KARKUVEL PANDIAN SOUNDARAPANDIAN ,TUTICORIN vs. ITO, WARD-2, TUTICORIN, TUTICORIN

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 10.03.2025 for the Assessment Year (hereinafter referred to as ‘AY‘) 2018-19.

At the outset, the Ld.AR of the assessee brought to our notice that the appeal has been filed belatedly by ‘62’ days and for condoning the delay, the assessee has filed an affidavit explaining the cause for the delay. Having gone through the contents of the same, we find that cause for delay was reasonable, so we excuse the same and proceed to hear the assessee’s appeal.

The Ld.Counsel for the assessee submitted that the order of the Ld.CIT(A) is an ex parte order qua assessee and therefore prayed for one more opportunity to assail the impugned addition made by the Assessing Authority. He also brought to our notice that the AO has passed an ex parte order. And the Ld.AR further submitted that the AO has passed the assessment order without due application of mind and the order is bad since it is riddled with mistakes. In this regard, he brought to our notice that the AO has incorrectly noted the total credit in the Union Bank of India in the name of the assessee to the tune of ₹12,98,28,774/- whereas according to him the actual total credit was ₹1,56,42,582/-; and also drew our attention to the grounds raised and submitted that even the GST return has been filed which indicates a turnover of only ₹1,25,80,814/-; and submitted that there are many other mistakes which have crept into the order which makes the assessment incorrect and causes grave injustice to the assessee and therefore prayed for one more opportunity before the AO on the ground that assessee didn’t get proper (AY 2018-19) Karkuvel Pandian Soundarapandian opportunity before the AO. For such a proposition, he relied on the decision of the Hon’ble Supreme Court in the case of TIN Box Co. v. CIT reported in [2001] 249 ITR 216 (SC).

Per contra, the Ld.DR 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 didn’t file his ITR for AY 2018-19 and subsequently, the AO reopened the assessment by issuing notice u/s.148 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act‘) on 12.04.2022. However, the assessee didn’t file the ITR in response to the notice u/s.148 of the Act. The AO taking note that there was huge amount of cash deposits as well as withdrawal in the current account of the assessee, called for the statement of the bank account of the assessee and noted that the total cash deposits and other credits into two bank accounts of the assessee was to the tune of ₹14,07,11,080/- [which amount has been disputed by the assessee]. According to the AO, he had issued several notices to the assessee, but none were responded; and in the absence of any reply from the assessee, the AO completed the assessment proceedings by treating the credits in the bank accounts as assessee’s business income and computed the business income @10% of total credits and made an addition of ₹1,40,71,108/- by passing best (AY 2018-19) Karkuvel Pandian Soundarapandian judgment assessment u/s.144 of the Act. On appeal, the Ld.CIT(A) has noted that despite assessee given four (4) opportunities, the assessee didn’t bother to respond. However, the Ld.CIT(A) gave partial relief to the assessee by applying the special provision for computing profits & gain of business on presumptive basis u/s.44AD of the Act, directed the AO to compute the taxable profit @8% instead of 10%.

Before us, the Ld.AR submitted that due to the glitches in the system, the notices issued by the Ld.CIT(A) went to the ‘spam’ account and therefore, assessee/the Ld.AR was in the dark about the appellate proceedings going on before the Ld.CIT(A); and therefore couldn’t participate in the same which resulted in passing of the impugned appellate order and therefore prayed for one more opportunity. Having said so, he also drew our attention to the assessment order which is also passed ex parte order qua assessee. Considering the overall facts and the assessee’s assertion before us that there is several mistakes in the assessment order (especially the turn-over etc), we are inclined to set aside the impugned order and restore the assessment back to the file of the AO by relying on the decision of the Hon’ble Supreme Court in the case of TIN Box Co. v. CIT reported in [2001] 249 ITR 216 (SC). The Ld.AR undertakes to appear & file all relevant papers necessary for assessment and we expect him to be diligent before AO and the AO to (AY 2018-19) Karkuvel Pandian Soundarapandian denovo frame assessment in accordance to law after hearing the assessee.

In the result, appeal filed by the assessee is allowed for statistical purposes.