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Income Tax Appellate Tribunal, RAIPUR BENCH, RAIPUR
Before: SHRI PARTHA SARATHI CHAUDHURY, JM & SHRI ARUN KHODPIA, AM
आदेश / O R D E R Per Arun Khodpia, AM:
The captioned appeal filed by the assessee is directed against the order of the Commissioner of Income Tax (Appeal), [in short “Ld. CIT(A)”], National Faceless Appeal Centre (NFAC) passed under section 250 of the Income Tax Act, 1961 (in short “the Act”), dated 27.11.2024, for the Assessment Year 2017-18, which in turn arises from the assessment order u/s 144 of the Act, dated 27.09.2019, passed by the Income Tax Officer, Ward-1(2), Bilaspur (in short “Ld. AO ”).
The grounds of appeal raised by the assessee are as under:
“1. . That under the facts & the law, the Ld. CIT (Appeals) erred in upholding the Order of the Ld. AO passed u's 144 which is without jurisdiction as the Notice u/s 142(1) was issued by Ld. AO, Ward-2, Korba, the assessment has been made by Ld. ITO-1(2), Bilaspur, whereas the assessee resides in Raipur. Prayed that there is no jurisdiction to issue Notices & to make assessment, prayed to annul the Assessment Order.
2. That under the facts and the law, the Ld. CIT (Appeals) erred in passing the Order ex-parte, which is arbitrary, without allowing opportunity to the Appellant as the notices were not noticed by the appellant & also for the probable reason that Ld. CIT(A) appears to have mailed Notices on e-mail Id "srikant.kumar387@gmail.com" as mentioned in the order at Pg 4, which is not Email Id of Appellant, the correct Email Id of Appellant is "rakesh@imipl.com". Prayed to delete the addition of Rs. 1,78,96,250/-.
3. That under facts & the law, the Ld. CIT (Appeals) further erred in dismissing the Appeal ex- parte without considering the facts explained before him that the Appellant has disclosed the cash of Rs. 1,87,00,000/- before the Ld. PCIT, Raipur, u/s 183 of the Finance Tax Act, 2016 for the year under consideration on 29.09.2016 which has been accepted by him and Certificate has been issued by him vide Certificate dated 24.04.2019. The Ld. CIT (Appeals) further erred in not appreciating that the Appellant was filing Return of Income and above Declaration before Ld. PCIT, Raipur under the PAN – AAKHS1332K whereas, another PAN AANHS4080F was erroneously taken and immediately it was applied for cancellation when the mistake came to knowledge. Department was considering second PAN i.c. AANHS4080F, for assessment and appeals. Prayed that deposit into Bank is duly covered in above Declaration of Rs. 1,87,00,000/- . Prayed to delete the addition of Rs.1,78,96,250/-.
4. That under the facts and the law, prayed that the Appellant is regularly filing the Return of Income including of the year under consideration under the PAN-AAKHS1332K, which the Ld. AO, who is AO for both the PANs and the Ld. CIT (Appeals) erred in not considering the same. Prayed to delete the addition of. Rs.1,78,96,250/-.
5. That under the facts and the law, without prejudice to above, the Ld. AO erred in considering that cash deposit into the Bank is Rs. 1,78,96,250/-, whereas the actual cash deposit made is less by Rs.13,00,000/- i.e., Rs.1,65,96,250/-. Prayed to delete the addition of Rs.1,78,96,250/-.”
The concise facts of the case are that the assessment in the case of the assessee u/s 144 was completed on 27.09.2019, wherein the assessed income of the assessee has been determined at Rs.1,78,96,250/- by making an addition on account of unexplained money u/s 69A, as the cash deposits made by the assessee (HUF) in its bank account maintained with the Union Bank Of India, Samta Colony Branch, Raipur could not be explained by the assessee. It is observed by the AO that, the assessee has failed to furnish Sunil Kumar Agrawal and Sons vs. Income Tax Officer, Ward 1(2) return of income for the assessment year 2017-18 in compliance to provision of sub-section (1) of section 139 of the Act, also the assessee has failed to comply with the notice issued u/s 142(1) to furnish information related to cash deposits made during the demonetization period.
