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Facts
The assessee deposited cash, including SBN notes during demonetisation, totaling Rs. 28.46 lakhs in FY 2016-17. The Assessing Officer completed an ex-parte assessment u/s 144 due to the assessee's non-response to notices, making additions u/s 69A and for 8% profits on bank deposits. The CIT(A) dismissed the appeal without adjudication on merits, citing non-payment of admitted tax and non-filing of return of income, in violation of section 249(4)(b).
Held
The Tribunal found that the assessee had already deposited Rs. 2.67 lakhs, which was sufficient to cover the admitted tax requirement under section 249(4)(b). Consequently, the Tribunal directed the CIT(A) to admit the appeal and adjudicate it on merits after providing the assessee with a proper opportunity of being heard.
Key Issues
Whether the ex-parte assessment under section 144 was valid given alleged non-service of notice, and whether the CIT(A) erred in dismissing the appeal for alleged non-payment of admitted tax under section 249(4)(b) when the assessee claimed payment.
Sections Cited
Section 250, Section 144, Section 142(1), Section 69A, Section 249(4), Section 249(4)(b), Rule 34(4) of Income Tax Appellate Tribunal Rules 1963
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Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR.
Before: SH. MANOJ KUMAR AGGARWAL & SH. UDAYAN DASGUPTA
ORDER Per: Udayan Dasgupta, J.M.: This appeal is filed by assessee against order of Ld. CIT (A), NFAC, Delhi, passed u/s 250 of the Act 1961, dated 24.01.2025 which has emanated from the order of the AO, Ward-2(4), dated 20/11/2019, passed u/s 144 of the Act. 2. The grounds of appeal in Form No. 36 are as under:
1. That the assessment order passed by the Assessing Officer as well as the order of the Learned Commissioner of Income Tax 2 Assessment Year: 2017-18 (Appeals), National Faceless Appeal Centre (NFAC), Delhi thereby confirming the order of the Assessing Officer are both against the facts of this case and are untenable under the law.
2. That no reasonable and proper opportunity of being heard was allowed by the Assessing Officer before passing the said order. As such the assessment order passed is bad in the eyes of law and the same is liable to be cancelled and similarly the Ld. CIT(A) has confirmed the order of the AO without application of mind and as such the order passed by the worthy CIT(A) is also bad in the eyes of law and the same is liable to be cancelled.
3. That the ex-parte order passed u/s 144 is bad in the eyes of law as no notice u/s 142(1) was ever served on the assessee and as such the provisions of section 144 arc not at all applicable to the present facts and circumstances of this case. The CIT(A) further did not appreciate that the AO has not followed the CBDT Circular F.No. 225/363/2017- ITA.II dated 15/11/2017 in which it was also directed that the notice u/s 142(1) shall be issued electronically as well as through Postal Services. As such the assessment order passed is bad in the eyes of law and the same deserves to be cancelled.
4. That the authorities below did not appreciate that in those days in Jammu & Kashmir, there was grave problem in the working of internet in J&K. The Parliament of India voted in favour of resolution tabled by Home Minister Amit Shah to revoke the temporary special status granted in Article 370 of Indian Constitution to Jammu & Kashmir. It may be submitted 3 Assessment Year: 2017-18 that as a result of this amendment, the whole J&K was disturbed and even the normal life was paralyzed. There was no regular working in Jammu & Kashmir. As a result, thereof the whole business working of J&K was completely disturbed. As a result of this the notices could not be received and could not be complied. As such • there was no justification in deciding the case ex-parte by invoking the provisions of section 144. As such, the Ld. CIT(A) was not justified in confirming the order of the AO and the addition made may be deleted.
5. That the CIT(A) was not at all justified in invoking the provisions of section 249(4) for the first time and accordingly thereby rejecting the appeal without giving any reasonable opportunity of being heard. The worthy CIT(A) should have allowed an opportunity of being heard in view of the provisions of section 249(4). The order of the Ld. CIT(A) is purely based on conjectures, surmises and suppositions and the same is liable to be cancelled.
6. That the CIT(A) did not appreciate that the addition of Rs. 14,67,127/- [i.e. Rs.398127/- + Rs.1069000/-] was not at all called for and he should have deleted the addition. A sum of Rs.2,67,500/- was deposited on 15/02/2020 and accordingly the stay was granted vide letter dated 25/01/2020. Under the same and similar circumstances, the tribunal has set aside several orders passed by the CIT(A) by invoking he provisions of section 249.
4 Assessment Year: 2017-18
The brief facts emerging from record are that the assessee has deposited cash amounting to Rs.10.69 lakhs in SBN notes in his various bank accounts during the demonetisation period and a total deposit of Rs.28.46 lakhs in the entire F.Y. 2016- 17 in his J & K Bank A/c Gonda ( A/c xxxx000693). In absence of any response to notices issued by the AO thereby resulting in a failure on the part of the assessee to explain the source of cash deposit, the assessment was completed on a total income of Rs.14.67 lakhs (including an addition of Rs.10.69 lakhs u/s 69A of the Act being the SBN notes deposited) plus an addition of Rs.3,98,127 (being 8% profits) on the remaining bank deposits.
The matter was carried in appeal and the ld. CIT(A) has dismissed the appeal by refusing to admit the same for adjudication on merits for non-payment of advance tax (admitted tax) coupled with fact that no return of income has been filed resulting in a violation of provisions of section 249(4)(b) of the Act 61.
In course of appeal proceedings before the tribunal the ld. AR of the assessee explain the fact that it is not correct that admitted tax is not paid, and he explained that an amount of Rs.2,67,500/- has already been deposited by the assessee on 15.02.2020 immediately after filing the appeal on 05.02.2020 (challan No. 001 dated 15.02.2020 BSR 6320345) and a copy of the said challan has already been submitted before the AO on 25.02.2020 praying for stay of demand. He further submitted that in course of first appellate proceedings the assessee has never been allowed an 5 Assessment Year: 2017-18 opportunity to explain the non-payment of admitted tax. He further stated that the total income determined by the AO @ 8% on total turnover works out to Rs.3.98 lakhs (as per assessment order without considering the SBN deposit) and the assessee has already deposited Rs.2.67 lakhs in course of pending first appellate proceedings, which will be more than enough to cover the admitted tax if any. As such, he prays for an opportunity of fresh hearing before the ld. CIT(A) in order to explain his case.
The ld. DR relied on the order of the ld. CIT(A).
We have heard the rival submissions and considered the materials available on record and we find that the assessee has already paid an amount of Rs.2.67 lakhs on 15.02.2020 (copy of challan is also enclosed). The amount paid is certainly much more than the calculation of advance tax (admitted tax) required for filing of the appeal as provision of section 249(4)(b) of the Act. As such, we are of the opinion that the appeal filed before the first appellate authority is maintainable and we accordingly direct the ld. first appellate authority to admit the appeal and to adjudicate the case on merits on the grounds contained in Form 35. The assessee is also directed to file all necessary particulars and explanations alongwith documentary evidences in support of his contention as per his ground of appeal
. The assessee will be allowed proper and reasonable opportunity of being heard and with 6 Assessment Year: 2017-18 this aforesaid direction, we remand the matter back to the file of the ld. CIT(A) for adjudication of the appeal on merits of the case.
8. In the result, the appeal of the assessee is allowed for statistical purposes.