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Facts
The assessee, an individual, filed an income tax return for AY 2018-19 under the presumptive provisions of Section 44AD. The Assessing Officer, based on ITS data, found export transactions and, due to non-response from the assessee, completed an ex parte assessment under Section 144, adding 6% of export receipts as undisclosed business income. The CIT(A) also decided the appeal ex parte due to non-compliance and confirmed the addition.
Held
The Tribunal condoned the 352-day delay in filing the appeal. Noting that both the assessment and first appeal were decided ex parte and the addition was presumptive, the Tribunal held that in the interest of substantial justice, the matter should be remanded to the Assessing Officer for a fresh assessment. The assessee is to be given adequate opportunity to present evidence and cooperate with the AO.
Key Issues
Whether the ex parte assessment and addition of presumptive income from export sales, made without providing adequate opportunity to the assessee, was justified, and if the case should be remanded for a fresh assessment.
Sections Cited
44AD, 144, 250
AI-generated summary — verify with the full judgment below
सुनवाई की तारीख/Date of Hearing : 07/10/2025 उदघोषणा की तारीख/Date of Pronouncement : 16/10/2025 आदेश/Order PER KRINWANT SAHAY, A.M: This is an appeal filed by the Assessee against the order of the Ld. CIT(A)/NFAC, Delhi dt. 09/05/2024 pertaining to Assessment Year 2018-19.
At the outset the Registry has pointed out that the present appeal is barred by limitation by 352 days for which the assessee had filed the condonation application seeking condonation. The condonation application is placed on record.
Ld. Sr. DR strongly opposed the condonation of delay.
After considering the condonation application filed by the assessee in the present appeal, we condone the delay for which sufficient cause is shown, and admit the appeal for adjudication.
In the present appeal Assessee has raised the following grounds:
1. That the learned CIT(A) has erred in law and on facts in confirming the actions of AO in making additions of Rs. 5,25,364/ on account of undisclosed business income from export sales.
2. That the authorities below have erred in law and on facts in making as well as confirming the additions without an adequate opportunity of being heard provided to the assessee.
Briefly the facts of the case are that the assessee, an individual filed his return of income for the Assessment Year 2018–19 on 31.03.2019, declaring total income of Rs.4,93,260/- under the presumptive provisions of section 44AD of the Income-tax Act. The total turnover declared was Rs.1,06,85,300/- and presumptive income at 6% thereof was Rs.6,43,255/-.
6.1 During the assessment proceedings, the Assessing Officer noticed from the ITS data that the assessee had export transactions amounting to Rs.87,56,073/-. The assessee did not respond to notices and therefore the assessment was completed ex parte under section 144 of the Act. The Assessing Officer treated 6% of the said export receipts amounting to Rs.5,25,364/- as undisclosed business income and added the same to the total income of the assessee, resulting in the assessed income of Rs.4,93,260/- plus the said addition.
Against the order of the AO the assessee went in appeal before the Ld. CIT(A). However, despite several notices under section 250 being issued electronically to the registered e-mail address, there was no compliance by the assessee. The CIT(A), therefore, proceeded ex parte and held that the assessee had failed to substantiate his grounds of appeal or file any documentary evidence in support of his claim.
7.1 The CIT(A) observed that the Assessing Officer had rightly made the addition under section 144 of the Act since the assessee had not availed the opportunities given. Relying upon various judicial pronouncements, including CIT v. B.N. Bhattacharjee (118 ITR 461) and Estate of Late Tukojirao Holkar v.
CWT (223 ITR 480), the CIT(A) dismissed the appeal holding that the assessee failed to discharge his onus and that there was no violation of natural justice by the Department. Accordingly, the order of the Assessing Officer was confirmed and the appeal was dismissed.
Against the order of the Ld. CIt(A) the assessee preferred in appeal before the Tribunal.
During the course of hearing the Ld. AR submitted that the authorities below erred in confirming the addition of Rs.5,25,364/- without affording a reasonable opportunity of being heard. It was contended that the assessee could not respond to the earlier notices due to unavoidable circumstances and lack of communication, and that the entire assessment was completed ex parte. The Ld. AR further submitted that the addition made by the Assessing Officer is merely based on an assumption of 6% profit on export sales, without verifying the books of account or the actual nature of the transactions. He urged that the matter may kindly be restored to the file of the Assessing Officer for de novo consideration, so that the assessee may present proper evidence in support of his return of income and turnover.
Per contra, the Ld. DR relied on the orders of the authorities below.
We have considered the rival submissions and perused the orders of the authorities below. It is evident that the assessment was completed ex parte under section 144 of the Act and that the CIT(A) also decided the appeal ex parte on account of non-compliance. The assessee has pleaded that the non-appearance was not deliberate but due to genuine reasons. In the interest of substantial justice, we are of the view that the assessee deserves one more opportunity to present his case before the Assessing Officer. The addition made was on a presumptive basis without examining the export records or explaining whether such export receipts were already part of the turnover declared under section 44AD.
11.1 We therefore deem it just and proper to set aside the impugned order of the CIT(A) and restore the matter to the file of the Assessing Officer with a direction to frame a fresh assessment after affording adequate opportunity of being heard to the assessee and after considering all documentary evidence to be filed by him in support of his claim. The assessee is also directed to extend full cooperation and promptly respond to any notices issued by the Assessing Officer.
In the result, the appeal filed by the assessee is allowed for statistical purposes.