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Facts
The assessee, engaged in Dairy business, did not file an income tax return for AY 2015-16. Information about cash deposits of Rs. 85,00,500/- led to reopening of the assessment under Section 147. After filing a return, an assessment was completed. The assessee filed a rectification application under Section 154 concerning self-assessment tax credit and interest under Section 234B. While the tax credit was rectified, the interest levy was upheld, and the subsequent appeal to the National Faceless Appeal Centre (NFAC) was dismissed ex-parte.
Held
The Tribunal observed that the NFAC dismissed the assessee's appeal ex-parte without providing a reasonable opportunity of hearing. Consequently, the Tribunal restored the appeal to the NFAC for fresh adjudication on merits, directing the NFAC to grant the assessee a proper hearing and advising the assessee to comply with future directions.
Key Issues
Whether the NFAC erred in dismissing the appeal ex-parte without granting an opportunity of hearing, and the legality of levying interest under Section 234B when the assessee was not mandated to pay advance tax under Section 44AD.
Sections Cited
147, 148, 80TTA, 154, 143(3), 234B, 44AD, 250
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, LUCKNOW BENCH “B”, LUCKNOW
Before: SHRI. SUDHANSHU SRIVASTAVA & SHRI ANADEE NATH MISSHRA
This appeal has been preferred by the assessee against the order dated 21.03.2024, passed by the ld. Commissioner of Income Tax (Appeal), National Faceless Appeal Centre (NFAC), Delhi for Assessment Year 2015-16.
The brief facts of the case are that the assessee was engaged in Diary business and sale of cattle feeds, vegetables, etc. during the year under consideration. The assessee had not filed the return of income for the year under consideration. On the basis of information available with the Income Tax Department that assessee had made cash deposits to the tune of Rs.85,00,500/- in his bank accounts maintained with Central Bank of India and UCO Bank, 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. In response to the notice under section 148 of the Act, the assessee filed his return of income, declaring a total income of Rs.9,07,323/- and claimed a deduction of Rs.10,000/- under section 80TTA of the Act, thereby declaring a taxable income of Rs.8,97,320/-. The assessee had declared the entire deposits as its receipts for the year under consideration and declared 8% of the receipts, which came to Rs.6,80,000/-, as its business income. Moreover, the assessee had also declared interest receipt to the tune of Rs.2,27,323/-. The Assessing Officer (AO) completed the assessment under section 147 of the Act on the very income declared by the assessee in response to notice under section 148 of the Act, i.e., at Rs.8,97,320/-, vide order dated 31.03.2023.
2.1 Against the aforesaid order dated 31.03.2023 of the AO, the assessee filed a rectification application dated 28.04.2023 under section 154 of the Act, raising the following grounds:
"At time of completion of assessment u/s 143(3) r.w.s. 147 of the I.T. Act, 1961, credit of Self-Assessment tax paid of Rs.2,19,080/- was not allowed. Therefore, the credit of Self- Assessment tax paid may please be given."
2. While computing the tax on total income, you have wrongly charged the interest of Rs.98,304/- u/s 234B because "IN THE ASSESSMENT YEAR 2015-16 AS PER ACT, THE ASSESSEE IS NOT MANDATED TO PAY ADVANCE TAXES FOR BUSINESS INCOME U/S 44AD" 2.2 The contention of the assessee vide ground No.1 of the rectification application was found to be correct and, therefore, the mistake apparent from record, in this regard, was rectified by the AO. However, ground No.2 raised by the assessee in the rectification application was rejected by the AO and held that the revised total income of the assessee remains the same, i.e., Rs.8,97,320/.
Aggrieved by the rectification order dated 19.05.2023, passed under section 154 r.w.s. 147 of the Act, the assessee preferred an appeal before the NFAC. However, the appeal before the NFAC came to be dismissed by passing an order ex-parte qua the assessee.
Now, the assessee has approached this Tribunal challenging the dismissal of its appeal by the NFAC by raising the following grounds of appeal:
1. That on facts and in law the impugned order dated 21.03.2024 passed by the Commissioner of Income Tax (Appeals) CIT(A) u/s 250 of the Income Tax Act, 1961 is bad in law and void-ab-initio.
2. That the facts and in law the CIT(A) have erred in passing the impugned appellate order ex-parte i.e. without granting a single date of hearing and opportunity of being heard, either in person or in the form of written submission, ignoring the procedure as provided u/s 250 of the Income Tax Act, 1961, and thereby violating the principles of natural justice.
3. That on facts and in law the CIT(A) has erred in upholding the levy of interest u/s 234B of the Income Tax Act, 1961.
4. That the appellant craves to add, to alter, amend or vary from the above grounds of appeal at or before the time of hearing.
None was present for the assessee when the appeal was called out for hearing. However, looking into the facts of the case, we proceed to adjudicate the appeal ex-parte qua the assessee.
It is seen that the impugned order does not even mention the dates on which opportunity was provided to the assessee to represent his case. Thus, apparently, no opportunity was provided by the Ld. First Appellate Authority to the assessee. Since the order passed by NFAC is an ex-parte order, the ld. Senior D.R. had no objection to the restoration of appeal to the NFAC.
We have heard the ld. Senior Departmental Representative and have also perused the material on record. It is evident that the order passed by the NFAC is an ex-parte order qua the assessee. 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, on the facts of this case, we restore this file to the Office of the NFAC with the direction to hear the appeal on merits after providing reasonable opportunity of hearing to the assessee. We also caution the assessee to fully comply with the directions of the NFAC in the set-aside proceedings when called upon to do so, failing which, the NFAC would be at complete liberty to pass the order in accordance with law, based on material available on record even if it is ex-parte qua the assessee.
In the result, the appeal of the assessee stands allowed for statistical purposes.
Order pronounced in the open Court on 12/03/2025.