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Facts
The assessee, engaged in work contracts, trading, and agriculture, did not file an ITR for AY 2017-18. An ex-parte assessment was completed u/s 144, making additions for unexplained cash deposits u/s 69A and 10% of aggregate credits, primarily due to cash deposits during the demonetization period. The CIT(A) dismissed the appeal ex-parte as the assessee failed to respond, who contended he was residing abroad and did not receive the notices.
Held
The Tribunal determined that the assessee was not afforded an effective opportunity at both the assessment and appellate stages due to his absence from India and non-receipt of notices. Consequently, the Tribunal set aside the assessment order and remanded the matter to the Assessing Officer for a de-novo assessment, directing the assessee to cooperate.
Key Issues
Whether the ex-parte assessment and appeal dismissal were valid when the assessee claimed non-receipt of notices due to residing abroad, thereby denying a proper opportunity of being heard.
Sections Cited
250, 144, 142(1), 69A, 44AD
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD
Before: DR. B.R.R. KUMAR, VICE-SHRI SIDDHARTHA NAUTIYAL
PER DR. B.R.R. KUMAR, VICE-PRESIDENT:-
This appeal has been filed by the Assessee against the order dated 22.05.2024 passed by the Ld. Commissioner of Income-Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (‘Ld. CIT(A)’ in short), under Section 250 of the Income-tax Act, 1961 (‘the Act’ in short), relating to the Assessment Year 2017-18.
The assessee has raised the following grounds of appeals:
1. Addition of Cash deposit into Bank total of Rs.29,12,417/- under section 69A in not correct in law and in facts need to be deleted.
2. Profit @10% on total credit of Rs.81,96,158 otherwise than cash collection is erroneously added as income. The total collection work out by AO included loans received from bank so there was error in considering total gross receipt otherwise than collection as part of business Receipt and Rajeshkumar N Patel Vs. ITO Asst. Year : 2017-18 - 2– loans and advances. Further the income work out without applying section 44AD of the act. Need to be corrected.
Addition made of Rs.819616 @ 10% credit in bank account and cash deposit of Rs.2912417 during the Demonetization period is not justificiable in fact and law and need to deleted.
4. Addition of u/s.69A is bad in law and fact need to be deleted.
3. The brief facts of the case are that assessee is an individual, said to be engaged in miscellaneous work contracts and trading activities, and also deriving agricultural income. For the AY 2017-18, the assessee did not file the return of income. Based on cash deposits made during the demonetization period, the case was selected for scrutiny. Statutory notices under Section 142(1) were issued, which remained uncompiled with. Consequently, the Assessing Officer completed the assessment u/s 144 of the Act on 22.10.2019, determining total income at Rs.37,32,033/- after making the following additions:
(i) Unexplained cash deposits u/s 69A. - Rs. 29,12,417/- (ii) 10% of aggregate credits of Rs.81,96,158/- - Rs. 8,19,616/- as deemed income
Aggrieved by the order of the Assessing Officer, the assessee preferred appeal before the Ld. CIT(A), which was dismissed vide order dated 22.05.2025, on the ground that the assessee failed to respond to notices or substantiate his claims with proper evidence.
Aggrieved by the impugned order of the Ld. CIT(A), the assessee is now in appeal before the Tribunal.
The Ld. AR, before us, submitted that the assessee normally reside in the USA and visit India year to year since 2017. During FY 2016–17, he Rajeshkumar N Patel Vs. ITO Asst. Year : 2017-18 - 3– was engaged in finance and trading activities and deposited Rs.29,12,417/- in cash during the demonetization period. The Ld. AR submitted that the assessment of the assessee was completed ex-parte u/s 144, as notices issued by the Department were not received while the assessee was abroad. On becoming aware of the assessment through a penalty notice in March 2020, the assessee filed an appeal on 10.04.2020, specifying the AR’s email for service of notice. The Ld. AR submitted that the notices u/s 250 issued by the Ld. CIT(A) were not received by the AR, and the assessee was outside India on both occasions; therefore, the appeal was dismissed ex-parte without proper opportunity of hearing. The Ld. AR, therefore, urged that the matter be restored to the Ld. CIT(A) for fresh adjudication after providing due opportunity.
The Ld. DR, on the other hand, supported the orders of the authorities below.
We have heard the rival submissions and perused the material available on record. It is not in dispute that the assessment was framed u/s 144 due to non-compliance, and the appeal before the Ld. CIT(A) was dismissed ex-parte for similar reasons. Now, the assessee has placed on record that he was residing abroad and had requested all communications to be made through the AR's email. The non-receipt of such notices and the assessee's absence from India during relevant periods are also not refuted. Therefore, in our view, both at the assessment and appellate stages, the assessee has not been granted an effective opportunity to present his case. We, therefore, deem it fit and proper to set aside the assessment order and restore the matter to the file of the Assessing Officer for de-novo assessment, after giving due and reasonable opportunity of being heard to the assessee. The assessee is also directed to fully cooperate with the proceedings and furnish all necessary documents and explanations as may be required by the Assessing Officer.
In the result, the appeal of the assessee is allowed for statistical purposes.
The order is pronounced in the open Court on 02.09.2025.