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Facts
The assessee filed an Income Tax Return for AY 2017-18, and the case was selected for limited scrutiny regarding cash deposits during demonetization. Despite multiple notices, the assessee failed to provide information, leading the AO to make an addition of Rs. 72,20,500 for unexplained cash deposits under Section 69A read with Section 115BBE and complete the assessment ex-parte under Section 143(3) read with Section 144. The Ld. CIT(A) had also dismissed the assessee's appeal ex-parte due to non-compliance.
Held
The Tribunal, acknowledging the assessee's prayer for another opportunity, remitted the matter back to the Ld. CIT(A) to decide the appeal afresh on merits. The assessee was cautioned to promptly cooperate with the Ld. CIT(A) in the proceedings.
Key Issues
Whether the CIT(A) was justified in confirming additions ex-parte without deciding the issue on merits, and whether the assessment order passed under Section 143(3) instead of Section 144 was valid given the assessee's non-compliance during assessment proceedings.
Sections Cited
143(3), 143(1), 143(2), 142(1), 133(6), 144, 69A, 115BBE
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH, VISAKHAPATNAM
Before: SHRI DUVVURU RL REDDY, HON’BLE & SHRI S BALAKRISHNAN, HON’BLE
(�नधा�रण वष� / Assessment Year: 2017-18) Jayanth Gaddipati, Vs. Income Tax Officer, Guntur. Ward-2(3), PAN: BBMPG1369Q Guntur. (अपीलाथ�/ Appellant) (��यथ�/ Respondent) अपीलाथ� क� ओर से/ Appellant by : Sri I. Kama Sastry, CA ��याथ� क� ओर से / Respondent by : Dr. Aparna Villuri, Sr. AR सुनवाई क� तार�ख / Date of Hearing : 12/08/2025 घोषणा क� तार�ख/Date of : 04/09/2025 Pronouncement O R D E R PER DUVVURU RL REDDY, Vice President:
This appeal filed by the assessee is against the order of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [“Ld. CIT(A)-NFAC”] in DIN & Order No. ITBA/NFAC/S/250/2024-25/1074176424(1), dated 07/3/2025 arising out of the order passed U/s. 143(3) of the Income Tax Act, 1961 [“the Act”] for the AY 2017-18.
Jayanth Gaddipati vs. ITO 2. Brief facts of the case are that the assessee is an individual. The assessee filed his return of income for the AY 2017-18 on 28/03/2018 admitting a total income of Rs. 4,97,470/-. The return of income was processed U/s. 143(1) of the Act by the CPC, Bangalore and the case was selected for “limited scrutiny” under CASS to verify “cash deposit during the year, cash deposit during demonetization period”. Thereafter, notice U/s. 143(2) of the Act was issued on 14/08/2018 through ITBA. Notices U/s. 142(1) of the Act were issued on 09/01/2019 and 05/02/2019. Further, notice U/s. 133(6) of the Act was issued on 24/01/2019 to IndusInd Bank Ltd, HDFC Bank, Hyderabad, ICICI Bank, HDFC Bank, Mangalagiri and obtained the bank account(s) statements maintained by the assessee. In response to the notices, the assessee had not furnished the information called for. Therefore, a show cause notice along with notice U/s. 142(1) of the Act was issued on 15/07/2019 requesting the assessee to furnish the information called for regarding the cash deposits made during the year and demonetization period in his bank accounts. Further, the assessee was also requested to furnish objections, if any, for completion of scrutiny assessment proceedings ex-parte under best judgment assessment U/s. Jayanth Gaddipati vs. ITO 143(3) r.w.s 144 of the Act by taking into account the total cash deposits of Rs. 72,20,500/- made during the year. Since there was no response from the assessee, the Ld. AO was of the opinion that the assessee has no sufficient sources of income for depositing the cash of Rs. 72,20,500/- and treated the same as unexplained money U/s. 69A r.w.s 115BBE of the Act. Thus, the Ld. AO completed the assessment and determined the total income at Rs. 77,17,970/- and passed the assessment order dated 18/12/2019. Aggrieved, the assessee carried the matter in appeal before the Ld. CIT(A).
