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Facts
The assessee, due to prolonged illness, failed to file income tax return and was assessed ex-parte u/s 144, with cash deposits in the bank account treated as undisclosed income, leading to a demand of Rs. 20,01,615/-. The CIT(A) also dismissed the appeal ex-parte, allegedly without providing proper hearing, as notices were not received by the assessee.
Held
The Tribunal held that the assessee was denied adequate opportunity of being heard at both the assessment and first appellate stages. It found the CIT(A)'s ex-parte dismissal based on insufficient email notices erroneous and, in the interest of justice, restored the matter to the Assessing Officer for a fresh assessment after affording proper opportunity to the assessee.
Key Issues
Whether the ex-parte assessment and subsequent ex-parte dismissal of appeal by CIT(A) violated principles of natural justice by denying the assessee adequate opportunity of being heard.
Sections Cited
Section 250, Section 144, Section 143(3), Section 44AD
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI ‘SMC’ BENCH,
Before: SHRI ANUBHAV SHARMA, & SHRI NAVEEN CHANDRA
PER NAVEEN CHANDRA, ACCOUNTANT MEMBER:-
This appeal by the assessee is preferred against the order of the NFAC, Delhi dated 12.02.2024 pertaining to A.Y 2010-11.
2. The grievances of the assessee read as under:
“1. The commissioner of appeal was wrong in dismissing the appeal of the appellant.
The commissioner of appeal was wrong on the facts and circumstances of the case, the exparte appellate order passed by the Hon’ble CIT Appeals under Section 250 of the Act lacks the law of natural justice as the appeal dismissal order has been passed without the appellant being heard.
3 The commissioner of appeal was not justified in dismissing the appeal of the appellant without giving him proper opportunity of being heard.
4. The commissioner of appeal has ignored the fact that the appeal was filed long back in 2018 and transferred from the physical mode to faceless mode after a long gap, but the appeal is dismissed by giving just two email notices.
5. The commissioner of appeal has wrongly presumed that the two email notices sent by him have been received to the appellant and appellant was not willing to peruse the appeal.
6. The commissioner of appeal has ignored the fact that the appellant was not heard at the assessment stage and dismissing the appeal at short notice may cause a great injustice to the appellant as the income assessed by the Ld. AO is substantially higher than the actual income of the appellant.
The commissioner of appeal was wrong in not making a direction to the Ld. Assessing officer to assess the income of the appellant by giving appellant an opportunity of being heard.
8. The commissioner of appeal was wrong in dismissing the appeal of the appellant ignoring the merit of the appeal filed which seeks the remand of the case to the Ld. AO for correct assessment of income.
9. That the appellant craves leave to add, amend, or alter any of the grounds of appeal.”
Briefly stated, the facts of the case are that the assessee is an individual and was not able to file his return of income due to his critical and prolonged illness. The assessee was assessed u/s 144 r.w.s 143(3) of the Income-tax Act, 1961 [the Act, for short] and a demand of Rs. 20,01,615/- was raised on him by the Assessing Officer.
The demand was in respect of cash deposit into the bank account by the assessee. The Assessing Officer treated the entire cash deposit in the bank account as undisclosed income of the assessee.
It is the contention of the ld. counsel for the assessee that the assessee has deposited tax and interest which is reflected in the return of income filed u/s 44AD of the Act. The ld. counsel for the assessee submitted that all the notices sent to his old address by the Assessing Officer were not received by him and the assessee was not able to explain facts and figures before the Assessing Officer.
Not satisfied with the explanation tendered by the assessee, the Assessing Officer passed an ex parte order.
7. Aggrieved, the assessee went in appeal before the ld. CIT(A) who also dismissed the appeal exparte as the assessee was not in receipt of the notice.
Now the further aggrieved assessee is in appeal before us.
Before us, the ld. counsel for the assessee vehemently stated that the assessee is a small business person and lost all his business due to bad health and indebtedness. The assessee had no source to deposit the same and the matter should be reheard. It is the say of the ld. counsel for the assessee that the assessee has sufficient documentary evidences and has reason to believe that after assessment the demand raised shall be reduced to zero. The ld. counsel for the assessee further submitted that there is no accumulation of income on account of deposit in the bank account. It is the say of the ld. counsel for the assessee that the dismissal order has been passed without the appellant being heard and the ld. CIT(A) was not justified in dismissing the appeal of the assessee without giving him proper opportunity of being heard.
Per contra, the ld. DR relied upon the orders of the authorities below.
We have heard the rival submissions and have perused the relevant material on record. We note that the appeal was filed long back in 2018 before the ld CIT(A) and transferred from the physical mode to faceless mode after a long gap, but the appeal was dismissed by the ld CIT(A) by giving just two email notices. The ld. CIT(A) presumption that the two email notices sent by him have been received by the assessee and the assessee was not willing to pursue the appeal appears to be erroneous.
We are of the considered opinion that the fact that the assessee was not heard at the assessment stage and the CIT(A) dismissing the appeal at short notice, may cause great injustice to the assessee as the income assessed by the Assessing Officer is substantially higher than the actual income of the assessee. We feel that no adequate opportunity of being heard was given to the assessee.
In that view of the matter, in the interest of justice and fair play, we restore the issue to the file of the Assessing Officer. The assessee is directed to furnish the original documents for verification and the Assessing Officer is directed to examine the same and decide the issue as per the provisions of law after affording reasonable and sufficient opportunity of being heard to the assessee.
In the result, the appeal of the assessee in is allowed for statistical purposes.
The order is pronounced in the open court on 11.10.2024.