Aggrieved with the aforesaid addition, the assessee preferred an appeal before the Ld. CIT(A), challenging the justification of aforesaid additions, however, the appeal is dismissed on account of no response/compliance by the assessee.
Dissatisfied with the aforesaid order of Ld. CIT(A), the assessee preferred an appeal before us, which is under consideration in the present case.
At the outset, it is mentioned by the Ld. AR that the appeal filed by the assessee is delayed by 162 days. In this respect, Ld. AR representing the assessee submitted the prayer for condonation of delay, raising contentions that the delay had occurred on account of circumstances beyond control of the assessee, as the assessee while filing the appeal memo before the Ld. CIT(A), NFAC in Form No.35 against the column “whether notices/communications may be sent on e-mail”, had opted “NO”. It was, therefore, prayer that the assessee was under Bonafide belief that the notice of hearing and order would be received by it in physical form. On same parity Sunil Kumar Agrawal and Sons vs. Income Tax Officer, Ward 1(2) it was the belief of assessee that the order passed by the Ld. CIT(A) would receive in physical form only, but it was never serviced on the assessee in physical form. Considering these facts, the delay in filing the appeal is found to be unintentional, beyond the control of the assessee and on account of circumstances for which the assessee was prevented from filing the appeal on time. Regarding condonation of delay, looking to circumstances of the matter, Ld. Sr. DR has not raised any objection. Accordingly, the delay is condoned and the matter is taken up for adjudication.
7. Further, on perusal of impugned order of Ld. CIT(A) at paragraph No.4, it is noticed that the appellant was issued notices to furnish the details and submissions on several occasions, such as, 17.08.2023, 04.09.2023 and 07.10.2024, however, even after due services of these notices electronically on the registered e-mail ID of the assessee and on the ITBA system, the appellant has not responded to any of these hearing notices. Accordingly, the appeal of assessee is disposed of by Ld. CIT(A) on ex-parte basis.
8. In backdrop of the aforesaid facts and circumstances of the instant case, wherein the impugned order which is assailed by the assessee before us, passed by the Ld. CIT(A) was an ex-parte order and the assessee had never put up an appearance before him, neither any written submission to explain about the justification of additions was furnished by the assessee, Sunil Kumar Agrawal and Sons vs. Income Tax Officer, Ward 1(2) therefore, the case of assessee is squarely covered by the decision of ITAT, Raipur in the case of Brajesh Singh Bhadoria Vs. Dy./ Asstt. Commissioner of Income Tax, Central Circle-2, in IT(SS) No. 1 to 6, 8 & 9/RPR/2025 dated 20.03.2025, wherein our findings are as under:
We have considered the submissions of the parties herein and analyzed the facts and circumstances involved in all the captioned appeals. After careful perusal of the documents on record, we find that the assessee had assailed the legal ground as aforestated, however, the fact of the matter is that on perusal of the respective orders of the Ld. CIT(Appeals) for all the years before us, it is also evident from Para 3 that there has been no compliance by the assessee before the said authority and as such, an ex-parte order was passed for the concerned years in appeal. Admittedly, as per record, sufficient opportunities had been provided to the assesse, however, there was no compliance by the assessee. In effect, rights and liabilities of the parties herein are yet to be adjudicated substantially at the level of the first appellate authority. Though in the impugned orders, discussion has been done as per material available on record by the Ld. CIT(Appeals) but they are only Form 35, statement of facts, grounds of appeal and the assessment order. However, due to non-compliance by the assessee, there are no submissions, evidence and documents submitted for adjudication by the assessee before the Ld. CIT(Appeals). That as per Para 3 of the Ld. CIT(Appeals) order, there has been no compliance on the part of the assessee for submitting detailed explanations regarding the grounds of appeal for the years under consideration which clearly shows that the grounds of appeal raised before the first appellate authority has not been substantiated on merits through corroborative evidence /submissions.
