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Facts
The assessee's income was assessed at Rs. 1,06,33,547/- against a returned income of Rs. 12,547/-. An addition of Rs. 1,06,21,000/- was made under Section 69A read with Section 115BBE as unexplained share application money. The assessment was completed ex-parte under Section 144 as the assessee failed to respond to notices.
Held
The Tribunal found that both the assessment order and the CIT(A)'s order were not meritorious. The assessee expressed a desire to participate in proceedings before the AO and undertook to comply with requisitions.
Key Issues
Whether the assessment order passed ex-parte under Section 144 was justified, and whether the assessee was provided a reasonable opportunity of being heard.
Sections Cited
253, 69A, 115BBE, 144, 143(1), 143(2), 142(1), 246A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI BHAGIRATH MAL BIYANI & SHRI PARESH M JOSHI
आदेश/ O R D E R
Per Paresh M Joshi, J.M.:
This is an appeal filed by the Assessee Under Section 253 of the Income Tax Act, 1961 (hereinafter referred to as the Act for sake of brevity) before this Tribunal. The assessee is aggrieved by order bearing Number ITBA/NFAC/S/ 250/2024- 25/1072568083(1) dated 27.01.2025 passed by Ld. CIT(A), u/s 250 of the Act which is hereinafter referred to as the 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 the total income of the assessee exigible to tax was computed & assessed at Rs.1,06,33,547/-. The income shown as per return of income was at Rs.12,547/-. An addition of Rs.1,06,21,000/- was made u/s 69A r.w.s. 115BBE of the Act. The assessment order was made u/s 144 of the Act. That the aforesaid assessment order bears number:- ITBA/AST/S/144/2019-20/1022715489(1) and that the same is dated 19.12.2019 which is hereinafter referred to as the “Impugned Assessment Order”. The core reason for selection of case in CASS was “Large share Application money pending for more than one year as compared to preceding year”. This was basis of addition also u/s 69A r.w.s. 115BBE of the Act.
2.2 That the assessee being aggrieved by the aforesaid “Impugned Assessment Order” prefers the first appeal u/s Page 2 of 8 Order” has dismissed the first appeal of the assessee on the grounds and the reasons stated therein. The core ground and reason for dismissal of the first appeal was as under:
“5.7 The principle that every Court that is to decide on a matter of dispute. inherently possesses the power to dismiss the case for default, has been upheld by the Hon'ble Supreme Court in case of Dr. P. Nalla Thampy Vs. Shankar (1984Supp) SCC 63 and the case of New India Assurance vs. Srinivasan (2000) 3SCC 242. In the latter case, the Apex Court has held as under:- "That every court or judicial body or authority, which has a duty to decide a list between two parties, inherently possesses the power to dismiss a case in default Where a case is called up for hearing and the party is not present, the court or the judicial or quasi-judicial body is under no obligation to keep the matter pending before it or to pursue the matter on behalf of the complainant, therefore, the court will be well within its jurisdiction to dismiss the complaint for non-prosecution. So also, it would have the inherent power and jurisdiction to restore the complaint on good cause being shown for the non-appearance of the complainant." 6.1 The issues were considered. Relevant assessment order, statement of facts and grounds of appeal were carefully perused. The assessment order clearly stated that the appellant filed their return of income for the Assessment Year 2017-18 on 31.03.2018, declaring an income of Rs. 12,550. The return was processed under section 143(1) of the Income Tax Act at the CPC in Bangalore. The case was selected for limited scrutiny, and notice under section 143(2) was issued on 11.08.2018, followed by several notices under section 142(1) but the appellant failed to respond. As a result, the assessment was completed under section 144 of the Income Tax Act, based on the available data. The case was selected for scrutiny due to the large share application money pending for over a year, totaling Rs. 1,06,21,000. Since the appellant did not provide any explanation or details regarding the share application money, it was treated as unexplained money under section 69A and section 115BBE, and added to the total income for the year. 6.2 The appellant's grounds are found to be untenable due to the fact that specific findings in the assessment order have not been Page 3 of 8. A.Y. 2017-18 controverted by the appellant along with corroborative evidences. The arguments advanced by the appellant in his statement of facts and grounds of appeal are also not supported by tangibile materials. Accordingly, the appeal is being decided keeping in view the facts brought on record by the AO in the assessment order and by the appellant in the grounds of appeal, statement of facts. 6.3 The appellant's contentions are not acceptable in the absence of written submission to substantiate its contentions made in the grounds of appeal and non-submission of any material in the course of the appellate proceedings to controvert the findings in the assessment order by the AO to arrive at his decision on the issues. 6.4 Based on the facts mentioned above, and detailed discussion in the assessment order by the AO, I am not inclined to interfere with the decision of the AO on the issues raised in the grounds of appeal.
