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Facts
The assessee, an individual, did not file her Income Tax Return for AY 2015-16. The AO initiated reassessment proceedings under Section 147 based on information of undisclosed interest income of Rs. 3,24,589/- and an unexplained time deposit of Rs. 51,93,088/-. Due to the assessee's non-compliance to notices, a best judgment assessment was passed under Section 144, and the Ld. CIT(A) subsequently dismissed the assessee's appeal ex-parte.
Held
The Tribunal, acknowledging that the assessee was not given a proper opportunity of being heard by the CIT(A), remitted the matter back to the Ld. CIT(A). This remand is for a fresh consideration of the appeal on merits, granting the assessee one more opportunity to present her case, with a caution for future cooperation.
Key Issues
The key legal issues include the validity of reassessment proceedings, whether notices were properly served and within limitation, and the justification of the CIT(A)'s ex-parte order without providing sufficient opportunity of being heard to the assessee.
Sections Cited
147, 144, 148A(d), 148A(b), 144B, 56, 69A, 148, 149(1)(b), 234A, 234B
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Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH, VISAKHAPATNAM
Before: SHRIK NARASIMHA CHARY, HON’BLE & SHRI S BALAKRISHNAN, HON’BLE
सुनवधई की तधरीख/ Date of Hearing : 12/02/2025 घोर्णध की तधरीख/Date of Pronouncement : 07/03/2025 O R D E R PERS. BALAKRISHNAN, Accountant Member :
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)”) vide DIN & Order No. ITBA/NFAC/S/250/2024-25/1069780417(1), dated 18/10/2024 arising out of the order passed U/s. 147 r.w.s 144 of the Income Tax Act, 1961 (“the Act”) for the AY 2015-16.
2. Brief facts of the case are that the assessee is an individual and did not file her return of income for the AY 2015-16. As per the information available with the Department, the Ld. AO observed that the assessee has received interest amounting to Rs.3,24,589/- and has made time deposit of Rs. 51,93,088/- during the AY 2015-16. Therefore, the Ld. AO was of the opinion that the interest income and time deposit chargeable to tax has escaped assessment and hence, the assessee’s case was reopened for scrutiny by invoking the provisions of section 147 of the Act after passing an order U/s. 148A(d) of the Act. Accordingly, a notice U/s. 148A(b) of the Act was issued on the assessee with the prior approval of the competent Authority. However, there was no compliance from the assessee even though the notice was served by email/ speed post. Therefore, considering the assessee’s non-compliance / no response to the notices issued, the Ld. AO concluded the assessment as best judgment assessment by invoking the provisions of section 144 of the Act. Thus, in the assessment order passed U/s. 144 r.w.s 147 r.w.s 144B of the Act, the Ld. AO made the following additions ie., (i) Addition U/s.56 of the Act on account of undisclosed interest of Rs. 3,24,589/- treating the same as income from other sources and (ii) Addition of Rs. 51,93,088/- on account of unexplained money U/s. 69A of the Act and determined the total income at Rs. 55,17,677/-. Aggrieved by the order of the Ld. AO, the assessee preferred an appeal before the Ld. CIT(A).
3. On appeal, the Ld. CIT(A) passed exparte order and 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 entire reassessment proceedings are bad in law as the notice U/s. 148 dated 8/4/2022 has never been served on the assessee either electronically or physically except for placing same in the assessee’s account on the ITBA Portal.
The notice issued U/s. 148 dated 8/4/2022 is barred by limitation as per the proviso to section 149(1)(b) being beyond six years from the end of the relevant assessment year.
The show cause notice U/s. 148A(b) dated 19/03/2022 is invalid as the same has not given 7 clear days for compliance consequently the entire reassessment proceedings are invalid and void ab initio.
The notice U/s. 148 dated 8/4/2022 issued by the Income Tax Officer, Ward-2(1), Guntur is invalid for the reason that i. the notice has been issued by the jurisdictional Assessing Officer instead of by the National Faceless Assessment centre as mandated by the e-assessment of income escaping assessment scheme. (ii) the notice is issued with prior approval of Pr. CCIT, AP & Telangana, Hyderabad, whereas no such approval is needed for notices issued on or after 01/04/2022 where order U/s. 148A(d) is passed with prior approvalof the specified authority. (iii). The material relied on for passing the order U/s. 148A(d) and copy of the approval of the specified authority is not furnished to the assessee till date though the same is mandated by the CBDT guidelines for issue of notices U/s.
Consequently, the entire assessment proceedings under such an invalid notice are bad in law and ab initio void.
The Assessment Unit, National Faceless Assessment Centre is not justified and the CIT(A), National Faceless Appeal Centre is not justified in confirming the determination of Rs. 55,17,677/- as taxable income of the assessee by treating the following amounts as income of the assessee time deposits in bank Rs. 51,93,080/- and interest income of Rs. 3,24,589/- totaling to Rs. 51,17,677/-.
The computation of income tax is totally wrong as the assessment unit has levied tax of Rs. 14,80,304 on income of Rs. 3,24,589/- chargeable at normal rate of tax applicable to individuals Sl No. 23 of the computation sheet attached to the assessment order. Consequently, the surcharge and education cess levied is also on the higher side as also the interest under section 234A and 234B.
7. The period for which interest U/s. 234A is levied is not justified as the same cannot be levied for the period during which it is not possible for the assessee to file a valid return of income.
All the above grounds of appeal
are manually exclusive and without prejudice to one another.
9. The appellant craves leave to add to, alter, amend, modify, delete all or any of the above grounds of appeal.”
4. 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.
5. 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 nor his Representative appeared before the Ld. CIT (A). 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.
6. 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 several occasions. However, none appeared on behalf of the assessee before the CIT(A) on the dates of hearing. Therefore, the Ld. CIT (A) was left with no other option except to adjudicate the appeal ex-parte. In this situation, we do not find much strength in the arguments advanced by the ld. AR. However, considering the prayer of the Ld. AR, 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 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 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.