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Facts
The assessee's e-filed Return of Income for AY 2016-17 was treated as invalid. The AO subsequently discovered an unexplained cash investment of Rs. 36.30 lakhs in land and made an addition under Section 69, completing the assessment under Section 147 read with Sections 144 and 144B. The CIT(A) dismissed the assessee's appeal as no response was received to the notices issued.
Held
The Tribunal rejected the assessee's argument regarding the lack of a Section 143(2) notice, as no valid ROI was filed. However, considering the principle of natural justice and the assessee's readiness to provide necessary information and documents, the Tribunal set aside the CIT(A)'s order and remanded the case to the AO for fresh assessment on merits after providing adequate opportunity of hearing.
Key Issues
Whether the assessment order was invalid due to the absence of a Section 143(2) notice, and if the assessee was denied a proper opportunity of hearing by the lower authorities, leading to an unsustainable addition under Section 69 for unexplained investment.
Sections Cited
69, 142(1), 143(2), 144, 144B, 147, 148, 234A, 234B, 234C, 250
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Income Tax Appellate Tribunal, Hyderabad ‘SM-A’ Bench, Hyderabad
Before: SHRI VIJAY PAL RAO & SHRI MADHUSUDAN SAWDIA
नननननन नन ननननन/Date of 06/03/2025 hearing: ननननन नन 19/03/2025 ननननन/Pronouncement: आदेश/ORDER PER MADHUSUDAN SAWDIA, A.M. : This appeal is filed by Ms. Saritha Sharma (“the assessee”), feeling aggrieved by the order passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (“Ld. CIT(A)”), dated 28.11.2024 for the A.Y. 2016-17.
The assessee has raised the following grounds :
3. The assessee has also raised the following additional grounds :
4. Learned AR submitted that additional ground so filed are admissible in view of judgment rendered by the Hon’ble Supreme Court in the case of National Thermal Power Co. Ltd. v. CIT (1998) 229 ITR 383 (SC). The prayer for admission of additional ground noted above which are not in memorandum of appeal are being admitted for adjudication in terms of Rule 11 of the Income Tax (Appellate Tribunal) Rules, 1963 owing to the fact that objections raised in additional ground are legal in nature for which relevant facts are stated to be emanating from the existing records.
5. The brief facts of the case are that the assessee is an individual, e-filed her Return of Income (“ROI”) for the A.Y. 2016-17 on 25.04.2017 declaring total income of Rs.2,68,470/-. However, the assessee had not verified the said return. Consequently, the ROI was treated as invalid. Subsequently, the Learned Assessing Officer (“Ld. AO”) came to know that the assessee had purchased a land for Rs.36,30,000/- in cash. As the assessee had not disclosed the source of investment, notice u/s.148 of the Income Tax Act, 1961 (“the Act”) was issued to the assessee on 09.12.2019. The assessee did not file any ROI in response to the notice issued by the Ld. AO. After issuing notice u/s. 142(1) of the Act and considering the submissions of the assessee, the Ld. AO completed the assessment u/s.147 r.w.s. 144 r.w.s. 14B of the Act on 24.09.2021 treating the total investment made by the assessee in purchase of land as unexplained investment u/s.69 of the Act and made the addition of Rs.36,30,000/- in the hands of the assessee.
6. Aggrieved with the order of Ld. AO, the assessee filed appeal before the Ld. CIT(A). Before the Ld. CIT(A), the assessee did not respond to the notices issued by the Ld. CIT(A). Consequently, the Ld. CIT(A) dismissed the appeal of the assessee.
7. Aggrieved with the order of Ld. CIT(A), the assessee is in appeal before us. The first argument of the Learned Authorised Representative (“Ld. AR”) was that, no notice u/s.143(2) of the Act was issued by the Ld. AO to the assessee, therefore, the order passed by the Ld. AO without issue of notice u/s.143(2) of the Act is bad in law and is liable to be quashed. On perusal of assessment order, we found that original ROI filed by the assessee on 25.04.2017 was treated as invalid by the Ld. AO due to non-verification. Further, no ROI was filed by the assessee in response to the notice issued u/s.148 of the Act. Hence, there was no valid ROI filed by the assessee. Accordingly, in the absence of any ROI, the question of issue of notice u/s.143(2) of the Act does not arise. Therefore, the contention of the assessee that the assessment order passed by the Ld. AO is bad in law in absence of issue of notice u/s.143(2) is not sustainable and hence rejected.
8. In their alternate argument, the Ld. AR submitted that both the Revenue Authorities did not provide sufficient opportunity to the assessee to submit their explanations/evidence in support of the additions made by the Ld. AO. It is further contended that both the Revenue Authorities have passed the order without providing proper opportunity. The Ld. AR also submitted that the assessee does not stand to gain by allowing the appeal to be disposed of without any documentary evidence being produced and it is only due to the reasons beyond the control of the assessee, the assessee could prosecute his case before both the Revenue Authorities. By consolidating all the grounds, he further submitted that given an opportunity, the assessee is now ready to produce all such details and conduct the proceedings diligently and get the matter disposed of on merits.
9. Per contra, Ld. DR placed heavy reliance on the orders of the Revenue authorities and submitted that, sufficient opportunity has already been given by the Revenue authorities, but the assessee failed to avail the same. He opposed the grant of further opportunity to the assessee.
We have heard the rival contentions and also gone through the record in the light of the submissions made by either side. It could be seen from the orders of both the Revenue Authorities that in spite of many opportunities given, the assessee failed to prosecute his case on merits. It is a fact that the assessee does not stand to gain by not producing the necessary information/documents and prosecute his case on merits. Be that as it may, now the assessee is ready to produce all information/documents and get the matter disposed of on merits. The highest that would happen by allowing an opportunity to the assessee is that a cause would be decided on merits. With this view of the matter and considering the principle of natural justice, we are of the view that fresh opportunity should be given to the assessee. Accordingly, we set aside the impugned order and restore the issue to the file of the Ld. AO for passing a fresh order on merits after affording the opportunity of hearing to the assessee. Grounds of appeal are answered accordingly.