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Facts
The assessee, Rakesh Malhotra, made a cash payment of Rs.1,25,200/- for a property purchase, which was added as unexplained investment under Section 69 by the Assessing Officer (AO) after reopening the case under Section 147. Both the AO's assessment and the CIT(A)'s appellate orders were passed ex-parte under Sections 144/147 read with Section 144B due to alleged non-compliance.
Held
The Tribunal observed that both lower authorities passed ex-parte orders without addressing the merits of the case and without providing adequate opportunity of hearing, violating natural justice. Consequently, the Tribunal remanded both appeals back to the CIT(A) for fresh adjudication on merits after affording a proper hearing to the assessee.
Key Issues
The primary issue was whether the lower authorities were justified in passing ex-parte orders without considering the merits of the case and without providing a proper opportunity of hearing, violating principles of natural justice.
Sections Cited
69, 144, 144B, 147
AI-generated summary — verify with the full judgment below
BEFORE SHRI LALIET KUMAR, JUDICIAL MEMBER & SHRI KRINWANT SAHAY, ACCOUNTANT MEMBER आयकर अपील सं./ & 392/CHD/2025 �नधा�रण वष� / Assessment Years : 2017-18 & 2018-19 Rakesh Malhotra, The ITO, बनाम C/o Tej Mohan Singh, Ward-2(1), Advocate, Chandigarh Vs. 527, Sector 10, Chandigarh 160011 �थायी लेखा सं./ PAN NO: AAVPM7247C अपीलाथ�/Appellant ��यथ�/Respondent ( PHYSICAL HEARING ) �नधा�रती क� ओर से/Assessee by : Sh. Tej Mohan Singh, Advocate राज�व क� ओर से/ Revenue by : Dr.Ranjit Kaur, Addl. CIT, Sr.DR सुनवाई क� तार�ख/Date of Hearing : 21.07.2025 उदघोषणा क� तार�ख/Date of Pronouncement : 22.07.2025 आदेश/Order Per Bench : Captioned appeals have been filed by the assessee against the separate orders each dated 06.03.2025 passed by the Ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi.
The Assessee has preferred common grounds of appeal for both the assessment years wherein, although numerous grounds have been raised by the Assessee but 391 & 392-Chd-2025 Rakesh Malhotra, Chandigarh 2 the sole issue raised in both the appeals is that the Ld. CIT(A) has erred in passing an ex-parte order dismissing the appeal of the Assessee in limine without discussion on legal issues raised as well as on merits and even without affording a proper opportunity of hearing which is against the principles of natural justice and as such the order passed by is arbitrary and unjustified, opposed to law and facts of the case and, thus, is untenable.
3. The brief facts, which too are somehow identical, culled out from the appeal for AY 2017-18 (ITA No.391/Chd/2025), as per the order of the CIT(A), are as under: -
3.1 The appellant is an individual. As per information available with department regarding appellant's purchase of property from Mis. Bajwa Developers Ltd. By making a payment of Rs.3,25,200/- during the A.Y.2017- 18, out of which Rs.1,25,200/- was paid in cash, the case was re-opened after taking necessary approval from competent authority. Notices were issued and served to the appellant accordingly, but the appellant had not submitted the required reply.
391 & 392-Chd-2025 Rakesh Malhotra, Chandigarh 3
3.2 As per the information available and collected from other sources, the appellant had made a payment of Rs.3,25,200/- during the F.Y 2016-17 relevant to 2017-18 to M/s. Bajwas Developers Ltd. Out of which Rs.1,25,200/- was paid in cash and Rs.2.00,000/- was paid through banking channel. The appellant had failed to explain cash transaction of Rs.1,25,200/-. Hence in the absence of proper explanation and supporting documents, the cash payment of Rs.1,25,200/- was added to the total income of the appellant as unexplained investment u/s.69 of the Income Tax Act, 1961 for the A.Υ.2017-18. Aggrieved, the appellant is in appeal against the said assessment order passed u/s 147 r.w.s 144 r.w.s 144B of the IT Act, 1961.
At the very outset, the Counsel of the assessee brought to the notice of the Bench that the ex-parte assessment order was passed u/s 144/147 r.w.s. 144B of the Act. Similarly, the Ld. CIT(A) also has passed an ex- parte order because of the non-compliance of the assessee. The Ld. counsel argued that as the assessee did not receive notice issued by the NFAC, Delhi, therefore, it could not be complied with. However, the submission of the ld. Counsel is that despite the fact that there was no 391 & 392-Chd-2025 Rakesh Malhotra, Chandigarh 4 compliance on the part of the assessee, the Ld. CIT(A) was required to pass a speaking order on merits on the basis of material available on record but that has not been done.
That the Ld. DR relied on the orders of the authorities below.
We have heard the parties and perused the material available on record. We have also gone through the assessment orders passed by the Assessing Officer and findings of the Ld. CIT(A) in the appellate orders. We find that the orders passed by the Assessing Officer are an ex- parte orders passed u/s 144 in both the cases without considering the issues on merits and the Ld. CIT(A) also sustained the same without going into the merits of the case by passing ex-parte orders. Therefore, keeping in view the element of natural justice, we are of the considered view that the matters in both the cases should be remanded back to CIT(A) for fresh adjudication. Accordingly, these cases are remanded back to the CIT(A) for adjudication afresh on merit, in accordance with law, on affording due and adequate opportunity of hearing to 391 & 392-Chd-2025 Rakesh Malhotra, Chandigarh 5 the Assessee. The Assessee, no doubt, shall cooperate in the fresh proceedings before the CIT(A). All pleas available under the law shall remain so available to the assessee. Ordered accordingly. The appeals of the Assessee are allowed for statistical purposes.
In the result, both the appeals are allowed for statistical purposes.
Order pronounced on 22.07.2025.