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Facts
The assessee filed his return of income for AY 2017-18, which was selected for scrutiny. The Assessing Officer added Rs. 43,00,000/- under Section 68 of the Income Tax Act, 1961, treating cash deposits during demonetization as unexplained. The assessee's appeal before the CIT(A) was dismissed ex-parte due to lack of effective representation.
Held
The Tribunal noted that the lower authorities passed ex-parte orders and that the assessee was not afforded sufficient opportunity. To uphold the principles of natural justice, the Tribunal set aside the impugned orders and restored the appeal to the CIT(A) for a decision on merits.
Key Issues
Whether the CIT(A) erred in dismissing the appeal ex-parte without providing adequate opportunity to the assessee, and whether the addition under Section 68 was justified without proper consideration of facts.
Sections Cited
68, 143(2)
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 16.11.2023 pertaining to the assessment year 2017-18. The assessee has raised the following grounds of appeal: -
1. Because on the facts and in the circumstances of the case the order of Assessment is bad in law and deserves to be quashed being illegal.
Because on the facts and in the circumstances of the case the order of the Assessment is bad in law and being passed by the Ld. AO without assuming proper jurisdiction.
Because on the facts and in the circumstances of the case, the Ld. CIT(A), NFAC has passed the order without providing the assessee with a due and proper opportunity of hearing.
4. Because without considering the facts and circumstances of the case, the Ld. Assessing Officer has erred in law and in facts in adding an amount of Rs. 43,00,000/- under section 68 of the Income Tax Act, 1961 being cash deposited during demonetization period without considering the fact that such cash deposits were out of sales and receipts from debtors were duly incorporated in the audited books of account of the assessee which were accepted by the Ld. Assessing Officer and such deposits stands duly explained.
5. Because on the facts and in the circumstance of the case, the order of Assessment has been passed in absolute violation of the principles of Natural Page 2 of 4 Justice, without providing adequate Opportunity of being heard and therefore deserves to be declared a nullity, 6. The humble assessee, craves for leave to add/amend any other ground with the prior permission of the Hon’ble Tribunal.”
2. Briefly stated, facts are that the assessee filed his return of income on 30.10.2017, declaring total income of Rs.18,03,210/- in the status of individual. The case was selected for scrutiny through Computer Assisted Scrutiny Selection (CASS). Thereafter, notice was issued to the assessee u/s 143(2) of the Income Tax Act, 1961 [hereinafter referred as to the “Act”]. In response to the statutory notices, the assessee furnished the requisite information but the information was not found to be satisfactory. Therefore, the cash deposited in the bank account of Rs.43,00,000/- was treated as unexplained by the Assessing Officer. Accordingly, same was added into the revenue of the assessee. Aggrieved by this, the assessee preferred an appeal before the Ld. CIT(A), before him also, there was no effective representation on behalf of the assessee. Therefore, impugned order was passed exparte to the assessee thereby sustaining the addition. Now the assessee is in appeal before this Tribunal.
At the outset, the Ld. Counsel for the assessee submitted that there was no effective representation on behalf of the assessee. Ld. Counsel contended that both the lower authorities have passed exparte order against the assessee. The assessee was not afforded sufficient opportunity by the authorities below, therefore, he 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”) supported the orders of the lower authorities. He contended that sufficient opportunities were given to the assessee.
Page 3 of 4 6. We have heard the rival contentions and perused the material available on records. We find that the Ld. CIT(A) dismissed the appeal of the assessee by observing as under: - “6.2 As seen in assessment order, sufficient opportunities were granted to the appellant to respond to the notices. However, the appellant did not explain to the satisfaction of the AO. The appellant's attitude is clear that he did not want to furnish the details called for since those details, if furnished, would turn against him. For a moment leaving aside the proceedings of the AO, the appellant's attitude is proved to be similar even before the FAA (First Appellate Authority). In fact, sufficient Opportunities were given even by the FAA. If the appellant had really missed to submit any evidences to the Id.AO in his support, he could have very well submitted them before the FAA because the appellate authorities, except the Constitutional Courts, are the fact finding authorities. In the course of appeal by either party to the dispute, new facts can be discovered by the Appellate Authorities so as to know the truth of the matter. However, he remained non-compliant and non serious in prosecuting his appeal before the FAA, only for the purpose of hiding the facts and to conceal the truth. In view of the negligence of the appellant, the appeal against the addition made u/s 68 is rejected and dismissed.”
7. It is evident from the finding of the Ld. CIT(A) that on the merits of the addition, there is no clear finding except the sustaining the addition made by the assessing authority. We, therefore, considering the totality of the facts and the material placed before us, to sub-serve the principle of natural justice and to be fair with both the parties, deem it necessary and expedient under the facts of the present case to set aside the impugned orders and restore the grounds to the file of the Ld. CIT(A) to decide the appeal on merits. Grounds of appeal of the assessee are allowed for statistical purposes.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 17/01/2025.