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Facts
The assessee's assessment under Section 143(3) resulted in additions for unexplained cash deposits during demonetization (Section 68) and excess claim of loss on house property. The CIT(A) dismissed the assessee's first appeal, stating non-compliance and lack of prosecution by the assessee despite multiple opportunities given via the ITBA portal.
Held
The Tribunal found that the CIT(A)'s order was passed ex-parte due to insufficient and disproportionately spaced opportunities, leading to a violation of natural justice. Both the assessee and the Revenue agreed to a remand. Consequently, the Tribunal set aside the CIT(A)'s order and remanded the matter to the Assessing Officer for fresh adjudication (de novo) with directions for the assessee to cooperate.
Key Issues
Whether the CIT(A) erred in confirming additions without providing adequate and effective opportunity of hearing to the assessee, thereby violating principles of natural justice, and whether the matter should be remanded for fresh adjudication.
Sections Cited
253, 250, 143(3), 68, 246A, 24(a)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, INDORE BENCH, INDORE
the order bearing Number ITBA/NFAC/S/250/2024- 25/1071815572(1) dated 02.01.2025 passed by the Ld. CIT(A) u/s 250 of the Act which is hereinafter referred to as the “Impugned order”. The relevant Assessment Year is 2017-18
Page 1 of 8 and the corresponding previous year period is from 01.04.2016 to 31.03.2017.
FACTUAL MATRIX 2.1 That as and by way of an assessment order dated 26.12.2019 passed u/s 143(3) of the Act, the assessee’s total income exigible to tax was computed at Rs.29,62,190/-. The income as per Return of Income was at Rs.10,22,950/-. Addition of Rs.17,84,400/- was made on account of unexplained cash deposits during the demonetization period u/s 68 of the Act.
Further addition of Rs.1,54,841/- was made on account of excess claim of loss on house property. That the aforesaid assessment order bears No.ITBA/AST/S/143(3)/2019- 20/1023162769(1) dated 26.12.2019 which is hereinafter referred to as the “impugned assessment order”.
2.2 That the assessee being aggrieved by the aforesaid “impugned assessment order” prefers the first appeal u/s 246A of the Act before the Ld. CIT(A) who by the “impugned order” has dismissed the 1st appeal of the assessee on the grounds and reasons stated therein. The core grounds and reasons for the dismissal of the 1st appeal was as under:-
“4. Determination:-
I have considered facts of the case, the submission of the assessee and the order of the AO.
4.1 I have carefully perused the assessment order and the grounds of appeal submitted by the appellant. During the appellate proceedings, the following opportunities of being heard were granted to the appellant vide notices u/s 250 of the Act issued through the ITBA portal which are summarized below:
Sr. No. Date of Notice Date of Compliance Remark 1 19.01.2021 29.01.2021 Adjournment requested and granted. 2 05.12.2004 12.12.2024 Non compliance 3 13.12.2024 19.12.2024 Non compliance
The above table clearly demonstrates that the appellant has been allowed several opportunities to explain the contentions of this appeal but to no avail as the appellant has remained not- forthcoming and has not responded on the ITBA portal.
4.2 The aforesaid mentioned circumstances show that the appellant is not interested in pursuing its appeal and has no documentary evidence in support of the grounds of appeal filed by the appellant. The maxim 'vigilantibus non- dormientibusjurasubvenunt i.e. the law assists those who are vigilant and not those who sleep over their right, is applicable in this case.
4.3 The Hon'ble ITAT in for the AY 2002-03 in the case of M/s Chhabra Land & Housing Ltd, after following the decision of Hon'ble Supreme Court in the case of B.N. Bhattacharjee & other 118 ITR 461 [SC] held that the appeal does not mean merely filing of the appeal but effectively pursuing the same.
