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Facts
The assessee failed to file a return of income. The Assessing Officer (AO) reopened the case under Section 147 of the Income Tax Act, 1961, on information about substantial bank deposits and commission income. The assessee did not respond to notices, leading to a Best Judgment Assessment.
Held
The Tribunal held that the assessee was not given adequate opportunity to be heard and that the NFAC order dismissing the appeal ex-parte was not justified. The Tribunal restored the matter to the AO for fresh adjudication.
Key Issues
Whether the assessment order passed without adequate opportunity of being heard and proper notice is valid? Whether the ex-parte dismissal of appeal by NFAC was justified?
Sections Cited
147, 148, 144, 144B, 69A, 115BBE, 271AAC(1), 271F, 272A(1)(d)
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Income Tax Appellate Tribunal, LUCKNOW BENCH “a”, LUCKNOW
Before: SHRI. SUDHANSHU SRIVASTAVA & SHRI NIKHIL CHOUDHARY
This appeal has been preferred by the assessee against the order dated 28.05.2024, passed by the ld. Commissioner of Income Tax (Appeal), National Faceless Appeal Centre (NFAC), Delhi for Assessment Year 2017-18.
2.0 The brief facts of the case are that the assessee had not filed the return of income for the year under consideration. The Income Tax Department was in possession of information that the assessee had made deposits of Rs.1,07,32,410/- in his Current Bank Account, received commission/brokerage of Rs.71,934/- from Vakarangee Finserve Ltd. and had also made cash withdrawals of Rs.64,90,600/- during the year under consideration. The case of the assessee was reopened under section 147 of the Income Tax Act, 1961 (hereinafter called “the Act’) after issuing notice under section 148 of the Act to the assessee. However, the assessee did not file any return of income in response to notice under section 148 of the Act. Thereafter, the AO issued statutory notices to the assessee. However, the assessee did not respond to the notices issued by the AO. The AO, therefore, proceeded to complete the assessment on the basis of Best Judgment Assessment, after issuing show cause notice to the assessee. While completing the assessment under section 147 read with sections 144 and 144B of the Act, the AO treated the cash deposits of Rs.1,07,32,410/- made by the assessee in his bank account during the year under consideration as his unexplained income and added the same to the total income of the assessee under section 69A of the Act.
2.1 The Assessing Officer also invoked the provisions of section 115BBE of the Act and also initiated penalty proceedings under sections 271AAC(1), 271F and 272A(1)(d) of the Act, separately.
3.0 Aggrieved, the assessee preferred an appeal before the NFAC. However, the appeal before the NFAC came to be dismissed ex-parte qua the assessee for the reason of non- compliance by the Assessee.
4.0 Now, the assessee has approached this Tribunal challenging the orders of the AO as well as the NFAC by raising the following grounds of appeal:
1. That the learned Commissioner of Income-tax (Appeals), NFAC has erred in law and on facts in failing to consider that the Id. A.O. has not allowed adequate opportunity of being heard to the assessee and passed the impugned assessment order u/s 147 r.w.s.144 read section 144B of the I.T. Act, 1961, without placing on record any material in support of the addition which was made on the basis of presumption and surmises only.
2. That the learned Commissioner of Income-tax (Appeals), NFAC has erred in law and facts in failing to observe that the Assessing Officer has passed the impugned assessment order under section 147r.w.s.144 and 144B of the I.T.Act, 1961 without serving on the assessee the mandatory notice under section 148 of the I.T. Act, 1961dated 28-03-2021and therefore the impugned assessment order is liable to be quashed as illegal.
That the learned Commissioner of Income-tax (Appeals), NFAC has erred in law and on facts in arbitrarily upholding the addition of Rs.1,07,32,410/- in respect of withdrawals on behalf of the customers of bank which has been wrongly made by Id. A.O. as unexplained cash credit u/s 69A resulting of the I.T.Act, 1961 and in levy of tax u/s 115BBE consequential addition of Rs.1,07,32,410 is not justified.
That the appellant craves permission for amending the aforesaid grounds of appeal and / or for raising fresh grounds of appeal. 5.0 The Ld. Authorized Representative for the assessee (Ld. A.R.) submitted that there is a delay of 224 days in filing the appeal before the Tribunal. He further submitted that the assessee had filed an application dated 12.03.2025 for condonation of delay, duly supported by an Affidavit of Shri Ajay Kumar Dubey, Advocate, stating therein that the order of the ld. CIT(A) along with relevant documents and appeal fee were handed over to Shri Ajay Kumar Dubey, Advocate on 30.05.2024 for filing the appeal before the Tribunal within the prescribed time. However, the Advocate had failed to file the appeal before the Tribunal within the stipulated time due to rush of work. An Affidavit of Advocate, Shri Ajay Kumar Dubey, in this regard, is placed on record. It was submitted that the delay caused in filing the appeal was not deliberate and that it was beyond the control of the assessee, which may please be condoned and the appeal be heard on merits.
6.0 The Ld. CIT (D.R.) had no objection to the delay being condoned.
7.0 In view of the prayer made by the Assessee, duly supported by an Affidavit and no objection by the Ld. CIT (D.R.), we condone the delay in filing of the appeal and admit the appeal for hearing.
8.0 The Ld. A.R. submitted before us that the NFAC has passed an order ex-parte qua the assessee, arbitrarily upholding the addition of Rs.1,07,32,410/- in respect of withdrawals from Bank account, which has been wrongly made by AO. The Ld. A.R. further submitted that the AO has not allowed adequate opportunity of being heard to the assessee and passed the impugned assessment order under section 147 read with sections144 and 144B of the Act, without bringing on record any material in support of the addition which was made on the basis of presumption and surmises only. The Ld. A.R., therefore, prayed that in the interest of justice, the matter may be restored to the file of the AO for deciding the same afresh after providing reasonable opportunity of being heard to the assessee. He submitted that the assessee undertakes to produce all the relevant documents in support of his claim before the AO.
9.0 The Id. CIT (D.R.) had no objection to the restoration of appeal to the file of the Assessing Officer.
10.0 We have heard both the parties and have also perused the material on record. Looking into the facts of this case, we are of the considered view that the assessee deserves one more opportunity to present his case and, therefore, we restore this file to the Office of the Assessing Officer with the direction to provide one more opportunity to the assessee to present his case and produce the necessary evidences in support of the impugned bank deposits. We also caution the assessee to fully comply with the directions of the Assessing Officer in the set-aside proceedings when called upon to do so, failing which, the Assessing Officer would be at complete liberty to pass the order in accordance with law, based on the material available on record even if it is ex-parte qua the assessee.
11.0 In the result, the appeal of the assessee stands allowed for statistical purposes.
Order pronounced in the open Court on 31/07/2025.