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Facts
The assessee failed to file the income tax return for AY 2010-11. Upon receiving AIR data showing a cash deposit of Rs. 1,91,30,000/-, the AO issued a notice u/s 148. The assessee did not file the return or comply with subsequent notices, leading to additions of Rs. 22,99,020/- and Rs. 167/-.
Held
The Tribunal found that the assessee could not properly present their case before the lower authorities, resulting in ex-parte orders. While acknowledging the assessee's non-compliance, the Tribunal set aside the CIT(A)'s order in the interest of justice and natural principles of fairness, allowing for a fresh assessment.
Key Issues
Whether the ex-parte orders passed by the AO and CIT(A) due to non-compliance violate principles of natural justice, and if an opportunity for fresh assessment should be granted.
Sections Cited
147, 148, 68, 271(1)(c)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, SURAT BENCH, SURAT
Before: SHRI DINESH MOHAN SINHA & SHRI BIJAYANANDA PRUSETH
आदेश / O R D E R
PER BIJAYANANDA PRUSETH, AM:
This appeal emanates from the order dated 24.12.2024 passed by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [in short, “the CIT(A)”] for the assessment year (AY) 2010-11.
The grounds of appeal
raised by the assessee are as follows: “1. The Ld. AO hat erred in reopening the case u/s 147 of the Act and in issuing the notice us 148 of the Act and also the Ld. CIT (A) has erred in confirming the same.
2. The Ld. AO has erred in applying section 68 of the Act and also the Ld. CITA) has erred in confirming the same.
3. The Ld. AO has erred in making the addition of Rs.22,98,851/- as unexplained cash credits w's 68 of the Act without verifying the details and without bringing 2010-11 Jaynil Sunil Shah any material on record, and also the Ld. CITEA) has erred in confirming the same.
The Ld. AO has erred in making the addition of Rs.167/- as undisclosed interest income us 68 of the Act and also the Ld. CITEA) has erred in confirming the same 5. The appellant reserves the right to add, alter, amend, or withdraw any grounds of appeal.”
The facts of the case in brief are that the assessee had not filed the return of income for the year under consideration. As per AIR data, the assessee deposited the cash of Rs.1,91,30,000/- in savings bank account, maintained with Bank of Baroda. After recording the reasons, the notice u/s 148 of the Act was issued to the assessee on 29.03.2017 and assessee was requested to file the return of income. In response, the assessee had not filed return of income. Various statutory and show notices u/s 142(1), u/s 271(1)(b) of the Act were issued to the assessee. The assessee failed to comply with the notices. During the proceedings, neither the assessee nor his representative attended or sought any adjournments. The Assessing Officer (in short, ‘AO’) observed that the assessee had no evidence to explain the source of cash deposited in his saving bank account. Therefore, the AO made addition of Rs.22,99,020/- u/s 68 of the Act and interest income of Rs.167/- and added to the total income of the assessee. Penalty proceedings u/s 271(1)(c) of the Act was also initiated.
4. Aggrieved by the order of AO, the assessee filed appeal before the CIT(A). The CIT(A) issued 4 notices, i.e., on 26.11.2018, 23.01.2021, 12.05.2023 and 2010-11 Jaynil Sunil Shah 26.11.2024. The assessee sought adjournment only on 26.11.2018 and did not respond to any of the notices. The CIT(A) observed that the appellant was not interested in pursuing his appeal before him. The CIT(A) relied upon the decision of CIT vs. B. N. Banerjee & Ors, 118 ITR 461 (SC) and stated that the appeal does not mean mere filing of the memo of appeal but effectively pursuing the same. The CIT(A) also relied upon the various other decisions and observed that that the assessee remained absent and there was no assistance from him. The assessee was given sufficient opportunity to furnish the necessary details or documentary evidence, but he has failed to produce any supporting details to rebut the findings of AO. In absence of any evidence to the contrary, the additions made by the AO were upheld by the CIT(A) and he dismissed the appeal of the assessee.
Aggrieved by the order of CIT(A), the assessee filed appeal before the Tribunal. The learned Authorized Representative (ld. AR) of the assessee submitted that assessee could not represent his case before the AO as well as the CIT(A) and the order being ex parte orders, stood vitiated on account of violation of principles of natural justice. The ld. AR submits that during the appellate proceedings, the assessee could not appear before the CIT(A) due to circumstances beyond its control. Adequate opportunity of hearing was not given to the assessee, therefore, ld. AR contended that one more opportunity should be given to the assessee to plead his case before the CIT(A).
On the other hand, the learned Senior Departmental Representative (ld. Sr. DR) for the revenue submitted that assessee was negligent during the assessment as well as the appellate proceedings. He submitted that the Bench may decide the matter as thinks it fit.
We have heard both the parties and perused the materials available on record. It is an undisputed fact that the assessee did not respond to the notices issued to him by the AO and CIT(A). The CIT(A) has upheld the addition made by the AO and dismissed the appeal by observing that the assessee was totally non- compliant. We find that assessee could not plead his case properly before the lower authorities. We find that the CIT(A) has passed the ex parte order due to non-compliance by the assessee before him. The ld. AR contended that another opportunity of hearing may be given to the assessee to plead his case on merit. It is settled law that principles of natural justice and fair play require that the affected party is granted sufficient opportunity of being heard to contest his case. Therefore, without delving deeper into the merits of the case, in the interest of justice, we set aside the order of CIT(A) and restore the matter to the file of AO for fresh assessment and to pass a speaking order after affording sufficient opportunity of being heard to the assessee. The assessee is also directed to furnish explanations and submit the relevant details and documents 2010-11 Jaynil Sunil Shah before the AO. For statistical purposes, the appeal of the assessee is treated as allowed.
In the result, appeal of the assessee is allowed for statistical purposes. Order is pronounced on 26/09/2025 in the open court.