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Facts
The assessee failed to comply with statutory notices issued during assessment proceedings, leading the AO to make an addition of Rs. 60,58,100/- for unexplained cash deposits under Section 68 of the Income-tax Act. The CIT(A) dismissed the appeal for non-compliance, despite the assessee's claim that some documents were provided.
Held
The Tribunal found that the CIT(A) did not pass an order as per Section 250(6) of the Act and dismissed the appeal solely on grounds of non-compliance. Given that the assessment order was confirmed ex-parte, the assessee deserves another opportunity to contest the case on merit.
Key Issues
Whether the CIT(A) erred in dismissing the appeal due to non-compliance without considering the merits of the case, and if the assessee should be granted another opportunity to present their case.
Sections Cited
68, 115BBE, 143(3), 144, 250, 251(1)(a), 274, 271AAC
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Before: SHRI T. R. SENTHIL KUMAR & 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 24.01.2025, by the Commissioner of Income-tax (Appeals), National Faceless Appeal Centre, Delhi [in short ‘CIT(A)’] for the Assessment Year (AY) 2017-18.
Grounds of appeal
raised by the assessee are as under: “1. Learned AO as well as CIT(A)/NFAC has erred in making addition to the total income of the assessee for Rs.60,58,100/- towards cash deposit as unexplained cash credit u/s. 68 of the Act which is erroneous and unjustified to the assessee and requiring to be deleted.
2. On the facts and circumstances of the case and in law, during the course scrutiny proceedings, learned AO issued notices u/s 142(1) dated 22.01.2019, 08.04.2019. 05.08.2019 and SCN on 18.10.2019. Unfortunately, assessee was not able to make compliance of any above notice but learned AO has passed the order u/s 143(3) of the Act instead of /AY.2017-18 Dipen Jaydeepbhaui Dhimar invoking the provision of section 144 which becomes the order ab initio void.
3. On the facts and circumstances of the case and in law, learned CTT(A)/NFAC erred in dismissing the appeal instead of invoking the provision of Section 251(1)(a) enacted by the finance Act 2024 w.e.f. 01.10.2024 which empower the CIT(A)/NFAC cases where assessment order was passed as best judgement case under section 144 of the Act, Commissioner (Appeals) shall be empowered to set aside the assessment and refer the case back to the Assessing Officer for making a fresh assessment due to fact that learned AO has passed the order u/s 143(3) of the Act instead of invoking the provision of section 144 which becomes order passed u/s 250 of the Act becomes null and void.
4. On the facts and circumstances of the case and in law, learned AO as well as CIT(A)/NFAC has failed to appreciate the facts that cash were deposited by the assessee in to his current account no. 14430200000187 with Bank of Baroda, Valod Branch throughout financial year i.e. from 01.04.2016 to 31.03.2017 and not restricted to demonetization period i.e. from 08.11.2016 to 30.12.2016 which clearly establish the facts that cash deposited were out of business transaction.
The Appellant craved leave to Add, Alter, deletes, amend or rescind any of the above grounds of appeal
with the prior permission of the Honourable Income Tax Appellate Tribunal Bench Surat.”
3. Brief facts of the case are that the assessee filed his return of income on 17.02.2018, declaring total income of Rs.3,40,610/-. The case was selected for limited scrutiny under CASS. Various statutory and show notices were issued to the assessee through ITBA e-proceedings portal. However, the assessee failed to reply in response to the said notices. Such details are at para 3 of the assessment order. The AO observed that the assessee has deliberately avoided to make compliance by skipping the proceedings before him. The assessee deposited total cash of Rs.60,58,100/- in the bank accounts, maintained with Bank of Baroda. In absence of any explanation and supporting documents from the assessee, /AY.2017-18 Dipen Jaydeepbhaui Dhimar the AO made the addition of Rs.60,58,100/- u/s 68 of the Act and levied tax @60% u/s 115BBE of the Act. The AO assessed the total income of Rs.63,98,710/- against the returned income of Rs.3,40,610/-. Though he stated that order made u/s 144 of the Act at para 7 of the assessment order, he has mentioned at page 1 that assessment was made u/s 143(3) of the Act. Penalty proceedings were also initiated u/s 274 r.w.s. 271AAC of the Act.
