SUNIL MELATHILVEEDU NAZARUDEEN,OYOOR vs. ITO WARD 3, KOLLAM

Brief facts of the case are that the appellant is an individual. No regular return of income for AY 2017-18 was filed by the appellant under the provisions of section 139(1) of the Income Tax Act, 1961 (the Act). The Income Tax Officer, Ward-3, Kollam (hereinafter called "the AO") had come to know that the appellant Sunil Melathilveedu Nazarudeen made cash deposit with Kollam District Central Cooperative Bank of Rs. 61,76,396/-, out of which an amount of Rs. R,70,000/- was made during demonetization period in specified bank notes. Therefore, the AO issued a notice u/s. 142(1) of the Act on 25.12.2007 calling upon the appellant to file the return of income. The appellant neither complied with the notice u/s. 142(1) nor complied with the notices of hearing issued by the AO. In the circumstances, the AO proceeded with making best judgement assessment u/s. 144 of the Act treating the cash deposit of Rs. 65,19,994/- as unexplained money of the appellant and made additions on account of rental income of Rs. 1,60,202/-, income from other sources of Rs. 2,91,501/- and interest income of Rs. 73,836/- vide order dated 16.12.2019 passed u/s. 144 of the Act.

Being aggrieved, an appeal was filed before the CIT(A), contending that the appellant was dealing in the business of trading in agricultural implements, paints, polishes, enamels, pipes, etc. under the name and style of M/s. Makrana Marbe Palace, having VAT Registration. The total credits during the year in the account No. 0303960028220012 aggregated Rs. 108,82,715/-. From the transactions recorded in the aforesaid Bank Account, it is seen that there were total credits of Rs. 1,08,82,715/- and total debits of Rs. 1,27,26,138/-. The credits were stated to be cash deposits from cash sales and clearings, and the debits were claimed as mostly payments towards clearing cheques given to suppliers of goods.

Being aggrieved, the appellant is in appeal before this Tribunal in the present appeal.

At the outset we find that the CIT(A) has passed exparte order. We find from para 2 of the impugned order that notice of hearing were issued by the National Faceless Appeal Centre trough ITBA portal. In our considered opinion, it is not a valid method and manner of service of notice as specified under the provisions of section 282(1) of the Income-tax Act, 1961 Act and Rule 127(1) of the Income-tax Rules, 1962. Therefore, it is crystal clear that the notices were not served upon the appellant. To fortify our view, we would like to make reference to a decision rendered by the Hon’ble Punjab & Haryana High Court in the case of Munjal BCU Centre of Innovation and Entrepreneurship Vs. CIT (Exemptions) (2024) 463 ITR 560 (P&H), wherein the Hon’ble High Court after making reference to provisions of 282(1) held that service of notice through ITBA portal is not valid service and remanded the matter to AO for denovo disposal of case. The relevant paragraphs of the judgment are reproduced below: -

In view of the above legal position, we of the considered opinion that proper notice(s) of hearing were not served properly on the appellant. Therefore, we are of the considered opinion that in the interest of justice, the matter should be remitted back to the file of CIT(A) for denovo adjudication after affording reasonable opportunity to the appellant, in accordance with law. The appellant is at liberty to file any evidence in support of his claim as he deems expedient.

In the result, the appeal filed by the assessee is partly allowed for statistical purposes.