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Facts
The assessee, an individual, did not file his return of income for AY 2015-16. Information indicated deposits and credits totaling Rs. 1,13,24,622/- from vehicle loans and bank accounts, the source of which remained unexplained. Notices issued by the Assessing Officer (AO) and Commissioner (Appeals) were not complied with.
Held
The Tribunal held that the principle of res judicata does not apply to income tax proceedings and that the assessee's non-compliance led to an ex-parte assessment. However, considering the Covid-19 period and the ex-parte nature of the orders, the Tribunal restored the issue to the AO.
Key Issues
Whether the ex-parte assessment made by the AO and sustained by the CIT(A) due to non-compliance and non-prosecution is justified, or if a final opportunity should be granted to the assessee.
Sections Cited
69A, 148, 142(1), 144, 147, 144B
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE
Before: SHRI R. K. PANDA & MS. ASTHA CHANDRA
This appeal filed by the assessee is directed against the order dated 31.08.2024 of the Ld. CIT(A) / NFAC, relating to assessment year 2015-16.
Although a number of grounds have been raised by the assessee, however, these all relate to the order of the Ld. CIT(A) / NFAC in dismissing the appeal for want of prosecution and thereby sustaining the addition of Rs.1,13,24,622/- made by the Assessing Officer u/s 69A of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’).
Facts of the case, in brief, are that the assessee is an individual and has not filed his return of income for the impugned assessment year. As per information available the assessee has made deposit against vehicle loans of Rs.9,04,000/- in Kahnpur Pathar Multistate Co-op. Credit Society. Similarly, as per 26AS data, there are total credits of Rs.1,04,20,622/- in his bank account during the financial year 2014-15. Since the assessee has not filed his return of income, the source of such deposits remained unexplained. Hence, a notice u/s 148 of the Act was issued on 31.03.2021 after recording the reasons and after seeking necessary approval from the competent authority requiring the assessee to file his return of income within 30 days. However, there was no compliance from the side of the assessee to the notice issued u/s 148 of the Act. The Assessing Officer therefore, issued notice u/s 142(1) of the Act seeking certain information but again there was no compliance from the side of the assessee. The Assessing Officer therefore, proceeded to complete the assessment u/s 144 of the Act. Since there was no explanation from the side of the assessee to explain the nature and source of deposit against loan of Rs.9,04,000/- in Kahnpur Pathar Multistate Co-op. Credit Society and total credits of Rs.1,04,20,622/- in various bank accounts maintained as per 26AS data, the Assessing Officer made addition of the same to the total income of the assessee u/s 69A of the Act.
Since there was no compliance from the side of the assessee despite 5 opportunities granted, the Ld. CIT(A) / NFAC in the ex-parte order passed by him dismissed the appeal.
Aggrieved with such order of the Ld. CIT(A) / NFAC, the assessee is in appeal before the Tribunal.
The Ld. Counsel for the assessee at the outset submitted that the assessment order passed on 03.03.2022 was during the Covid-19 period and all the notices were also issued during the same period. Since the notices were issued through ITBA portal all these notices went to the address given by the then Counsel who never informed the assessee. Referring to the order of the Assessing Officer for assessment year 2014-15, copy of which is placed at pages 1 to 6 of the paper book, he submitted that the Assessing Officer during the assessment year 2014-15 in the ex-parte order passed by him u/s 147 r.w.s. 144 r.w.s. 144B of the Act has estimated such income at 6.34%. However, for the impugned assessment year the Assessing Officer made addition of the entire deposits as income of the assessee which has been upheld by the Ld. CIT(A) / NFAC which is not justified. He accordingly submitted that the Assessing Officer may be directed to adopt the same rate of profit that has been estimated for assessment year 2014-15.
The Ld. DR on the other hand submitted that the principle of res judicata does not apply to the income tax proceedings as every year is separate and distinct. He submitted that for the impugned assessment year the assessee has never appeared before the Assessing Officer to explain the nature and source of such deposits. He accordingly submitted that the order of the Ld. CIT(A) / NFAC dismissing the appeal filed by the assessee should be upheld and the grounds raised by the assessee be dismissed.
We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and Ld. CIT(A) / NFAC and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. It is an admitted fact that due to non compliance to the statutory notices issued by the Assessing Officer he completed the assessment u/s 147 r.w.s. 144 r.w.s. 144B of the Act determining the total income of the assessee at Rs.1,13,24,622/- being the deposits against vehicle loan of Rs.9,04,000/- in Kahnpur Pathar Multistate Co-op. Credit Society and total credits of Rs.1,04,20,622/- in his bank account u/s 69A of the Act. We find the Ld. CIT(A) / NFAC upheld the action of the Assessing Officer due to non-prosecution of the appeal filed by the assessee. It is the submission of the Ld. Counsel for the assessee that the re-assessment proceedings had taken place during the Covid-19 period and the notices issued by the Ld. CIT(A) / NFAC were never informed by the then Counsel for which all these unfortunate events happened. It is also his submission that since the Assessing Officer in the assessee’s own case for assessment year 2014-15 has adopted the profit rate at 6.34% under identical circumstances, therefore, for this year also the same rate should have been adopted. It is the settled legal proposition that the principle of res judicata does not apply to income tax proceedings as every year is separate and distinct. Merely because the Assessing Officer has adopted the profit rate at 6.34% in the preceding year, the assessee cannot claim that the same rate of profit should be adopted for the huge cash deposits made in the bank account, the nature and source of which remained unexplained. However, considering the fact that the assessment proceedings had taken place during the Covid-19 period and the order of the Ld. CIT(A) / NFAC’s also ex-parte order due to non-appearance of the assessee, therefore, considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the Assessing Officer with a direction to grant one final opportunity to the assessee to substantiate his case by filing the requisite details and decide the issue as per fact and law. The assessee is also hereby directed to appear before the Assessing Officer on the appointed date and make his submissions, if any, without seeking any adjournment under any pretext failing which the Assessing Officer shall be at liberty to pass appropriate order as per law. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 21st May, 2025.