4. Aggrieved by the order of AO, the assessee filed this appeal before the CIT(A). The CIT(A) has condoned the delay in filing appeal. He issued 4 notices fixing the hearing on 29.01.2021, 24.10.2024, 14.11.2024 and 20.01.2025. All the notices were duly served electronically on the registered e-mail id of the appellant and the status of the notices was shown as ‘Delivered’ in the ITBA portal. The CIT(A) observed that the appellant was not interested to pursue his appeal, and he had no defence against the additions made by AO. Since opportunities were given to him, it cannot allege contravention of principles of natural justice as held in case of P. N. Balasubramanium ,112 ITR 512 (AP). He also relied upon the decisions in cases of: (i) CIT vs. B. N. Bhattacharya, 118 ITR 461 (SC), (ii) Estate of Late Tukojirao Holkar vs. CWT, 223 ITR 480 (MP) and observed that assessee is not interested in pursuing the appeal. Thereafter, the CIT(A) decided the appeal on the basis of material available on record. He observed that details, documents or submission were provided by the appellant to /AY.2017-18 Dipen Jaydeepbhaui Dhimar substantiate his claim. No explanation with documentary evidence were filed to rebut the findings of AO. In absence of concrete evidence on record, the CIT(A) upheld the addition made by AO and dismissed the appeal.
5. Aggrieved by the order of CIT(A), the assessee filed appeal before the Tribunal. The learned Authorized Representative (ld. AR) of the assessee filed a paper book and submitted that details and documents were filed before AO. He further submitted that the CIT(A) passed the order u/s 250 of the Act on 24.01.2025 without hearing the assessee in violation of the principles of natural justice. Her also submitted that since the order was passed u/s 144 of the Act, the CIT(A) should have set aside the assessment order back to AO u/s 251 of the Act. Since, adequate opportunity of hearing was not given to the assessee; therefore, Id. AR contended that one more opportunity should be given to the assessee to plead his case before the AO. He undertakes to be vigilant and furnish explanation and details expeditiously.
6. On the other hand, learned Senior Departmental Representative (ld. Sr. DR) of the revenue supported the order of lower authorities. He submitted that the adequate opportunities were given to the assessee during the assessment proceedings as well as appellate proceedings. The assessee has been negligent and non-cooperative due to which the addition was confirmed by CIT(A). However, he submitted that appropriate cost may be imposed upon the assessee, if the matter is restored to AO.
/AY.2017-18 Dipen Jaydeepbhaui Dhimar 7. We have heard both the parties and perused the material available on record. The AO made additions of Rs.60,58,100/- u/s 68 of the Act towards unexplained cash deposits in the bank accounts maintained with Bank of Baroda. The CIT(A) has dismissed appeal because the appellant did not file supporting evidence for the grounds raised in the appeal. The ld. AR submitted that the AO passed an ex parte order, which was confirmed by the CIT(A) in absence of details and evidences. He submitted that non- furnishing of relevant details by the appellant was not deliberate but due to circumstances beyond control of the appellant. He submitted that some papers and documents had been submitted before AO / CIT(A), but these were not considered by them. He also submitted that the CIT(A) should have set aside order of AO because it was passed u/s 144 of the Act. 7.1 First, we shall discuss as to whether the order of AO should have been set aside by the CIT(A). The ld. AR himself has given a paper book and contended that the details were given to AO. Be that as it may, AO passed order u/s 143(3) and not u/s 144 of the Act. Hence, the CIT(A) could not have set aside the assessment order to the file of AO. Though the power of setting aside u/s 251(1)(a) is effective from October 1, 2024 it is discretionary in view of the word “may” used in the proviso under clause (a) below sub-section (1) of section 251 of the Act. By no stretch of imagination, it can be construed that it is mandatory and uniformly applicable in all cases where orders were made u/s 144 of the Act. In view /AY.2017-18 Dipen Jaydeepbhaui Dhimar of the facts and the legal position discussed above, the ground No.3 is dismissed. 7.2 Coming to the merits of the addition, the ld. AR submitted that the appellant is ready to submit all details before AO to substantiate his claim. He, therefore, requested that one more opportunity may be given to the appellant to plead his case on merit. After considering the contentions of both parties and perusing the order of lower authorities, we find that the CIT(A) has not passed an order as per the mandate of section 250(6) of the Act and dismissed the appeal of assessee only on the ground of non- compliance. In view of the fact that the assessment order was confirmed by CIT(A) in ex parte order, we are of the considered view that the assessee deserves one more opportunity to contest his case on merit. Accordingly, in the interests of justice, we set aside the order of CIT(A) subject to payment of cost of Rs.15,000/- (Rupees fifteen thousand only) to the credit of the ‘District Legal Services Authority, Surat’ within three weeks from receipt of this order. Subject to payment of above cost, we set aside the order of CIT(A) and remit the matter back to the file of AO for fresh adjudication in accordance with law after granting adequate opportunity of hearing to the assessee. The assessee is directed to be more vigilant and diligent and to furnish all the details and explanations as needed by the AO by not seeking adjournment without valid reasons. With these directions, the grounds of appeal raised by the assessee are allowed for statistical purposes.
/AY.2017-18 Dipen Jaydeepbhaui Dhimar 8. In the result, appeal of the assessee is allowed for statistical purposes. Order is pronounced under provision of Rule 34 of ITAT Rules, 1963 on 17/07/2025.