Loading judgment…
Facts
The assessee filed appeals against the quantum and penalty orders. The Assessing Officer initiated reassessment proceedings under Section 147, believing income had escaped assessment due to unexplained cash deposits. The assessee did not comply with notices, leading to an ex-parte assessment.
Held
The Tribunal noted that both the Assessing Officer and the CIT(A) passed ex-parte orders. To provide a final opportunity, the Tribunal set aside the quantum appeal for de novo adjudication, subject to costs, and also set aside the consequential penalty appeal.
Key Issues
Whether the ex-parte orders passed by the lower authorities violated the principles of natural justice and if a fresh opportunity should be granted to the assessee for de novo adjudication.
Sections Cited
147, 148, 143(2), 142(1), 144, 144B, 69A, 271(1)(c), 271(1)(b), 44AD, 282
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, HYDERABAD “A” BENCH: HYDERABAD
Before: SHRI VIJAY PAL RAO & SHRI MANJUNATHA G
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD “A” BENCH: HYDERABAD BEFORE SHRI VIJAY PAL RAO, VICE PRESIDENT AND SHRI MANJUNATHA G, ACCOUNTANT MEMBER ITA.Nos.407 & 408/Hyd./2025 Assessment Year 2013-2014 Asif Ali Mohd. Amangal, The Income Tax Officer, Mahabubnagar – 509 358 Ward – 1, vs. Telangana. Mahabubnagar. PAN AKXPM0187D (Appellant) (Respondent) For Assessee : Shri P Vinod, Advocate For Revenue : Shri Ranjan Agrawala, Sr. AR Date of Hearing : 16.04.2025 Date of Pronouncement : 16.04.2025 ORDER PER MANJUNATHA G. :
The above twin appeals are filed by the Assessee against the quantum and penalty order dated 21.08.2024; dated 06.02.2025 of the learned CIT(A)-National Faceless Appeal Centre [in short the “NFAC”], Delhi, relating to the assessment year 2013-2014.
2 ITA.Nos.407 & 408/Hyd./2025 2. At the very outset, there is a delay of 128 days in filing the appeals before the Tribunal. The assessee filed an affidavit explaining the reasons for condonation of delay to the effect that the order of the learned CIT(A) was not served upon the assessee and that the order has been sent to wrong email ID and, therefore, there is a delay of 128 days in filing the instant appeals before the Tribunal. He submitted that the delay is neither willful nor that the assessee derive any benefit by filing the appeals with delay. He, accordingly, prayed that the delay of 128 days may please be condoned in the interest of justice.
We have heard both the parties and perused the reasons explained by the assessee in his affidavit for condonation of delay of 128 days in filing the appeals before the Tribunal. We find that there is a ‘sufficient cause’ for the assessee in not filing the appeals before the Tribunal within the prescribed period as the order of the learned CIT(A) was not served upon the assessee and, therefore, we condone the delay of 128 days in filing the instant appeals before the Tribunal and proceed to decide the appeals for adjudication.
3 ITA.Nos.407 & 408/Hyd./2025 ITA.No.407/Hyd./2025 – A.Y. 2013-2014 :
The assessee has raised the following grounds in the instant appeal :
On the facts and in the circumstances of the case, the order of the Id. CIT(A) is erroneous and unsustainable in law apart from being passed in violation of principles of natural justice. The Id. CIT(A) failed to appreciate that proper notices were not served on the appellant as required under section 282 of the Act r.w. rule 127 of the Rules, and therefore Appellant could not put forth his case.
Without prejudice to the above, the Id. CIT(A) erred in sustaining the addition made by the AO of Rs.18,30,200 as unexplained money u/s.69A of the Act. The Id. CIT(A) failed to appreciate that the AO having accepted the return of income, ought not to have made addition of entire deposits in the bank as unexplained money u/s.69A of the Act.
3. The authorities below failed to appreciate that the Appellant declared turnover of Rs.16,54,500 and filed return of income u/s.44AD of the Act and the addition if any ought to have been made on the difference in the turnover declared and the deposits made by duly estimating the same. (Tax Effect: Rs.5,65,532) 4. Any other ground that may be urged at the time of hearing.
