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Facts
The AO received information regarding the assessee's cash deposits of Rs. 27,00,000/- in a savings bank account. Due to the assessee's non-compliance with verification letters and statutory notices, the AO initiated proceedings under section 147 and completed an ex-parte assessment under section 147/144, making an addition of Rs. 27,00,000/- as unexplained cash credits. The learned CIT(A) subsequently affirmed the AO's action.
Held
The Tribunal observed that there was no effective representation by the assessee before the lower authorities and that the CIT(A) had not decided the appeal on its merits. Consequently, the impugned order was set aside, and the matter was restored to the file of the learned CIT(A) to decide the grounds of appeal afresh after providing the assessee a due opportunity of being heard, in adherence to the principles of natural justice.
Key Issues
Whether the addition of unexplained cash credits was justified when the assessment and first appeal were conducted ex-parte without providing the assessee sufficient opportunity of being heard, violating principles of natural justice.
Sections Cited
Section 69A, Section 147, Section 144
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Income Tax Appellate Tribunal, DELHI BENCH “SMC”: NEW DELHI
Before: SHRI KUL BHARAT
This appeal, by the assessee, is directed against the order of the learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, dated 09.05.2023, pertaining to the assessment year 2010-11. The assessee has raised following grounds of appeal:
“1. That in the law and facts of the case, both the Ld/- AO & Ld/- CIT(A) have erred in law and facts of the case by making an addition and confirming the additions respectively by passing ex-parte orders without providing sufficient opportunity to the appellant which is highly arbitrary, unjustified, uncalled for and bad in law.
2. The Ld/- CIT(A) has erred in law and facts of the case by confirming the additions made by the AO under section 69A of the Act as the appellant was prevented by sufficient cause which highly arbitrary, unjustified and against the principle of natural justice.
3. That the Ld/- CIT(A) has erred in law and facts of the case by confirming the addition of Rs. 27,00,000/- made by the Ld/- AO under section 69A of the Act which is unjustified, uncalled for and bad in law.
That the Ld/- CIT(A) has erred in law and facts of the case by deciding the appeal as ex parte without providing the sufficient opportunity of being heard to the appellant which is highly unjustified and bad in law.
The appellant company craves the right to add, amend or modify any ground of appeal.”
Facts, in brief, are that AO received information that assessee had cash deposits of Rs. 27,00,000/- in savings bank account. The assessee did not comply with the verification letter dated 29.06.2016 issued by the AO. Therefore, action u/s 147 of the Income-tax Act, 1961 was initiated. The assessee did not comply with the statutory notices issued by the AO. The AO completed the assessment proceedings u/s 147/144 of the Act and vide order dated 25.10.2017 made addition of Rs. 27,00,000/- as unexplained cash credits and made the assessment accordingly. In appeal the learned CIT(A) affirmed the action of the AO.
Aggrieved against this now the assessee is in appeal before this Tribunal.
It is noticed from the record that there was no effective representation on behalf of the assessee before the lower authorities. The learned CIT(A) has not decided the appeal on merit. Therefore, the impugned order is hereby set aside and in the interest of principles of natural justice, the grounds raised by the assessee are restored to the file of learned CIT(A) who will decide the grounds of appeal afresh after giving due opportunity to the assessee of being heard. 4. Appeal of the assessee is allowed for statistical purposes.
Order pronounced in open court on 22nd March, 2024