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Facts
The assessee, a partnership firm, failed to file returns for AY 2018-19 and 2019-20. Information suggested the firm was involved in bogus accommodation entries for long-term and short-term capital gains. Despite notices and reassessment proceedings under Section 147 r.w.s. 148A, the assessee did not respond, leading to ex-parte orders.
Held
The Tribunal noted the assessee's non-cooperative attitude and failure to inform about the firm's dissolution. Consequently, the Tribunal imposed a cost of Rs. 20,000/- to set aside the ex-parte assessment and penalty orders, directing the Assessing Officer to provide one more opportunity for a hearing on merits.
Key Issues
Whether the ex-parte assessment and penalty orders were passed without adhering to principles of natural justice, and if the assessee's failure to participate due to firm dissolution warranted setting aside the orders.
Sections Cited
147, 148A, 148, 142(1), 271AAC(1), 272A(1)(d), 176, 115BBE, 69A
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Income Tax Appellate Tribunal, AHMEDABAD “B” BENCH
Before: Shri T.R. Senthil Kumar & Shri Narendra Prasad Sinha
Alisha Packaging The ITO, Industries Ward-3(3)(1), Ratnasagar Complex, Vs Ahmedabad Opp. Gulab Tower, Shilaj, B.O., Daskroi, Ahmedabad-380059 Gujarat (Respondent) PAN: AAIFA5392H (Appellant) Assessee Represented: Shri Aseem Thakkar, A.R Revenue Represented: Shri Abhijit, Sr. D.R. Date of hearing : 04-08-2025 Date of pronouncement : 06-08-2025 आदेश/ORDER PER BENCH:-
& 1171/Ahd/2025 are filed by the Assessee as against the exparte appellate orders both dated 05.03.2025 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, (in short referred to as “CIT(A)”), arising out of the exparte reassessment orders passed under section 147 r.w.s.
& 1171 and 1182 to 1185/Ahd/2025 A.Ys. 2018-19 & 2019-20 Page No 2 Alisha Packaging Industries vs. ITO 144 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Years 2018-19 & 2019-20. to 1185/Ahd/2025 are filed by the Assessee as against the exparte appellate orders dated 24.03.2025 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, (in short referred to as “CIT(A)”), arising out of the penalties levied u/s. 271AAC(1) and u/s 272A(1)(d) of the Act relating to the Assessment Years 2018-19 & 2019-20.
Brief facts of the case is that the assessee is a partnership Firm which has not filed its Return of Income for the Asst. Years 2018- 19 and 2019-20. Information received from the Investigation Wing that Kushal Group is engaged in providing accommodation entries in the form of bogus Long Term Capital Gain, Short Term Capital Gain and the assessee is one of the beneficiary who has incurred LTCL/STCL of Rs.73,28,953/- for the Asst. Year 2018-19 and Rs. 36,51,447/- relating to Asst. Year 2019-20. Hence the A.O. after recording reasons and following procedures laid down u/s 148A of the Act passed order u/s 148A(d) dated 31-03-2022 with prior permission of specified authority and issued notice u/s 148 of the Act dated 05-04-2022. The assessee had not responded to the notice. Therefore notice u/s 142(1) dated 31-01-2023 issued to the assessee, however there was no response. Hence another notice dated 22-06-2023 sent by Speed Post. However the same was not replied by the assessee firm. Therefore further notices and final show cause notices issued to the assessee which was neither replied and nor filed any adjournment request. Therefore the Assessing Officer made addition of Rs.73,28,950/- and Rs. & 1171 and 1182 to 1185/Ahd/2025 A.Ys. 2018-19 & 2019-20 Page No 3 Alisha Packaging Industries vs. ITO 36,51,447/- as unexplained income of the assessee and demanded tax thereon for the Asst. Years 2018-19 & 2019-20. It is thereafter, the A.O. initiated penalty proceedings by issuing show cause notice dated 08-04-2024. The assessee again failed to make any reply to the notices. Therefore A.O. passed exparte penalty orders levying penalty u/s. 271AAC(1) of Rs.4,39,737/- for A.Y. 2018-19 and Rs. 2,84,812/- for Asst. Year 2019-20 and penalty u/s. 272A(1)(d) of Rs.30,000/- each for the Asst. Years 2018-19 and 2019-20.
3. Aggrieved against the above orders, the assessee filed appeals before Ld. CIT(A) with condonation delay for the quantum appeals which was condoned by Ld. CIT(A). As the assessee failed to respond to the hearing notices dated 18-11-2024, 10-12-2024, 19- 02-2025 and 28-02-2025 issued by Ld. CIT(A). In the absence of any details, Ld. CIT(A) dismissed the quantum appeals filed by the assessee. Consequently, Ld. CIT(A) dismissed the penalty appeals also vide separate orders.
Aggrieved against the appellate order, the assessee is in appeal before us raising the following Grounds of Appeal:
A.Y. 2018-19 1. The Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi has erred in passing an Ex Parte Order dismissing the appeal without providing reasonable opportunity of being heard to the appellant. Hence the same being against the principles of natural justice and equity requires to be quashed.
2. The Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi has erred in dismissing the appeal on the ground of non-prosecution and not adjudicating any of the grounds of appeal raised on its merits.
& 1171 and 1182 to 1185/Ahd/2025 A.Ys. 2018-19 & 2019-20 Page No 4 Alisha Packaging Industries vs. ITO
The Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi has erred in confirming the action of the Assessing Officer, Assessment Unit, Income Tax Department in issuing notice u/s. 148 of the Act to an entity which is not in existence hence the same being illegal and bad in law requires to be quashed and therefore consequential assessment requires to be cancelled.
