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Facts
The assessee, a partner in liquor trading firms, filed their return for AY 2017-18 declaring income of Rs.43,87,100. A survey on 03.05.2017 and 04.05.2017 revealed an un-declared cash payment of Rs.10,00,000 for property purchase, leading to assessment proceedings under Section 147. The Assessing Officer (AO) added this amount as unexplained income, which was upheld by the CIT(A).
Held
The Tribunal held that the CIT(A) passed an ex-parte order without providing adequate opportunity for hearing, violating principles of natural justice. The matter requires fresh adjudication by the CIT(A) after allowing the assessee to submit all relevant documents and evidence.
Key Issues
Whether the CIT(A) erred in upholding the AO's addition and passing an ex-parte order without affording proper opportunity of hearing to the assessee.
Sections Cited
147, 148, 143(3), 69, 69A, 115BBE, 271(1)(c), 133A, 131
AI-generated summary — verify with the full judgment below
Before: SHRI DINESH MOHAN SINHA & SHRI BIJAYANANDA PRUSETH
आदेश / O R D E R
PER BIJAYANANDA PRUSETH, AM:
This appeal by the assessee emanates from the order passed under section 250 of the Income-tax Act, 1961 (in short, 'the Act’) dated 22.03.2024 by the Commissioner of Income-tax (Appeals)-4, Surat [in short, ‘CIT(A)’] for the assessment year (AY) 2017-18, which in turn arises out of assessment order passed by the Assessing Officer (in short, ‘AO’) u/s. 147 r.w.s. 143(3) of the Act on 17.02.2022.
The grounds of appeal raised by the assessee are as under:
AY 17-18 Pramod R Tandel “1. On the facts and circumstances of the case and in law on the subject, the Ld. CIT(A) has erred in confirming the action of the AO in reopening the assessment u/s.147 of the Act and issuing notice u/s.148 of the Income tax Act, 1961.
2. On the facts and in the circumstances of the case as well as the law on the subject, the Ld. CIT(A) has erred in confirming the action of the AO in making addition of Rs.10,00,000/- on account of alleged cash payment to Shri Saukat Anwar Mithani on account of purchase of property treated as alleged Unexplained money u/s.69 of the Income tax Act, 1961.
3. On the facts and in the circumstances of the case as well as the law on the subject, the Ld. CIT(A) has erred in confirming the action of the AO in invoking the provisions of section 69 and 69A of the Act and taxed on income assessed u/s.115BBE of the Act.
4. On the facts and in the circumstances of the case as well as the law on the subject, the Ld. CIT(A) has erred in confirming the action of the AO in initiating the penalty proceedings u/s 271(1)(c) of the Income tax Act, 1961.
On the facts and in the circumstances of the case as well as the law on the subject, the Ld. CIT(A) has not offered adequate opportunities to hear the case and passed ex-parte order and hence the case may please e set aside and restored back to the CIT(A) or AO.
6. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal."
Brief facts of the case are that in the instant case, the assessee is a partner in two firms, namely, M/s. S B Liquor Unlimited and M/s. K W Enterprise, which were engaged in the business of wholesale and retail trading of liquors. The assessee had e-filed his return of income for the AY 2017-18 on 31.03.2018 declaring total income at Rs.43,87,100/-. Further, a survey u/s 133A of the Act was conducted on 03.05.2017 and 04.05.2017 and various incriminating documents were found and impounded. On verification of the same, the AO noticed that the assessee had made cash payment of Rs.10,00,000/- to Shri 2 AY 17-18 Pramod R Tandel Saukat Anwar Mithani on account of purchase of property. However, it was seen that assessee had not declared such transaction of Rs.10,00,000/- in his return of income. Therefore, case of the assessee was reopened u/s.147 and notice u/s.148 of the Act was issued on 26.03.2021. During the assessment proceedings, notices u/s142(1) of the Act were issued to the assessee for furnishing the details/explanation to complete the assessment proceedings. In response thereto, assessee furnished online submissions and other details.
