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Facts
The assessee's income tax return was subjected to scrutiny, leading to a fresh assessment under sections 143(3) r.w.s. 263 where an addition of Rs. 38,70,146/- was made for unexplained cash deposits under section 69A. The assessee's appeal before the CIT(A) was dismissed ex-parte due to non-appearance, upholding the addition.
Held
The Tribunal held that the CIT(A) violated principles of natural justice by dismissing the appeal ex-parte without affording the assessee an effective opportunity of being heard, especially since the matter involved a substantial addition under section 69A requiring proper factual examination. Consequently, the Tribunal set aside the CIT(A)'s order and remanded the case for fresh adjudication on merits, imposing a cost of Rs. 10,000/- on the assessee for their conduct.
Key Issues
Whether the CIT(A) was justified in dismissing the appeal ex-parte without providing adequate opportunity of being heard, and the validity of the addition under Section 69A for unexplained cash deposits.
Sections Cited
Section 250 of the Income Tax Act, 1961, Section 143(3) of the Income Tax Act, 1961, Section 263 of the Income Tax Act, 1961, Section 69A of the Income Tax Act, 1961
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िनधा"रती की ओर से/Assessee by : Shri Parveen Sharma, Virtual राज" की ओर से/ Revenue by : Shri Dr. Ranjit Kaur, Addl. CIT, Sr. DR सुनवाई की तारीख/Date of Hearing : 18/03/2026 उदघोषणा की तारीख/Date of Pronouncement : 19/03/2026 आदेश/Order PER LALIET KUMAR, J.M: This appeal filed by the assessee is directed against the order passed by the Ld. Commissioner of Income Tax (Appeals), Addl./JCIT (A)-2, Gurugram dated 26.06.2025 for the assessment year 2014-15 passed under section 250 of the Income Tax Act, 1961.
The brief facts of the case, as borne out from the record, are that the assessee filed return of income declaring income of Rs. 4,26,660/-. The case was selected for scrutiny and assessment was originally completed under section 143(3). Subsequently, the said assessment was set aside by the Ld. Principal Commissioner of Income Tax under section 263 and thereafter fresh assessment was framed under section 143(3) r.w.s. 263, wherein the Assessing Officer made addition of Rs. 38,70,146/- on account of cash deposits treating the same as unexplained money under section 69A of the Act.
Aggrieved against the said assessment order, the assessee preferred appeal before the Ld. CIT(A). However, it is noticed from the appellate order that despite issuance of various notices, the assessee did not appear nor filed any submission before the Ld. CIT(A), and consequently, the Ld. CIT(A) proceeded to decide the appeal ex-parte and confirmed the addition made by the Assessing Officer.
Before us, the grievance of the assessee, as raised in the grounds of appeal, is that the Ld. CIT(A) was not justified in dismissing the appeal without providing adequate opportunity of being heard and thus violated the principles of natural justice. It has further been contended that the addition sustained by the Ld. CIT(A) is unsustainable in law.
The Ld. Departmental Representative, on the other hand, relied upon the orders of the lower authorities and submitted that sufficient opportunities were granted to the assessee and therefore the Ld. CIT(A) was justified in deciding the matter on the basis of material available on record.
We have heard the rival submissions and perused the material available on record. It is an undisputed fact that the Ld. CIT(A) has dismissed the appeal primarily on account of non-compliance by the assessee and has adjudicated the issue without the benefit of any effective representation from the assessee’s side. Though the Ld. CIT(A) has referred to issuance of notices, however, considering the entirety of facts and circumstances, we are of the considered view that the matter deserves to be restored for fresh adjudication.
It is a settled principle of law that the appellate proceedings are continuation of assessment proceedings and the assessee should be afforded reasonable and effective opportunity of being heard. The right to be heard is a fundamental facet of principles of natural justice, and any order passed in violation thereof cannot be sustained. In the present case, the issues involved pertain to addition under section 69A on account of cash deposits, which require proper examination of facts and evidences. In absence of adequate representation, the matter has not been examined in proper perspective.
Considering the totality of facts, and in the interest of justice, we deem it appropriate to set aside the impugned order of the Ld. CIT(A) and restore the matter back to his file for fresh adjudication on merits after providing reasonable opportunity of being heard to the assessee. The assessee is also directed to cooperate in the appellate proceedings and not to seek unnecessary adjournments.
However, considering the conduct of the assessee in not pursuing the appeal before the Ld. CIT(A), we deem it fit to impose a cost of Rs. 10,000/-, which shall be deposited by the assessee in the Indira Gandhi Medical College & Hospital (IGMC), Shimla, Himachal Pradesh, within a period of one month from the date of receipt of this order. The Ld. CIT(A) shall afford opportunity only after verifying the deposit of the aforesaid cost.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 19/03/2026. - लिलत कुमार (LALIET KUMAR) "ाियक सद" /JUDICIAL MEMBER AS आदेश की "ितिलिप अ"ेिषत/ Copy of the order forwarded to :