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Facts
The assessee, engaged in real estate and renting services, declared a loss. The AO estimated income at 8% of turnover without issuing a show cause notice and rejecting books of accounts. The CIT(A) confirmed this estimation. The assessee argued that an adequate opportunity of being heard was not provided.
Held
The Tribunal found that the AO did not record if a show cause notice was issued before rejecting the books of account or estimating income. Considering the assessment was completed during the COVID-19 pandemic and the CIT(A) confirmed the AO's action ex parte, the Tribunal deemed it appropriate to give the assessee one more opportunity.
Key Issues
Whether the AO and CIT(A) erred by not providing an adequate opportunity of being heard and by confirming the estimation of income without proper procedure.
Sections Cited
254(1), 143(3)
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Order under Section 254(1) of Income Tax Act PER: PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by the assessee is directed against the order of learned Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi (in short, the ld. CIT(A)) dated 13/10/2025 for the Assessment Year (AY) 2018-19. The assessee has raised following grounds of appeal:
1. On the facts and circumstances of the Appellant's case and in law the Ld. CIT(A) had erred in confirming the action of the Id. A.O. in passing the impugned order without providing adequate opportunity of being heard to the appellant.
2. On the facts and circumstances of the Appellant's case and in law the Ld. CIT(A) had erred in confirming the action of the Id. A.O. in deliberately not considering the documents submitted by the appellant on e-portal and proceeding to pass the impugned order u/s 143(3) of the Act by rejecting books of accounts of the appellant.
3. On the facts and circumstances of the Appellant's case and in law the Ld. CIT(A) had erred in confirming the action of the Id. A.O. in estimating income of the appellant at Rs. 26,46,768/- which is 8% of the turnover of Rs. 3,30,84,606/- as against returned loss of Rs. 34,26,864/-, as per reasons mentioned in the assessment order or otherwise.”
(AY: 2018-19) Poonam Lifestyle 2. Rival submissions of both the parties have been heard and record perused. The learned Authorized Representative (AR) of the assessee submits that Assessing Officer (‘AO’) estimated the income of the assessee without issuing any specific show cause notice. The ld. CIT(A) confirmed the action in ex parte proceeding. The assessee could not furnish his written submission in support of various grounds of appeal
. The ld. AR of the assessee submits that the assessee has good case on merit and is likely to succeed if one more opportunity is allowed and the matter is restored back to the file of ld. CIT(A), with the liberty, the assessee to file detailed written submission.
3. On the other hand, the ld. Senior Departmental Representative (SR. DR) for the revenue submits that amply opportunity was given to the assessee by ld. CIT(A)as recorded in para 3.2 of order of ld. CIT(A).
4. We have considered the rival submissions of both the parties and have gone through the orders of lower authorities carefully. We find that while filing return of income, the assessee declared loss of Rs. 34,26,864/-. The case was selected for scrutiny. During assessment, AO recorded that assessee is a firm, engaged in real estate and renting services. The assessee has shown huge closing stock in its profit and loss account of Rs. 20.15 crore and debited various expenses of more than Rs. 3.00 crores. The AO called various details of closing stock. The AO recorded that certain required details were furnished. The AO on the basis of situation in market estimated 8.00% profit on turnover. However, the AO has not recorded if any show cause notice was issued before rejecting books of account of assessee and estimating income @8.00%. Before the ld. CIT(A), the assessee