form-35, but the said notices are not served on the assessee. Therefore, the assessee could not file any evidence. Further, the Assessing Officer made addition towards cash deposits and cash withdrawals as business turnover and estimated profit, even though, the assessee claims that, it is engaged in the business of commission agent and only a reasonable amount of profit can be estimated towards commission. Since, the assessment proceedings and appellate proceedings are ex-parte and the assessee did not get proper opportunity of hearing before both the authorities. He, therefore, pleaded that, another opportunity of hearing may please be provided to the 6 ITA.No.489/Hyd./2025 assessee in the interest of justice by remitting the matter back to the file of learned CIT(A).
MS. Helen Ruby Jesindha, learned Sr. AR for the Revenue, on the other hand, supporting the orders of the lower authorities submitted that, the assessee neither appeared nor filed relevant documentary evidences to substantiate it’s case before the lower authorities. Therefore, the Assessing Officer made the addition and in absence of proper explanation filed by the assessee during the course of appellate proceedings, the learned CIT(A) sustained the addition made by the Assessing Officer. She, therefore, submitted that, the order of the learned CIT(A) should be upheld.
We have heard both the parties, perused the material on record and gone through the orders of the authorities below. There is no dispute with regard to the fact that, the assessee is a licensed commission agent and earns income out of commission on sale of agricultural produce on behalf of the agriculturists. Further, the assessee had not filed it’s return of income and also not filed it’s submissions
7 ITA.No.489/Hyd./2025 before the Assessing Officer or the learned CIT(A) during the course of appellate proceedings. Therefore, in absence of proper explanation along with documentary evidences, the learned CIT(A) sustained the addition made by the Assessing Officer. Learned Counsel claims that, the said notices issued by the Department either during the course of assessment proceedings or during the course of appellate proceedings, are not received by the assessee and, therefore, the assessee could not file it’s submissions to substantiate it’s case. Therefore, learned Counsel for the Assessee pleaded that one more opportunity may please be provided by remitting the matter back to the file of learned CIT(A) to substantiate it’s case. We find that, there is a bonafide reason for the assessee in not appearing before the lower authorities, in absence of notices received by it. Thus, the assessee was prevented opportunity of hearing to substantiate it’s case and thereby, principles of natural justice are not followed. Therefore, we are of the considered view that, the issue needs to be set-aside to the file of learned CIT(A) to give another opportunity of hearing to the 8 ITA.No.489/Hyd./2025 assessee. Thus, we set-aside the order of the learned CIT(A) and restore the issue back to the file of learned CIT(A) with a direction to reconsider the issue, after providing reasonable opportunity of hearing to the assessee. Needless to say, the assessee shall furnish relevant details in support of it’s claim as and when the case is posted for hearing. Further, we also direct the assessee to pay a nominal cost of Rs.5000/- [Rs. Five Thousand Only] for showing negligence or inaction before the Assessing Officer and the learned CIT(A) and the said costs directed as above shall be paid to the Prime Minister’s Relief Fund and produce relevant evidence to the Registry of the Tribunal within 15 days from the date of receipt of this order.
In the result, appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on 31.07.2025.