6.5 The appellant appellant craves to leave add alter or amend any of the ground at or before hearing of the appeal. However, no such option was exercised by the appellant during the appellate proceedings. Hence, this ground is dismissed.
In the 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 under:
“1. That the Ld. CIT erred in law and facts of the case and confirmed the total income assessed by AO at Rs. 1,06,33,547/-as against returned income of Rs. 12,550/- under section 144 of the act. The addition made is totally wrong and illegal on facts of the case. 2.That the Ld. CIT erred in law and facts of the case passed the 2 order under Section 144 of the Income Tax Act, 1961 without providing the proper and Reasonable opportunity of being heard. 3.That the Ld. CIT erred in law and facts of the case and confirms addition by AO of share application money pending for allotment
Page 4 of 8 A.Y. 2017-18 amounting to Rs. 1,06,21,000/-by treating it as unexplained money under section 69A read with section 115BBE of Income Tax Act, 1961. The addition made is totally wrong and illegal on facts of the case. 4.That the appellant craves to leave add alter or amend any of the ground at Or before hearing.”
Record of Hearing 3.1 That the hearing in the matter took place before this Tribunal on 26.08.2025 when the Ld. AR for and on behalf of the assessee appeared before us and interalia contended that the “Impugned Assessment Order and so also Impugned Order” are exparte in nature. It was contended by the Ld. AR that as and by way of a letter dated 05.12.2024 bearing Ack No:742277601051224 the Ld. CIT(A) was requested “THE ASSESSMENT PROCEEDINGS WERE COMPLETED EXPARTE US 144 BY AO WITHOUT VERIFYING THE FACTS ON MERITS.
NOW AS PER AMENDMENT BROUGHT IN RECENT BILL US 251 IT IS KINDLY REQUESTED TO YOUR HONORS TO KINDLY SET ASIDE THE MATTER BACK TO THE FILE OF AO FOR DECIDING THE ISSUE AFRESH ON MERITS.” But the above reply along with the request was not considered by the Ld. CIT(A) despite “Impugned Assessment Order” being u/s 144 of Page 5 of 8 Impugned Assessment Order was under section 144 of the Act but the assessee company had filed the ITR and so also all the compliances/returns were filed under the CO’s Act provisions.
Upon a query by bench with regard to the status of the company and as to why the addition of the share application money was made, the Ld. AR stated that the assessee company is very much in the existence but these are no operations. It is not working.
Per contra Ld. DR appearing for and on behalf of the revenue stated that given the facts and the circumstances it would be fair and just that the matter be remanded back to Ld. AO to examine the entire issue afresh on denovo basis and the assessee be directed to cooperate with the department/revenue.
Observations & findings & conclusions 4.1 We have to decide the legality, validity and proprietary of the “impugned order” basis records of the case and the contentions canvassed before us.
4.2 We have carefully perused the records of the case.
Page 6 of 8 examining the contentions canvassed before us by the both the parties, are of the considered view that both the “Impugned Assessment order” and so also “Impugned order” are not meritorious in nature. The Assessee company has expressed the desire to participate before the Ld. AO and has undertaken that all the requisitions made by the department would be duly honoured. Promptly, under these circumstances, we deem it fit to set aside the “Impugned Order” and Remand the case back to the Ld. AO for fresh adjudication and ad-judgement on merits of the case. The Ld. AO to examine and to verify the reply/explanation of the assessee which would be filed by the assessee in the denovo proceedings. Accordingly the Impugned order is set aside as and by way of remand back to the file of Ld.
AO on denovo basis. We direct the assessee to furnish to the Ld. AO all the necessary material particulars documents etc. So that Ld. AO can compute the real income exigible to tax of the assessee in accordance with law.
Order Page 7 of 8 aside as and by way of remand back to Ld. AO on denovo basis. 5.2 In result appeal of the assessee is allowed for statistical purposes. Order pronounced in open court on 29 .08.2025.