Loading judgment…
Facts
The assessee filed an appeal in 2019 against the CIT(A)'s order for AY 2011-12. The assessee claims they were not served proper notice of hearing by the CIT(A), leading to an ex-parte order. The additions were made on account of unexplained expenditure/purchases and cash deposits.
Held
The Tribunal found that the assessee was not afforded a fair and reasonable opportunity to contest the appeal before the CIT(A). Both lower authorities passed ex-parte orders. Therefore, the order of the CIT(A) was set aside.
Key Issues
Whether the assessee was provided with a fair opportunity of hearing by the lower authorities and whether the ex-parte orders passed are sustainable.
Sections Cited
147, 148, 254(1), 250
AI-generated summary — verify with the full judgment below
Assessee represented by Sh. P.M. Jagasheth CA Department represented by Sh. Mukesh Jain, Sr. DR Date of hearing 19/02/2025 Date of pronouncement 03/03/2025 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 the National Faceless Appeal Centre, Delhi (NFAC)/learned Commissioner of Income Tax (Appeals), [in short, the ld. CIT(A)] dated 07.10.2024 for the Assessment Year (AY) 2011-12. Though, the assessee has raised multiple grounds of appeal
, however, in our considered view, the substantial grounds of appeal relate to (i) validity of reopening under section 147 and issuance of notice under section 148, (ii) if ld. CIT(A) erred in confirming action of Assessing Officer (AO) in making addition of Rs. 98.60 lacs on account of unexplained expenditure/ purchases and (iii) if ld CIT(A) erred in not allowing sufficient opportunity and in passing ex-parte order.
2. Rival submissions of both the parties have been heard and record perused. The learned Authorised Representative (ld. AR) of the assessee submits that no fair and proper opportunity was given to the assessee during the hearing before ld Dipesh Naresh Sattarshakwala CIT(A). The assessee filed appeal in 2019. At the time of filing appeal, the assessee in Form-35 has given e-mail address of his AR as of “jagashethcal@gmail.com“ for the purpose of service of notice of hearing of appeal. However, no notice was sent through such email address, rather notice was sent through different email at dipesh_17shakwala@yahoo.com, which was discovered on visiting ITBA portal. It was revealed that only one notice under section 250 was sent through such email address that to on 28.01.2021, which was severe Covid Pandemic period, copy of screen shot of ITBA portal is filed on record. The impugned order was passed on 07.10.2024. The appeal of the assessee was pending since 2019. The assessee was not served with notice of appeal, thus, prevented in making compliance of such notices for the reasons explained hereinabove. The assessee has good case on merit, and is likely to succeed, if one more opportunity may be allowed to the assessee to contest his appeal on merit. The Assessing Officer (AO) also passed ex-pate assessment order by disallowing entire expenses/the alleged bogus purchases. The ld CIT(A) also passed ex-party order without discussing merits of the case. The ld. AR of the assessee submits that the AO also passed assessment order for the want of submissions. The ld. AR of the assessee submits that he undertakes on behalf of assessee to be more vigilant in future in complying the notices issued by the lower authorities and would file his submissions of first date of hearing by either of the lower authority. He prayed to restore the matter back to the file of AO.
In alternative and without prejudice submissions, the ld AR of the assessee submits that AO in his finding has recorded that assessee is in the business of cheque discounting and provided bogus bills and that during assessment, the Dipesh Naresh Sattarshakwala assessee failed to provide details of fund trail. Thus, keeping in view of the business activities of assessee, a reasonable addition on account of commission on the alleged bogus billing may be sustained. Suart bench and Ahmedabad bench has added commission income ranging from 0.5% to 2.00% percent of turnover, and he is ready to offer @ 6.00% of alleged disputed transaction, and in case his submission is acceptable, than, he will not pressed any other legal or factual grounds of appeal
4. On the other hand, the learned Senior Departmental Representative (ld. Sr. DR), for the revenue submits that the assessee is habitual defaulter in making compliance. In case the Bench is of the view that the assessee deserves any relief, the matter may be restored back to the file of CIT(A) only with the direction to file appropriate reply and evidence to substantiate various issues.
5. We have considered the submissions of both the parties and have perused the orders of the lower authorities carefully.
6. We find that while passing assessment order, the AO made addition of Rs. 59.36 lacs on account of cash deposits during demonetization and further addition of Rs. 98.60 lacs bogus expenditure/ purchase / transaction with Dhawal Govindbhai Patel, who was providing cheque discounting. The ld CIT(A) confirmed the action of AO in ex-parte order. We find that the assessee filed appeal on 01.01.2029, however, first notice was issued to the assessee on 28.01.2021, through email, other than email provided on Form-35. Admittedly only one notice was issued to the assessee on 28,01.2021, yet the impugned order was passed on 07th October 2024, that is after more than three and half year of issuing notice to the assessee. In our considered view, the assessee was not allowed fair and reasonable to Dipesh Naresh Sattarshakwala contest the appeal, thus, order passed by the ld CIT(A) is set aside. On careful consideration of facts and the submissions of ld AR of the assessee, we are of the view that the assessee is interested in pursuing his appeal on merit. Further, considering the facts that substantial rights of the assessee are involved in the present case and both the lower authorities have passed order ex-parte and / or for the want of compliance, therefore, the matter is restored back to the file of AO to pass assessment order afresh and in accordance with law. Needless to direct that before passing the order, the AO shall grant fair and reasonable opportunity of hearing to the assessee. The assessee is also directed to be more vigilant in future and not to cause further delay and seek adjournment without any valid reason and to furnish all the details and his submissions and evidences on various grounds of appeal raised, as soon as possible. Considering the facts that we have restored the matter back to the file of AO, therefore, adjudication on alternative submissions of the assessee have become academic. In the result, the grounds of appeals raised by the assessee are allowed for statistical purposes.