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Facts
The assessee, a partnership firm engaged in Structural Fabrication, did not file its income tax return for AY 2017-18 despite being selected for scrutiny under Operation Clean Money due to substantial cash deposits during demonetization. The Assessing Officer, after issuing a notice under section 142(1) which went unanswered, passed an ex-parte assessment order under section 144, determining the total income at Rs.11,42,000/-. The CIT(A) confirmed this order as the assessee failed to appear or provide evidence during appellate proceedings.
Held
The Tribunal found that the learned CIT(A) dismissed the appeal for non-prosecution without deciding the matter on merits as mandated by section 250(6) of the Act. Therefore, the Tribunal remitted the case back to the CIT(A) for fresh adjudication on merits, with a direction to provide the assessee adequate opportunity to be heard and furnish all requisite documents.
Key Issues
Whether the CIT(A) erred in confirming the ex-parte assessment order without deciding the case on merits and if the matter should be remitted back for fresh adjudication.
Sections Cited
142(1), 144, 250(6)
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Income Tax Appellate Tribunal, NAGPUR “SMC” BENCH : NAGPUR
Before: SHRI V. DURGA RAO
ORDER PER V. DURGA RAO, J.M. : This appeal by the assessee has been directed against the order dated 16.10.2023, of the learned CIT(A)- National Faceless Appeal Centre [in short “NFAC”], Delhi, relating to assessment year 2017-2018. 2. At the outset, there is a delay of 40 days in filing the appeal before the Tribunal. The assessee has filed 2 ITA.No.44/NAG./2024 affidavit seeking for condonation of the delay. I am satisfied with the averments stated in the affidavit and condone the delay of 40 days in filing the appeal before the Tribunal and proceed to decide the appeal on merits.
Briefly stated facts of the case are that the assessee is a partnership firm, engaged in manufacturing of Structural Fabrication. The assessee did not file its return of income for the impugned assessment year 2017-2018. The case of the assessee has been selected for scrutiny under Operation Clean Money under which the assessees who had deposited substantial cash in bank account(s) during the demonetization period but have not filed the return of income for assessment year 2017-2018. Therefore, the Assessing Officer issued statutory notice u/sec.142(1) of the Act calling the assessee to explain the source of such deposits. Since the assessee did not file any reply, the Assessing Officer passed ex-parte assessment order u/sec.144 of the Act by determining the total income of the assessee at Rs.11,42,000/- vide order dated 27.12.2019.
3 ITA.No.44/NAG./2024
On being aggrieved, the assessee carried the matter in appeal before the learned CIT(A). During the course of appellate proceedings, the learned CIT(A) issued notices calling upon the explanation of the assessee on the impugned addition made by the Assessing Officer. Since, the assessee did not appear nor filed any documentary evidence, the learned CIT(A) confirmed the order of the Assessing Officer by passing ex-parte u/sec.144 of the Act, without deciding the issue(s) on merits.
Aggrieved by the order of the learned CIT(A), the carried the matter in appeal before the Tribunal. 6. During the course of hearing, the Learned Counsel for the Assessee submitted that the neither the Assessing Officer nor the learned CIT(A) grossly erred in not considering the redeposit of cash withdrawn earlier from the bank as explained cash deposit. Without bringing any facts on record, the lower authorities passed the impugned order(s). He, submitted that one more opportunity may please be granted to the assessee by remitting the matter in issue back to the file of learned CIT(A) for afresh adjudication as the learned 4 ITA.No.44/NAG./2024 CIT(A) has not decided the issues raised before him on merits as contemplated u/sec.250(6) of the Act.
The Learned DR on the other hand relied on the orders of the lower authorities and strongly opposed for remit the issue back to the file of learned CIT(A). He submitted that despite numerous granted by the Assessing Officer and the learned CIT(A) the assessee did not file any documentary evidence in support of it’s claim. He submitted that it is the settled position of law that mere filing of an appeal does not give right to an assessee, unless and until effectively pursuing the same. He accordingly, submitted that since the assessee has not availed the opportunities granted to him, the authorities below had no option, but, to pass ex-parte order(s) u/sec.144 of the Act. He submitted that that the order of the learned CIT(A) be confirmed.
I have heard the rival submissions of both the parties and perused the material on record. I find that the Learned Counsel for the Assessee has rightly pointed out that the learned CIT(A) has not decided the matter in issue on merits as contemplated u/sec.250(6) of the Act, according to 5 ITA.No.44/NAG./2024 which, the learned CIT(A) has to give reasons for decision and adjudication thereof. I find that the learned CIT(A) has not decided the matter in issue on merits and dismissed the appeal of assessee for non-prosecution. In view of the above, I remit the grounds raised
by the assessee back to the file of learned CIT(A) with a direction to re-decide the issue afresh, as per fact and law, after providing adequate opportunity of being heard to the assessee. Needless to say, it is for the assessee company to plead and prove it’s case before the learned CIT(A) by furnishing all the requisite documents as called for in consequential proceedings. I hold and direct accordingly.
9. In the result, appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on 03.02.2025.
Sd/- (V. DURGA RAO) JUDICIAL MEMBER Nagpur, Dated 03rd February, 2025 VBP/- 6 ITA.No.44/NAG./2024 Copy to 1. The appellant 2. The respondent 3. The CIT(A), Nagpur concerned 4. The CIT, Nagpur concerned 5. The D.R. ITAT, Nagpur SMC-Bench, Nagpur 6. Guard File. //By Order// True Copy Sr. Private Secretary : ITAT : Nagpur Bench NAGPUR.