As stated supra, the on verification of the impounded material, the AO noticed that the assessee had made cash payment of Rs.10,00,000/- to Shri Saukat Anwar Mithani on account of purchase of property, however, such transaction was not declared by the assessee in his return of income for the relevant AY. Moreover, as per the survey report, the aforementioned amount was admitted as cash receipt by the seller, Shri Saukat Anwar Mithani in his statement recorded on oath u/s 131 of the Act. Therefore, assessee was show caused as to why the aforementioned amount of Rs.10,00,000/- should not be treated as his unexplained income but no compliance was made by the assessee to aforesaid show cause notice inspite of multiple opportunities. In absence of any reply/response from the assessee, the AO added the amount of Rs.10,00,000/- to the total income of the assessee by invoking the provisions of section 69 of the Act. Accordingly, assessment order u/s 147 r.w.s. 143(3) of the AY 17-18 Pramod R Tandel Act was passed by the AO on 17.02.2022, determining total income at Rs.53,87,100/-. Aggrieved by the additions made by AO, assessee preferred appeal before CIT(A). During appellate proceedings, CIT(A) issued several notices to the assessee; however, no details/submissions were furnished by the assessee in their compliance. Therefore, CIT(A) proceeded to adjudicate the appeal on the basis of material available on records, i.e., after considering the grounds of appeal
, statement of facts and the assessment order. After considering the material available on records, CIT(A) upheld the order of the AO and dismissed the appeal of the assessee.
5. Aggrieved by the order of CIT(A), assessee has filed present appeal before the Tribunal. The Ld. AR for the assessee submitted that there is no evidence on record that assessee had made any cash payment in excess of sale consideration to seller of property namely, Shri Saukat Anwar Mithani. It is further contended that the AO made addition merely on the basis of impounded material and statement of seller of the property and there is no corroborative evidence for making such addition. The AR furnished copy of sale deed dated 29.11.2016, as per which the assessee paid amount of Rs.7,00,000/- to seller, vide cheque bearing no. 339739 dated 01.11.2016 of Axis bank, in consideration of purchase of property. No other payment was made for the aforesaid purchase of property. In view of the same, Ld. AR requested to delete the addition of Rs.10,00,000/- AY 17-18 Pramod R Tandel made by AO u/s.69 of the Act. Notwithstanding to the above, Ld. AR also contended that AO is wrong in invoking provisions of Section 115BBE and taxing the income at enhanced rate of tax @ 60% u/s.115BBE of the Act, since the same was not applicable for AY 2017-18. Ld. AR further contend that sufficient opportunities of being heard were not provided by CIT(A) during appellate proceedings, which is gross violation of principles of natural justice. The Ld. AR also submitted that relevant evidences, including the registered sale deed showing cheque payment, were not considered. To substantiate his claim, Ld. AR furnished copy of sale deed dated 29.11.2016 and relied upon several decisions, including (i) CBI vs. V.C. Shukla [1998] 1998 taxmann.com 2155 (SC); (ii) CIT Vs. Godlen Finance [2013] 40 taxmann.com 329 (Guj);(iii) CIT vs. Prakash Chand Lunia (D) Thr. Lrs. &Anr. (Civil appeal no. 7689-90 of 2022 (SC) and (iv) ITO vs. Oghadbhai Arjanbhai Der (MA No. 37/SRT/2024 (arising out (ITAT, Surat).
On the other hand, Ld. Sr. DR for the Revenue supported the order of lower authorities and submitted that sufficient opportunities of being heard were provided by CIT(A) to assessee during appellate proceedings; therefore, allegation of assessee is wrong that he was not provided reasonable opportunity to make submissions. Ld. Sr. DR, therefore, requested to uphold the order of CIT(A).
AY 17-18 Pramod R Tandel 7. We have heard both the parties and have gone through order of lower authorities carefully. The appellant filed paper book including various decisions containing pages 1 to 199. The record shows that the CIT(A) passed the order ex parte, without the benefit of any written submissions or personal appearance from the assessee. It is a settled position of law that no person should be condemned unheard (audi alteram partem). Adjudication without adequate opportunity violates the principles of natural justice and such orders cannot be sustained. 7.1 We find merit in the contention of the Ld. AR that the matter requires a fresh adjudication by the CIT(A) after providing reasonable and adequate opportunity of hearing. In the interest of justice, therefore, we are inclined to restore the matter back to the file of the CIT(A) for de novo adjudication after allowing the assessee to submit all relevant documents and evidences. However, due to repetitive failure of appellant to comply with the notices of the CIT(A), we deem it appropriate to impose a nominal cost of Rs.5,000/- by the assessee, to be deposited in the Prime Minister’s Relief Fund, as a token for past non-compliance within 30 days from receipt of this order. 7.2 In view of the above, the order of the CIT(A) is set aside and the matter is restored to the file of the CIT(A) for fresh adjudication in accordance with law. The CIT(A) shall provide adequate opportunity of hearing to the assessee and AY 17-18 Pramod R Tandel pass a speaking and reasoned order after considering all submissions and evidence placed on record. We make it clear that we have not expressed any opinion on the merits of the case, which shall be decided by the AO independently in accordance with law.
In the result, the appeal of the assessee is allowed for statistical purposes in terms indicated above.
Order pronounced in accordance with Rule 34 of ITAT Rules, 1963 on 16/10/2025 in the open court.