On appeal, the Ld. CIT(A) passed ex-parte order and observed that the assessee neither filed written submissions nor complied with the notices issued. Thus, the Ld. CIT(A) dismissed the appeal of the assessee. Aggrieved by the order of the Ld. CIT(A), the assessee is in appeal before the Tribunal by raising the following grounds of appeal:
1. The Ld. CIT(A), NFAC is not justified in confirming the additions made by the AO for non-prosecution by the assessee without deciding the issue on merits.
2. The entire assessment is null and void as the order is passed under U/s. 143(3) instead of U/s. 144 as the assessee has not complied with the notices issued during the course of the assessment proceedings.
Jayanth Gaddipati vs. ITO 3. The CIT(A), NFAC is not justified in confirming the addition of Rs. 72,20,500/- made by the ITO, Ward-2(3), Guntur U/s. 69A of the Act. 4. All the above grounds of appeal mutually exclusive and without prejudice to one another.
5. The appellant craves leave to add to, alter, delete, modify all or any of the above grounds of appeal.”
At the outset, the Ld. AR submitted before us that the Ld. CIT (A) has passed ex-parte order without providing proper opportunity to the assessee of being heard. It was therefore pleaded that the matter may be remitted back to the file of the Ld CIT (A) in order to provide one more opportunity to the assessee of being heard.
Ld. DR, on the other hand, vehemently opposed to the submissions of the Ld. AR and argued that several opportunities had been provided to the assessee however, on the given dates of hearing, neither the assessee has appeared before the Ld. CIT (A) nor responded to the hearing notices issued. It was further submitted that the Ld. CIT (A) had no other option but to pass ex-parte order based on the materials available on record. Hence, it was pleaded that the order passed by the Ld. CIT(A) does not call for any interference.
We have heard the rival submissions and carefully perused the materials on record. On examining the facts of the case, we find that the Ld. CIT (A) had posted the case on four occasions. However, none Jayanth Gaddipati vs. ITO appeared on behalf of the assessee before the CIT(A) on the dates of hearing nor filed any details / written submissions with regard to the grounds raised before the Ld. CIT(A). Therefore, the Ld. CIT (A) was left with no other option except to adjudicate the appeal ex-parte. In this situation, considering the prayer of the Ld. AR for one more opportunity before the Ld. CIT(A), and in the interest of justice, we hereby remit the matter back to the file of Ld. CIT (A) in order to consider the appeal afresh and decide the case on merits by providing one more opportunity to the assessee of being heard. At the same breath, we also hereby caution the assessee to promptly co-operate before the Ld. CIT (A) in the proceedings failing which the Ld. CIT (A) shall be at liberty to pass appropriate order in accordance with law and on merits based on the materials on the record. It is ordered accordingly.
In the result, appeal filed by the assessee is allowed for statistical purposes as indicated hereinabove.
Pronounced in the open Court on 04th September, 2025.
Sd/- Sd/- (एस बालाकृ�णन) (दु�वू� आर.एल रे�डी) (S.BALAKRISHNAN) (DUVVURU RL REDDY) लेखा सद�य/ACCOUNTANT MEMBER उपा�य� /VICE PRESIDENT Dated: 04/09/2025 Jayanth Gaddipati vs. ITO OKK - SPS आदेश की �ितिलिप अ�ेिषत /Copy of the order forwarded to:- 1. �नधा�रती/ The Assessee – Jayanth Gaddipati, 4-130-1, Near Ramalayam, Neerukonda, Mangalagiri Mandal, Guntur, Andhra Pradesh- 522503. 2. राज�व/The Revenue – Income Tax Officer, Ward-2(1), O/o. ITO, Lakshmipuram Main Road, Guntur, Andhra Pradesh-522006.