That in such scenario we are of the considered view that the Income tax Act is within the ambit of welfare legislation which are completely different from that of Sunil Kumar Agrawal and Sons vs. Income Tax Officer, Ward 1(2) the penal legislation, therefore, benefit of doubt whenever arises, it has to be interpreted in favour of the assessee tax payer within the parameters of law and facts. There may be circumstances beyond control of the assessee because of which, the assessee may not have been able to represent his case on the given dates of hearing before the Ld. CIT(Appeals). Though it is correct that there was no compliance from the side of the assessee, however, nothing is there on record which suggests any deliberate non-compliance or malafide conduct of the assessee. That further, if one final opportunity is provided to the assessee to represent his case before the first appellate authority, the position of the revenue will also not be jeopardized.
Recently, the Hon’ble High Court of Bombay in the case of Vijay Shrinivasrao Kulkarni Vs. Income-tax Appellate Tribunal (2025) 171 taxmann.com 696 (Bom.), dated 04.02.2025 observed that in the case the Assessing Officer had passed an ex-parte order and when the matter went on appeal before the Ld. CIT(Appeals)/NFAC, it had also dismissed the matter ex-parte due to non- compliance by the assessee’s authorized representative, when the matter came up before the ITAT, it had failed to address the infirmity regarding the fact that the assessee was not afforded proper opportunity of being heard and the matter was dismissed ex-parte by the Ld. CIT(Appeals)/NFAC which amounted to violation of principles of natural justice, and instead ITAT decided the case on merits, in such circumstances, the Hon’ble High Court of Bombay held that passing of an order on merits by the ITAT even when the impugned order was passed ex-parte amounts to violation of principles of natural justice and accordingly, the said matter was remanded to ITAT for passing a fresh order in accordance with law after hearing the parties. The legal principle as enshrined in the present judgment is crystal clear that the principles of natural justice i.e. the right to be heard is to be provided and accordingly, the matter had to be substantially adjudicated by the appellate authority. Therefore, if the impugned order of the Ld. CIT(Appeals)/NFAC is an ex-parte order, the only recourse in conformity with the aforesaid judicial Sunil Kumar Agrawal and Sons vs. Income Tax Officer, Ward 1(2) pronouncement is to remand the matter back to the file of the Ld. CIT(Appeals)/NFAC for fresh adjudication in terms with the principles of natural justice providing one final opportunity to the assessee.
10. In the aforesaid case, the Hon’ble High Court of Bombay had referred to a judgment of the Hon’ble Supreme Court in the case of Delhi Transport Corporation vs. DTC Mazdoor Union AIR 1999 SC 564, wherein the Supreme Court inter-alia held that Article 14 guarantees a right of hearing to a person who is adversely affected by an administrative order. The principle of audi-alteram partem is a part of Article 14 of the Constitution of India. In light of such decision, the petitioner ought to have been granted an opportunity of being heard which, partakes the characteristic of the fundamental right under Article 14 of the Constitution of India.
The Hon’ble High Court of Bombay in the aforesaid case had referred to a decision of the Hon’ble Supreme Court in the case of Commissioner of Income Tax Madras v. Chenniyappa Mudiliar 1969 1 SCC 591, wherein the Supreme Court in interpreting the section 33(4) of the Income Tax Act, 1922 has held that the appellate tribunal was bound to give a proper decision on question of fact as well as law, which can only be done if the appeal is disposed off on merits and not dismissed owing to the absence of the appellant. Reverting to the facts of the present case the grounds of appeal were simply filed before the Ld.CIT(Appeals) they were not substantiated or corroborated through submissions and filing of documentary evidences since the assessee had not complied before the Ld.CIT(Appeals) on the dates of hearing. Therefore, as per framework of the Act there must be adjudication on merits by the first appellate authority and one final opportunity be provided to the assessee to represent his matter on merits in the interest of natural justice.