4. The Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi has erred in confirming the action of the Assessing Officer in issuing the notice u/s 148 of the Act which is invalid and bad in law and therefore the assessment made in consequence thereof is void ab initio and deserves to be quashed.
5. Without prejudice to the above, The Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi has erred in confirming the action of the Assessing Officer, in making an Ex Partesessment by passing an order u/s.147 r.w.s.144 r.w.s.144B of the Act only on the basis of search carried out in the case of third party Kushal Ltd. and holding the assessee as beneficiary for Rs.73,28,953/-on account of sale of shares of Kushal Tradelink Ltd. 6. The Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi has erred in confirming the action of the Assessing Officer in computing the total income at Rs.73,28,953/- holding the sale of shares of Kushal Tradelink Ltd.as alleged unexplained money u/s.69A of the Act I the form of long term capital loss,short term capital loss without any basis. He further erred in taxing the same applying the provisions of Sec. 115BBE of the Act. 7. The Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi has erred in confirming the addition made by the Assessing Officer treating the transactions of purchase and sale of shares of Kushal Tradelink Ltd. as non genuine and bogus long term capital loss, short term capital loss, gain without confronting any material found and seized etc. statements recorded during search in case of Kushal Ltd. Group and therefore the assessment made is on the basis of hearsay. 8. The appellant prays that the delay in filing of appeal may kindly be condoned. 9. The appellant craves leave to add, alter, amend or modify any of the grounds of appeal on or before the date of hearing of appeal.
& 1171 and 1182 to 1185/Ahd/2025 A.Ys. 2018-19 & 2019-20 Page No 5 Alisha Packaging Industries vs. ITO for A.Y. 2018-19
1. The Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi has erred in passing an Ex Parte Order dismissing the appeal without providing reasonable opportunity of being heard to the appellant, and without issuing statutory notice of hearing of appeal. Hence the same being against the principles of natural justice and equity requires to be cancelled.
2. The Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi has erred in confirming the penalty of Rs.4,39,737/- levied by the Assessing officer u/s.271AAC(1) of the Act on the basis of the Assessment order passed in case of an entity which is not in existence hence the same being illegal and bad in law requires to be quashed and therefor onsequential Penalty order so passed also requires to be cancelled.
3. The Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi has erred in confirming the action of the Assessing Officer in levying penalty of Rs.4,39,737/- by passing an order u/s 271AAC(1) of the Act without proper service of statuary notice as required under the Act. Hence the order so passed is Void ab initio. 4. The Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi has erred in confirming the action of the Assessing Officer in levying penalty of Rs.4,39,737/- by passing an order u/s 271AAC(1) of the Act on the partnership which is not in existence and has been dissolved since long. Hence the same being illegal and bad in law requires to be Cancelled. 5. The appellant craves leave to add, alter, amend or modify any of the grounds of appeal on or before the date of hearing of appeal. for A.Y. 2018-19
The Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi has erred in passing an Ex Parte Order dismissing the appeal without providing reasonable opportunity of being heard to the appellant, and without issuing statutory notice of hearing of appeal. Hence the same being against the principles of natural justice and equity requires to be cancelled.
& 1171 and 1182 to 1185/Ahd/2025 A.Ys. 2018-19 & 2019-20 Page No 6 Alisha Packaging Industries vs. ITO
Ld. Counsel Shri Aseem Thakkar appearing for the Assessee submitted that the Partnership Firm of the assessee was dissolved on 30-09-2007 and therefore no business activities carried out by the assessee Firm. It is thereafter the Firm was continuing as a proprietorship concern by Shri Manjulbhai Prahaladbhai Patel. Ld. Counsel filed copy of the Dissolution of Partnership Deed dated 30- 09-2007 and thus requested the matter be set aside back to the file of lower authorities so that assessee undertakes to represent its case by all necessary details.
Per contra Ld. Sr. D.R. Shri Abhijit appearing for the Revenue submitted that ample opportunities were given to the assessee during the course of assessment proceedings as well as during the penalty proceedings. However the assessee neither informed about the closer of the Partnership Firm nor participated in the hearings in spite of service of notices. Thus the order passed by the lower authorities does not require any interference. Hence the appeals filed by the assessee are liable to be dismissed.
We have given our thoughtful consideration and perused the materials available on record. Section 176 of the Act deals with discontinued business, Sub-section (3) provides that any person discontinue any business or profession shall give to the notice of the assessing officer of such discontinuance within 15 days thereof. In this case, the assessee claims that the Partnership Firm was dissolved on 30-09-2007, however no such intimation was given to the assessing officer about the discontinuance of the Partnership Firm. That apart when the assessments were reopened for the & 1171 and 1182 to 1185/Ahd/2025 A.Ys. 2018-19 & 2019-20 Page No 7 Alisha Packaging Industries vs. ITO escaped assessments and notices were served through Speed Post on various dates, the assesse failed to appear and give necessary explanation neither before the assessing officer nor before Ld. CIT(A). Thus, taking into account the non-cooperative attitude of the assessee, we hereby impose a cost of Rs.20,000/- payable by the assessee to the Income Tax Department to set-aside the exparte assessment orders and exparte penalty orders passed by the Lower Authorities for the Asst. Years 2018-19 and 2019-20. On the production of receipt for the payment of cost, the Jurisdictional Assessing Officer will give one more opportunity of hearing to the assessee to pass fresh orders on merits. Needless to say, the assessee should make use of this final opportunity and produce all necessary details as required under the law before the assessing officer to pass orders in accordance with the provisions of law.
In the result, the appeals filed by the Assessee are allowed for statistical purposes.