4.4 Considering the above facts and the records available, it is established that the appellant was provided many opportunities of being heard. However, the appellant has remained noncompliant. No material fact has been brought on record in support of the grounds of appeal or to rebut the findings of the Assessing Officer (AO). The appellant inspite of being given ample opportunities during appellate proceedings, failed to offer
Page 3 of 8 any explanation/supporting documents in respect of grounds of appeal raised by the appellant. I have carefully considered the assessment order and since the appellant has not furnished any documentary evidence in support of the grounds of appeal filed by the appellant, I do not find any reason to interfere with the order of the AO. Hence, the Assessment Order of the AO stands confirmed. Accordingly, all the grounds of appeal taken by the appellant are dismissed.
5. In result, the appeal is dismissed”.
2.3 That the assessee being aggrieved by the “impugned order” has preferred the instant second appeal before this Tribunal and has raised following grounds of appeal in the Form No.36 against the “impugned order” which are as follows:-
“1. That in the facts of the case and in law the Id. AO has erred in considering the cash deposited during the demonetisation period in the bank as unexplained income u/s 68 of the Act. The Id. CIT(A) has also erred in confirming the additions made by the Id. AO.
2. That in the facts of the case and in law the Id. AO has erred in disallowing the deduction of interest u/s 24(a) of the Act. The Id. CIT(A) has also erred in confirming the additions made by the Id. AO.
3. That the appellant claims leave to add/edit/modify any grounds before disposal of appeal”.
Record of Hearing 3.1 The hearing in the matter took place before this Tribunal on 09.10.2025 when the Ld. AR for and on behalf of the assessee appeared before us and interalia contended that the assessee is Page 4 of 8 an individual. The assessee had deposited in his bank accounts with three banks Axis Bank, PNB & IDBI Bank total sum aggregating to Rs.39,83,900/- which amounts the assessee had realized from his debtors. Our attention was invited to page 3 of the “impugned assessment order” wherein following is recorded:-
Important Note: Kindly note that I have written letter to various debtors (parties) about confirmation of their deposit which are awaited as and when I received confirmation I will submit you the same."
The Ld. AR clarified that the addition of Rs.17,84,400/- is made only of “specified bank notes”. Further addition of Rs.1,54,841/- is on account of excess claim of loss on house property. The assessee has two properties out of which one is let out property. The Ld. AR thereafter contended that the “impugned order” is an ex-parte order. That the Ld. CIT(A) had fixed three hearings in the matter. In hearing fixed on 29.01.2021 vide notice dated 19.01.2021 the assessee had sought adjournment and that the same was granted. However the second and third hearing were fixed for 12.12.2024 & 19.12.2024 vide notice(s) dated 05.12.2024 & 13.12.2024
Page 5 of 8 respectively. The Ld. AR pleaded that it is required to be noted and appreciated by this tribunal that second and third hearings (supra) were fixed after 3 years and between 2nd and 3rd hearing there is a very nominal gap. It was fairly submitted that fair opportunity is thus not provided to the assessee. The Ld. AR has stated that the assessee has collected certain documents and that he is willing to file the same before the Ld. A.O. The Ld. AR finally prayed for remand of this case back to the file of Ld. A.O.
Per contra Ld. DR appearing for and on behalf of the revenue contended that the revenue has no objection if the matter is relegated back to the file of Ld. A.O for fresh adjudication.
Observations,findings & conclusions.
4.1 We now have to decide the legality, validity and the proprietery of the “impugned order” basis records of the case and rival contentions canvassed before us.
4.2 We have carefully perused the records of the case as presented to this Tribunal by both the Ld. AR & the Ld. DR to determine the legality, validity of the “impugned order” basis law and by following the due process.
Page 6 of 8 4.3 We basis records of the case and after hearing and upon examining the rival contentions are of the considered opinion that the “impugned order” should be set aside as both the assessee and Ld. DR seems to be on same page. There is violation of principles of natural justice as no effective opportunity of hearing was afforded to the assessee (supra). We accordingly set aside the “impugned order” as and by way of remand back to the file of Ld. A.O on denovo basis with the direction to the assessee to give all the information to the Ld. A.O and to cooperate with the department.
Order 5.1 In view of the aforesaid the “impugned order” is set aside as and by way of remand back to the file of the Ld. A.O on denovo basis with the directions as aforesaid.
5.2 In the result appeal of the assesse is allowed for statistical purpose. Order pronounced in open court on 10.10.2025.