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Facts
The assessee, a Public Charitable Trust, did not file its ITR and audit report for AY 2020-21. The AO reopened the assessment due to credit/debit entries in the bank account and made additions, passing an ex-parte order under Section 144 of the Act due to non-response to notices. The CIT(A) also dismissed the appeal ex-parte for non-compliance with notices.
Held
The Tribunal noted that both the AO and CIT(A) passed ex-parte orders without giving the assessee a proper opportunity to be heard. Relying on the Supreme Court's decision in TIN Box Co. v. CIT, the Tribunal held that a reasonable opportunity must be given to the assessee before passing an assessment order.
Key Issues
Whether the assessee was denied a proper opportunity of being heard by the AO and CIT(A), leading to ex-parte orders.
Sections Cited
144
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Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI
Before: SHRI ABY T. VARKEY & SHRI S.R.RAGHUNATHA
आदेश / O R D E R
PER ABY T. VARKEY, JM:
1. This is an appeal preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeals)/NFAC, (hereinafter referred to as “the Ld.CIT(A)”), Delhi, dated 01.09.2025 for the Assessment Year (hereinafter referred to as "AY”) 2020-21.
2. At the outset, the Ld.AR of the assessee brought to our notice that the impugned order of the Ld.CIT(A) is an ex-parte order qua assessee.
It was further brought to our notice that the AO has also passed an ex- parte order qua assessee. Therefore, he pleaded that the matter may be (AY 2020-21) M/s. Mom Foundation restored back to the file of the AO since the assessee didn’t get proper opportunity before AO, as held by the Hon’ble Supreme Court in the case of TIN Box Co. v. CIT reported in [2001] 249 ITR 216 (SC).
The brief facts of the case are that the assessee is a Public Charitable Trust, which according to the AO didn’t file ITR and audited report for AY 2020-21. The AO noted that in the assessee’s bank account there was a total credit and debit of ₹2,75,34,792/- & ₹2,67,50,551/- respectively. According to the AO, as per Form 26AS, the assessee has received interest receipt of ₹6,90,840/- as the diductors has reported in their TDS return. Since the assessee couldn’t offer explanation on the fund of ₹2,75,34,792/- received in its bank account with Union Bank of India, the AO treated the said income under the head ‘income from other sources’ and also added interest income of ₹6,90,840/-. And made addition of ₹2,72,68,769/- by order dated 29.01.2025. Aggrieved, the assessee preferred an appeal before the Ld.CIT(A) who dismissed the appeal of the assessee taking note that the assessee didn’t respond to his four (4) notices by passing the impugned ex-parte order. Aggrieved, the assessee pleaded for restoring the assessment back to the file of the AO for de-novo assessment, since assessee didn’t get proper opportunity before the AO and for such a plea, cited the decision of the Hon’ble Supreme Court in the case of TIN Box Co. v. CIT reported in [2001] 249 ITR 216 (SC).
4. Per contra, the Ld.DR opposes the plea of the assessee and doesn’t want us to give one more innings to the assessee.
We have heard both the parties and perused the material available on record, we note that the assessee is a Public Charitable Trust, but didn’t file the ITR & audit report for AY 2020-21. The AO reopened the assessment of the assessee by taking note of the credit/debit in the accounts of the assessee. Since he didn’t respond to his notices, and obviously didn’t offer explanation on the fund of ₹2,65,77,929/- received by the assessee in its bank account with Union Bank of India, he made addition of the same under the head ‘income from other sources’ and also added interest income and thus, made total addition of ₹2,72,68,769/- by passing ex-parte order u/s.144 of the Act. According to the assessee, it didn’t receive any notices from the AO due to glitches in the system. On appeal, the Ld.CIT(A) also dismissed the appeal since the assessee didn’t comply with the notices and that too without going into the merits of the grounds of appeal raised by the assessee. Be that as it may. The main grievance of the assessee, in the facts and circumstance of the case is that it (assessee) didn’t get proper opportunity before the AO which led to passing of ex-parte order making huge addition of more than ₹2.72 Crs.
We find that the assessee didn’t get proper opportunity before the AO and therefore relying on the decision of the Hon’ble Supreme Court in the case
1. It is unnecessary to go into great detail in these matters for there is a statement in the order of the Tribunal, the fact-finding authority, that reads thus :
"We will straightaway agree with the assessee's submission that the Income-tax Officer had not given to the assessee proper opportunity of being heard."
That the assessee could have placed evidence before the first appellate authority or before the Tribunal is really of no consequence for it is the assessment order that counts. That order must be made after the assessee has been given a reasonable opportunity of selling out his case. We, therefore, do not agree with the Tribunal and the High Court that it was not necessary to set aside the order of assessment and remand the matter to the assessing authority for fresh assessment after giving to the assessee a proper opportunity of being heard.
3. Two questions were placed before the High Court, of which the second question is not pressed.
The first question reads thus:
"1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in not setting aside the assessment order in spite of a finding arrived at by it that the Income-tax Officer had not given a proper opportunity of hearing to the assessee?"
In our opinion, there can only be one answer to this question which is inherent in the question itself: in the negative and in favour of the asses- see.
5. The appeals are allowed. The order under challenge is set aside. The assessment order, that of the Commissioner (Appeals) and of the Tribunal are also set aside. The matter shall now be remanded to the assessing authority for fresh consideration, as aforestated. No order as to costs.
Respectfully following the decision of the Hon’ble Supreme Court in the case of TIN Box Co. (supra), we are inclined to set aside the impugned order of the Ld.CIT(A) and restore the assessment back to the file of the AO for de-novo assessment. The Ld.AR has undertaken to file all the relevant documents necessary for making its claim and is at liberty (AY 2020-21) M/s. Mom Foundation to file relevant documents to substantiate its claim. The AO is directed to frame fresh assessment in accordance to law after hearing the assessee.
In the result, appeal filed by the assessee is allowed for statistical purposes.
Order pronounced on the 11th day of February, 2026, in Chennai.