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Facts
The assessee deposited cash totaling Rs. 18,96,500 in FY 2016-17 but failed to file an Income Tax Return for AY 2017-18 or respond to statutory notices. Consequently, the Assessing Officer completed an ex-parte assessment under Section 144, treating the deposits as unexplained cash credit under Section 69 read with Section 115BBE. The CIT(A) subsequently dismissed the assessee's appeal, affirming the ex-parte assessment.
Held
The Tribunal found that there was no effective representation by the assessee before the lower authorities, and the orders were passed ex-parte without providing adequate opportunity. To ensure natural justice and allow the assessee to properly present their case, the Tribunal set aside the orders of the lower authorities. The matter is restored to the Assessing Officer for a fresh (de novo) assessment, with instructions to provide a reasonable opportunity of being heard to the assessee.
Key Issues
Whether lower authorities erred in passing ex-parte orders without effective representation and without deciding on merits; validity of cash addition under Section 69/69A read with Section 115BBE; and validity of assessment order without DIN.
Sections Cited
250, 69A, 144, 69, 115BBE
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH “SMC”: NEW DELHI
Before: SHRI KUL BHARAT & SHRI DR. B.R.R. KUMAR
O R D E R PER KUL BHARAT, JM:
This appeal, by the assessee, is directed against the order of the National Faceless Appeal Centre (NFAC), Delhi, dated 29.11.2023, pertaining to the assessment year 2017-18. The assessee has raised following grounds of appeal:
“1. On the facts and circumstances of the case, the order passed by the National Faceless Appeal Centre (NFAC), Delhi u/s 250 of the Act is bad both in the eye of law and on facts 2. On the facts and in the circumstances of the case and law, NFAC has erred in passing the Ex-parte order The NFAC has not followed the Rules of natural justice
3. That the NFAC erred in dismissing the appeal filed by the assessee on the grounds of non-compliance by the assessee and without verifying the facts of the case. The assessee therefore prays that the impugned order be set aside.
4. On the facts and in the circumstances of the case and law, the NFAC has erred in deciding the appeal Ex-parte without deciding the appeal on merits as laid down in CIT v. S. Chennaiappa Mudaliar (1969) SC (591) and Balaji Steel Re-rolling Mills V. Commissioner Excise & Customs (2014) 52 taxmann.com 107 (SC) case 5 On the facts and circumstances of the case and law the NFAC made an error in upholding the addition of Rs 18,96,500/- on account cash deposited and cash credited in the bank account under section 69A of the Act. 6. That the NFAC further gravely erred in upholding the validity of the assessment order despite the fact that the proceedings had not been conducted in the manner prescribed by the department instructions from time to time which were mandatory for compliance by the Learned Assessing Officer since the impugned order was passed without mentioning DIN on the assessment order and the demand order. 7 The appellant craves leave to add, amend or alter any of the grounds of appeal
.”
2. Facts, in brief, as recorded in the assessment order, are that the Assessing Officer had received information that in F.Y. 2016-17 relevant to A.Y. 2017-18, the assessee had deposited cash amounting to Rs. 13,95,000/- during demonetization period and Rs. 5,01,500/- during remaining period of financial year and that the assessee did not file his return of income for the relevant assessment year. As per assessment order, the assessee did not response to the statutory notices issued requiring him to file return for A.Y. 2017-18 and explain the source of cash deposits. Therefore, AO proceeded to make assessment u/s 144 of the Act and vide order dated 25.12.2019, completed the assessment at an income of Rs. 18,96,500/-
69 read with section 115BBE of the Act. Aggrieved against it the assessee preferred appeal to the learned CIT(A), who dismissed the appeal and affirmed the assessment order.
Aggrieved against it, now the assessee is in appeal before this Tribunal.
Learned counsel for the assessee submitted before us that there was no effective representation on behalf of the assessee before the authorities below. He submitted that in the impugned assessment order the AO himself recorded that reply was received from the A.R. of the assessee along with POA. However, without affording further opportunity to the assessee the AO proceeded to complete the assessment ex parte to the assessee u/s 144 of the Act. He submitted that in appeal the learned First Appellate Authority dismissed the appeal, ex parte, to the assessee in limine. He prayed that orders of the authorities below may be set aside for decision afresh after providing an opportunity of being heard to the assessee.
Per contra, learned DR opposed the submissions and relied on the orders of authorities below.
We have heard rival submissions and perused the material available on record. Considering the fact that there was no effective representation on behalf of the assessee before the authorities below, in order to subserve the interests of natural justice and to provide an opportunity to the assessee to effectively represent his case, the orders of authorities below are set aside and the matter is restored to the file of Assessing Officer for assessment de novo, after providing reasonable opportunity of being heard to the assessee. Grounds are allowed for statistical purposes.
Appeal of the assessee is allowed for statistical purposes.
Order pronounced in open court on 24th April, 2024.