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Facts
The assessee's appeal was filed against an order that confirmed an addition due to an increase in capital amount. The assessee, a C&F Agent, claimed the capital was from reimbursements and submitted documents. However, the AO treated the capital introduction as an unexplained source without a proper show-cause notice. The CIT(A) passed an ex-parte order upholding the assessment.
Held
The Tribunal found that the assessee was not granted sufficient opportunity during the assessment and appellate proceedings. Therefore, to provide natural justice, the matter was restored to the file of the CIT(A) for fresh adjudication after allowing the assessee to present all relevant documents and evidence.
Key Issues
Whether the addition made by the AO on account of unexplained capital introduction was justified without affording sufficient opportunity to the assessee?
Sections Cited
68, 250, 143(3)
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Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI INTURI RAMA RAO, AM & SHRI ANIKESH BANERJEE, JM
O R D E R Per: Anikesh Banerjee, JM The instant appeal of the assessee was filed against the order of the Learned National Faceless Appeal Centre, Delhi [for brevity, ‘Ld. CIT(A)’] passed under section 250 of the Income-tax Act, 1961 (in short, the Act’) for Assessment Year 2017-18, date of order 14/08/2025. The impugned order emanated from the order of the Assistant Commissioner of Income Tax, Circle-2(1), Thrissur (in short, ‘Ld.AO’) passed under section 143(3) of the Act, date of order 29/11/2019.
Edakkalathur Devassy Daiz 2. The Ld.AR argued and stated that the addition was confirmed due to the increase of capital amount to Rs. 1,83,55,160/-. The assessee explained that the assessee is C&F Agent. The assessee has to pay service tax on all transactions including reimbursement transaction including principal & agent. The relevant documents are duly annexed in assessee’s appeal submission before the bench. The Ld. AO had not considered the assessee’s submission and treated the introduction of capital as unexplained source &added back with total income. The aggrieved assessee filed an appeal before the Ld. CIT(A). The Ld. CIT(A) passed an order exparte and uphold the impugned assessment order. Being aggrieved assessee filed an appeal before us.
The Ld. DR argued and stands in favour of the orders of the revenue authorities.
We heard the rival submissions and considered the documents available on the record. During the assessment the assessee unable to submit satisfactory explanation related to source of capital introduction. The Ld. AR in argument stated that the Ld AO without giving any proposals for addition or with issuance show-cause notice made the addition U/s 68 of the Act. The aggrieved assessee filed appeal before the Ld. CIT(A). Finally, the appeal order was also passed exparte. Having considered the totality of facts and circumstances, we are of the view that the assessee has demonstrated reasonable cause for the non-submission of documents before the Edakkalathur Devassy Daiz Ld. CIT(A) & Ld. AO. It is also evident that during the assessment & appellate proceedings, the assessee was not granted sufficient opportunity. Accordingly, in the interest of justice, we deem it appropriate to restore the matter to the file of the Ld. CIT(A). The assessee is directed to furnish all relevant documents and additional evidence, if any, before the Ld. CIT(A). The Ld. CIT(A) shall consider all such documents and evidence in accordance with law and decide the matter afresh after granting a reasonable opportunity of being heard to the assessee. We make it clear that we have not expressed any opinion on the merits of the case, so as not to prejudice the proceedings before the appellate authority. It is further directed that the assessee shall be diligent and fully cooperative in the set-aside proceedings to ensure expeditious disposal of the appeal. Accordingly, the matter is restored to the file of the Ld. CIT(A) for fresh adjudication.
Order pronounced in the open court on 29th October, 2025.