Briefly stated facts of the case are that, the assessee is a prop of. M/s. Popular General Store and filed his return of income for the A.Y. 2019-20 in ITR-3 and 4 ITA.Nos.407 & 408/Hyd./2025 declared business income of Rs.3,85,859/-. On verification of the AST and e-Filing Portal, it is noticed by the Department that, the assessee is not filing return of income regularly. Further, as per the information made available through Actionable Information Monitoring System [AIMS], the assessee made cash deposits aggregating to Rs.18,30,200/- in saving a bank account during the previous year relevant to the assessment year 2013-14. As per the information available with the Department and as verified from AST and ITBA, the assessee has not filed return of income for the assessment year 2013-14. Therefore, the Assessing Officer has reason to believe that the income chargeable to tax has escaped assessment. Accordingly, after recording reasons u/sec.147 of the Income tax Act, 1961 and after obtaining necessary approval from the competent/higher authority, the Assessing Officer has issued a notice u/s 148 of the Act for the impugned assessment year 2013-14 to the assessee on 05.03.2021 which was delivered to him on same day. In response, the assessee has filed his return of income on 5 ITA.Nos.407 & 408/Hyd./2025 05.04.2021 declaring total income at Rs.1,73,460/-. Subsequently, the Assessing Officer issued statutory notices u/sec.143(2) and 142(1) of Income tax Act, 1961 on various dates, however, the assessee neither furnished required details nor explained the case. Therefore, the Assessing Officer issued a show cause notice to the assessee u/sec.144(1) of the Act on 02-03-2022 calling the assessee to explain his case, failing which, the assessment will be completed ex-parte u/sec.144 of the Income tax Act, 1961. But the assessee has failed to comply with the said show cause notice. In view of these facts and in absence of any submission or documents furnished by the assessee, the Assessing Officer assessed the total income of the assessee at Rs.20,03,600/- by making addition u/sec.69A of the Act on account of unexplained credits in bank account to the tune of Rs.18,30,200/- as against the returned income of the assessee at Rs.1,73,460/- vide order dated 26.03.2022 passed u/sec.147 r.w.s.144B of the Income Tax Act, 1961 and also initiated penalty proceedings u/sec.271(1)(c) and 271(1)(b) of the Act separately by levying penalty of 6 ITA.Nos.407 & 408/Hyd./2025 Rs.5,65,532/- @ 100% on account of concealment of income of Rs.18,30,200/- u/sec.271(1)(c) of the Act which has also been challenged by the assessee in ITA.No.408/Hyd.2025.
On being aggrieved, the assessee carried the matter in appeals before the learned CIT(A) on quantum addition of Rs.18,30,200/- made by the Assessing Officer and penalty of Rs.5,65,532/- levied by the Assessing Officer u/sec.271(1)(c) of the Act. The learned CIT(A) sustained the addition and penalty levied by the Assessing Officer in absence of any contrary evidence brought to his notice by the assessee.
Aggrieved by the orders of the learned CIT(A) in sustaining addition and penalty [i.e., quantum and penalty appeals], the assessee now carried the matter in appeals before the Tribunal.
Shri P. Vinod, Learned Counsel for the Assessee, submitted that the learned CIT(A)-NFAC has passed ex- parte order u/sec.147 r.w.s.144 vide order dated 21.08.2024 on quantum addition of Rs.18,30,200/- and no 7 ITA.Nos.407 & 408/Hyd./2025 notice has been issued to the assessee during the course of appellate proceedings to substantiate his case and thereby, the learned CIT(A) has not followed the principles of natural justice. He, accordingly, submitted that the order of the learned CIT(A) cannot be sustained in the eye of law and pleaded that the order of the learned CIT(A) should be set aside in the interest of justice.
Shri Ranjan Agrawala, Sr. AR for the Revenue, on the other hand, strongly relied on the order of the learned CIT(A), but, fairly admitted the factual position that the learned CIT(A) has passed ex-parte order on the quantum addition appeal.
We have heard both the parties, perused the material on record and the orders of the authorities below. We find that, admittedly the Assessing Officer has passed ex-parte assessment order. During the course of appellate proceedings, the learned CIT(A) has also passed ex-pate order. In view of the above factual position, since the lower authorities are passed ex-parte orders, in the interest of 8 ITA.Nos.407 & 408/Hyd./2025 justice, one final opportunity is being provided to the assessee to substantiate his case before the Assessing Officer for de novo adjudication, subject to payment of Rs.2500/- towards costs in each appeal, in toto Rs.5000/- for both the appeals [i.e, quantum and penalty appeal] instituted before the Tribunal and such costs should be paid to the Prime Minister National Relief Fund [“PMNRF”] on or before one month from the date of this order and furnish relevant evidence to the Registry of the Tribunal. With these observations, we set-aside the quantum appeal i.e., ITA.No.407/Hyd./2025 to the file of the learned Assessing Officer for de novo adjudication of the matter in issue with a direction to provide adequate opportunity of being heard to the assessee.
Since, we have allowed the appeal of the assessee ITA.No.407/Hyd./2025 on quantum addition and that the penalty appeal i.e., ITA.No.408/Hyd./2025 is of consequential in nature, the same is also set-aside to the file of Assessing Officer to decide afresh after deciding quantum appeal.
9 ITA.Nos.407 & 408/Hyd./2025 12. In the result, ITA.No.407/Hyd./2025 of the assessee is allowed for statistical purposes and ITA.No.408/Hyd./2025 is dismissed. A copy of this common order be placed in the respective case files.
Order pronounced in the open Court on 16.04.2025