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Facts
The Assessing Officer reopened the assessment for AY 2015-16 based on information of escaped income of Rs.1,21,73,178. The assessee claimed cash deposits were from sales, but the AO estimated profit at 25% and made additions, assessing income at Rs.67,74,319. The CIT(A) decided the appeal ex-parte.
Held
The Tribunal restored the grounds of appeal to the CIT(A) for a fresh decision, allowing the assessee an opportunity to present evidence. The Tribunal noted that the original appeal was dismissed for non-submission of documents and that additions were made on estimation without proper verification.
Key Issues
Whether the CIT(A) erred in passing an ex-parte order without affording a reasonable opportunity to the assessee, and whether additions made by the AO were justified without proper verification and basis.
Sections Cited
147, 148, 143(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, LUCKNOW BENCH “A”, LUCKNOW
Before: SHRI KUL BHARAT & SHRI ANADEE NATH MISSHRA
PER KUL BHARAT, VICE PRESIDENT.:
This appeal, by the assessee, is directed against the order of the Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi dated 28.02.2025 pertaining to the assessment year 2015-16. The assessee has raised the following grounds of appeal: - “1 Because on the facts and in the circumstances of the case the order of Ld. CIT(A), NFAC is bad in law and deserves to be quashed being illegal.
2. Because on the facts and circumstances of the case, the learned CIT(A), NFAC has erred in law and in fact in passing the impugned ex parte appellate order without affording reasonable and sufficient opportunity of being heard to the appellant, thereby violating the principles of natural justice.
3. Because on the facts and circumstances of the case, the learned CIT(A), NFAC has erred in confirming the action of the Assessing Officer in estimating the net profit at 25% as against 17.5% declared by the appellant, without properly considering the nature and volume of business, and without examining supporting documents such as sample bills, invoices, and VAT returns.
Page 2 of 4 4. Because on the facts and circumstances of the case, the learned CIT(A), NFAC has erred in confirming the addition of Rs. 28,09,713/made by the Assessing Officer arbitrarily and without assigning any cogent reason or conducting proper verification.
5. Because on the facts and circumstances of the case, the learned CIT(A), NFAC has erred in confirming the rejection of the proprietor’s opening capital and accumulated brought-forward capital from earlier years, which had been duly reflected in the books of account and supported by tax audit reports, despite the fact that the assessee has been carrying on the business since 2011.
Because on the facts and circumstances of the case, the learned CIT(A), NFAC has erred in not appreciating that the assessee is the owner of 20.2 bighas of agricultural land and that the capital reflected in the accounts is genuine and disclosed, and no inquiry has been conducted to disprove the same.
Because on the facts and circumstances of the case, the learned CIT(A), NFAC has failed to appreciate the explanation and supporting evidence provided regarding the amount of Rs. 1,59,14,428.16/- being sourced from the father of the assessee from his savings account, and the same was wrongly treated as unexplained without proper inquiry, 8. Because on the facts and circumstances of the case, the learned CIT(A), NFAC has erred in confirming the addition of Rs.47,800/- pertaining to the outstanding payment to creditors, without verifying the appellant’s submissions and without affording an opportunity to explain the same.
The appellant craves for leave to add, modify, amend or delete any other and further ground of appeal
with permission.”
2. The facts in brief are that the Assessing Officer was having information suggesting that the income to the tune of Rs.1,21,73,178/- has escaped assessment in A.Y. 2015-16. Therefore, the case was re-opened and statutory notices were issued to the assessee. During the course of assessment proceedings, it was stated by the assessee that the cash deposited in the bank accounts were out of sale made during the year. Thereafter, the Assessing Officer proceeded to estimate the profit on this amount @ 25% and further made an addition of Rs.5,00,000/- and thereby the Assessing Officer assessed the income at Rs.67,74,319/-. Aggrieved by this, the assessee preferred appeal before the Ld. CIT(A), who decide the appeal exparte against the assessee. Now the assessee is in appeal before this Tribunal.
Page 3 of 4 3. Apropos to the grounds of appeal, the Ld. Counsel for the assessee contended that in the interest of principles of natural justice, the assessee may be granted one more opportunity to represent his case. It is contended that the assessee is ready to submit all relevant evidences before the Ld. CIT(A) in support of his claim. Therefore, she prayed that the matter may be remanded back and the authorities below may be directed to provide adequate reasonable opportunity.
On the other hand, the Ld. Departmental Representative (DR) opposed the submission and supported the orders of the lower authorities.
Heard, the Ld. Representatives of the parties and perused the material available on record. Undisputedly, there was no representation on behalf of the assessee before the First Appellate Authority. Therefore, the First Appellate Authority proceeded to sustain the impugned addition. Before us, the Ld. Counsel for the assessee contended that the appeal has been dismissed on account of non-submissions of the documentary evidences. It is also contended that the assessee would submit the requisite details, if one more opportunity is granted before the lower authority. Further, the addition is made purely on estimation basis without giving any basis for such estimation. It is not in dispute that the substantial addition of Rs.31,03,634/- is based upon the estimation made by the Assessing Authority. It is seen that in support of his claim of deposit day to day sales, the assessee had furnished copy of VAT return which has been duly recorded by the Assessing Officer. Further, it was stated before the Assessing Officer that the unsecured loan received from his father amounting to Rs.15,95,000/- and secured loan from bank of Rs. 13,33,594/-. The Assessing Officer without verifying these facts made impugned addition. Therefore, Page 4 of 4 considering the totality of facts and interest of justice, we deem it appropriate and expedient to restore these grounds before the Ld. CIT(A) who would decide afresh after making or causing verification of correctness of the claim of the assessee. Grounds raised
in this appeal are allowed for statistical purpose.
6. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on 07/08/2025.