12. There may even be a situation where the Ld. Counsel for the assessee may assail a legal ground before the Tribunal following the decision of the Hon’ble Sunil Kumar Agrawal and Sons vs. Income Tax Officer, Ward 1(2) Supreme Court in the case of National Thermal Power Company Ltd. Ltd. Vs. CIT (1998) 229 ITR 383 (SC) with a contention that irrespective of the order of the Ld. CIT(Appeals) being ex-parte, the Tribunal may decide the legal issue that has been raised by the Ld. Counsel. In our view, the decision of the Hon’ble Supreme Court in the case of National Thermal Power Company Ltd. Ltd. Vs. CIT (supra) provides that any legal issue which goes to the root of the matter and is established through legal principles, the assessee can take up and raise such legal issue at any appellate forum irrespective of whether the assessee had raised such legal issue at the sub-ordinate level or not, however, it always depends on facts and circumstances of each case whether the Tribunal would decide the legal ground or in a case where the question is of natural justice and ex-parte order by the Ld. CIT(Appeals) the Tribunal would remand it back to Ld. CIT(Appeals) providing final opportunity to a bonafide assessee. The Tribunal as the highest fact finding authority must be certain enough that the impugned order before it has been passed on merits and is a speaking order where the assessee has also complied during the process of litigation. In case, where the order of the Ld. CIT(Appeals) itself is ex-parte and some legal ground is raised and if the Tribunal decides such legal ground where in fact principles of natural justice is left unanswered due to the fact that the impugned order before the Tribunal is ex-parte and there was no compliance by the assessee in such scenario the Tribunal would also be usurping the power of the Ld. CIT(Appeals) which is also a statutory authority as per the Act. This is due to the reason that as per framework of the Act, Ld. CIT(Appeals) is the first appellate authority where an appeal by assessee it would be substantially decided through a speaking order by the Ld. CIT(Appeals). When this part is over and either party is aggrieved second appeal lies before the ITAT. Now if for every ex-parte order passed by the Ld. CIT(Appeals), of course due to non- compliance by the assessee, if the Tribunal adjudicates a legal ground, for instance validity of assessment or reassessment order and answers it in favour of the assessee then it would create an easy route for assessee getting redressal Sunil Kumar Agrawal and Sons vs. Income Tax Officer, Ward 1(2) from Tribunal even without bothering to comply with hearing notices before the Ld. CIT(Appeals). This would dismantle the structure of the Act which is definitely not the intention of the legislature. Here in this situation, where the benefit of doubt is given to the assessee since he had not complied with the hearing notices before the Ld. CIT(Appeals) which resulted in passing of an ex- parte order by the Ld. CIT(Appeals), in such scenario, as per the scheme of the Act and following the principles of natural justice, the only course of action is to remand the matter back to the file of the Ld. CIT(Appeals) for adjudication on merits providing one final opportunity to the assessee.
In view thereof, we set aside the respective orders of the Ld. CIT(Appeals) for all the years and remand the same to their file for denovo adjudication on merits. At the same time, we direct the assessee that this being the final opportunity, there must be compliance on merits before the first appellate authority. Needless to say, the Ld. CIT(Appeals) shall provide reasonable opportunity of being heard to the assessee and pass an order in terms of Section 250(4) and (6) of the Act within three months from receipt of this order.
9. In view of aforesaid facts and circumstances, respectfully following the aforesaid decision in the case of Brajesh Singh Bhadoria (supra), without dealing with the ground of appeal raised by the assessee on its merits, we find it appropriate to provide one last and final opportunity to the assessee to represent its case before the First Appellate Authority, to which both the parties herein have fairly agreed. Accordingly, the matter is restored back to the files of Ld. CIT(A) for fresh adjudication within a period of 3 months from the receipt of this order.
Needless to say, the assessee shall be afforded with reasonable opportunity of being heard in the set aside appellate proceedings. The assessee is also directed to cooperate and assist proactively in the set aside proceedings, failing which no further opportunities shall be provided, and the Ld. CIT (A) would be at liberty to decide the case in accordance with the mandate of law.
Order pronounced in the open court on 31/07/2025.