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Facts
The assessee, a vegetables vendor, failed to file a return for AY 2019-20. The AO initiated reassessment under Section 147 due to a Rs. 44,65,800/- cash deposit, but all notices sent by email or speed post remained unserved or uncomplied with. This led to an ex-parte assessment under Section 144, treating the deposit as unexplained income under Section 68.
Held
The Tribunal restored the matter to the AO for de novo adjudication, granting the assessee another opportunity to present their case. The assessee assured full cooperation, and the AO was directed to pass a speaking order after affording a proper hearing.
Key Issues
Non-service of notices and lack of opportunity to be heard during reassessment proceedings, leading to an ex-parte assessment.
Sections Cited
147, 148, 142(1), 144, 68, 251(1)(a)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, Indore Bench, Indore
आदेश/ O R D E R
Per B.M. Biyani, A.M.:
Feeling aggrieved by order of first-appeal dated 16.06.2025 passed by learned Commissioner of Income-Tax (Appeals)-NFAC, Delhi [“CIT(A)”] which in turn arises out of assessment-order dated 06.12.2023 passed by learned Assessment Unit of Income-tax Department [“AO”] u/s 147 r.w.s. 144 & 144B of Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2019-20, the assessee has filed this appeal on following grounds:
Page 1 of 6 AY 2019-20 “1. On the facts and circumstances of the case and in law, The Ld. 1 NFAC erred in upholding the addition of Rs.44,65,800/- made to the income of the appellant.
On the facts and circumstances of the case and in law, the NFAC order dated 16.06.2025 is contrary to law, facts and circumstances of the case and in any case is opposed to the principles of equity, natural justice and fair play.
On the facts and circumstances of the case and in law, the reassessment order dated 06.12.2023 is bad in law, without jurisdiction, and liable to be quashed.
4. On the facts and circumstances of the case and in law, the additions were made on mere conjectures, surmises and suspicions.
On the facts and circumstances of the case and in law, the reassessment was completed without complying with the statutory requirements of law.
6. On the facts and circumstances of the case and in law, the reassessment order dated 06.12.2023 is contrary to law, facts and circumstances of the case and in any case is opposed to the principles of equity, natural justice and fair play.
7. On the facts and circumstances of the case and in law, the 7 notice under section 148 dated 19.03.2023 is void and illegal hence liable to quashed.
On the facts and circumstances of the case and in law, the provisions of Section 68 are not invokable.
On the facts and circumstances of the case and in law, the provisions of section 115BBE cannot be invokable.
For that 9 the appellant craves leave to add, amend, alter vary and OR withdraw any OR all the above grounds of appeal
11. All the aforesaid grounds are without prejudice to each other.” 2. The background facts leading to present appeal are as under: (i) The assessee-individual did not file any return of income of AY 2019-
20 under consideration. The AO, on the basis of information in his possession revealing that the assessee had made cash deposit of Rs.
19.03.2023 to assessee in order to make assessment u/s 147. The AO also issued several notices u/s 142(1) and show-cause notice u/s 144 but all notices issued by AO remained uncompiled by assessee. The AO also attempted to serve a notice through Speed Post but the same was returned by postal authorities with the remark “Item returned. No such person in the address”. Ultimately, the AO made ex-parte assessment u/s 144 deeming the deposits of Rs. 44,65,800/- made by assessee in bank a/c as unexplained cash credit u/s 68. The AO also initiated penalty proceeding u/s 271AAC qua the income of Rs.
44,65,800/- assessed. Further, the AO also initiated penalty proceeding u/s 272A(1)(d) for non-compliances to the notices u/s 142(1).
(ii) Aggrieved, the assessee carried matter in first-appeal and made submissions to CIT(A). The assessee submitted to CIT(A) that the AO has passed assessment-order ex-parte u/s 144. It was further submitted that the case of assessee requires a vehement adjudication by AO and therefore a specific prayer was made to CIT(A) to remand this case to the file of AO in terms of Proviso to section 251(1)(a) newly introduced in Income-tax Act, 1961 through Finance (No. 2) Act, 2024 w.e.f. 01.10.2024. However, the CIT(A) observed that the said newly introduced Proviso uses the word ‘may’ and not ‘shall’, therefore it was his prerogative to decide whether or not to remand. Ultimately, the CIT(A) dismissed assessee’s appeal concluding thus:
“6.4 Appellant has not submitted any submission to support his Ground of Appeal therefore, all 13 grounds of appeal is decided against the assessee for non-prosecution of his grounds. Therefore, ground no. 1 to 13 dismissed as not pressed.” (iii) Still aggrieved, the assessee has come before us in next appeal.
3. During hearing before us, Ld. AR for assessee submitted that the assessee is a ‘vegetables vendor’ and the deposits in bank a/c are relatable to the activity/business of vegetable vending carried by assessee. That, all notices u/s 148/142(1)/show-cause notice were sent by AO to the e-mail but the assessee, being a person of small means and unaware of technological aspects, could not access those notices. That, the AO also sent a notice through speed-post but the AO has himself acknowledged in assessment-order that the speed post got returned and could not have been served upon assessee. Therefore, none of the notices came to the knowledge of assessee which has led to non-compliances. After narrating these facts, Ld. AR pointed out a fact that the AO also imposed penalty of Rs. 20,000/- u/s 272A(1)(d) for non-compliances of notices u/s 142(1) but the CIT(A) has already, vide order of even date (16.06.2025) as the impugned order, deleted penalty imposed by AO taking into account the very same facts as narrated by him. Copy of CIT(A)’s order deleting penalty is placed before us.
Ld. AR next submitted that the assessment-order passed by AO is ex- parte wherein the AO has assessed the income of Rs. 44,65,800/- equivalent to the amount of deposit entries in bank a/c, by invoking deeming provision of section 68. However, the assessee has complete details/documents in Page 4 of 6 AY 2019-20 possession to substantiate the entries of deposits and therefore an opportunity deserves to be given to assessee. Ld. AR acknowledges that the assessee shall make an effective representation before AO.
5. Ld. DR for revenue does not controvert the submissions and prayer made by Ld. AR. He, however, makes a request to direct the assessee to represent his case before AO without seeking unnecessary adjournments.
Considering above submissions of parties and having perused the material on record, we are inclined to uphold the plea of the assessee and provide yet another opportunity of hearing to the assessee. We see no harm in providing one more opportunity of hearing to the assessee, and the assessee has assured us of his full cooperation. In case, however, the assessee does not fully cooperate in expeditious disposal of remanded proceedings, learned AO will be at liberty to take such action, apart from disposal of appeal based on material on record, as he deems fit and proper and judicious. The matter is thus restored to the file of the learned AO for adjudication de novo after affording yet another opportunity of hearing to the assessee, by way of a speaking order, and in accordance with the law.
Resultantly, this appeal is allowed for statistical purpose.
Order pronounced in open court on 03/02/2026