TEJAL NILESH SORTHI,PALGHAR vs. INCOME TAX OFFICER, PALGHAR

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ITA 1283/MUM/2024Status: DisposedITAT Mumbai09 September 2024AY 2018-194 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal noted that while the assessee did not respond to notices from the first appellate authority, the CIT(A) passed an ex-parte order without discussing the merits of the case. The CIT(A) was expected to state points for determination, decision, and reasons as per Section 250(6) of the Act. In the interest of justice and fair play, the Tribunal decided to afford a last opportunity to the assessee and remitted the matter back to the CIT(A) for adjudication on merits. The Tribunal directed the assessee to be diligent and cooperative in attending hearings and making submissions for expeditious disposal, and to refrain from seeking adjournments except in compelling circumstances. The CIT(A) was directed to ensure observance of principles of natural justice. The Tribunal explicitly stated that no observations were made on the merits of the case. The appeal was allowed, and the impugned order was set aside for statistical purposes.

What were the facts?

The assessee, Tejal Nilesh Sorthi, filed a return of income for Assessment Year 2018-19 declaring Rs. 2,31,570/-. The case was selected for limited scrutiny, and notices under Sections 143(2) and 142(1) were issued. The Assessing Officer added Rs. 24,68,645/- to the assessee's total income. The assessee appealed to the Commissioner of Income-tax(Appeals)/National Faceless Appeal Centre (NFAC), who dismissed the appeal in default. The assessee then filed an appeal before the Income Tax Appellate Tribunal (ITAT) against the CIT(A)'s order, contending that the addition of Rs. 24,68,645/- under Section 40A(3) was contrary to the evidence submitted.

What were the issues?

1. Whether the learned CIT(A) erred in dismissing the assessee's appeal in default, thereby violating the principles of natural justice, contrary to the evidence submitted during assessment proceedings, and confirming the addition of Rs. 24,68,645/- under Section 40A(3) of the Income-tax Act, 1961? (Question of mixed law and fact, turning on Section 250 of the Income-tax Act, 1961). Assessee's contention: The impugned order was passed ex-parte in violation of the principles of natural justice, and the CIT(A) should have considered the merits of the case. The assessee prayed to set aside the impugned order. Revenue's contention: The assessee was provided sufficient opportunities of hearing by the CIT(A) on seven occasions, but did not avail them. The Revenue supported the impugned order.

Which sections of the Income-tax Act were involved?

Section 250,Section 143(2),Section 142(1),Section 40A(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘SMC’ BENCH

Before: SHRI NARENDRA KUMAR BILLAIYA, ACCOUNTANT & SHRI SUNIL KUMAR SINGH

For Appellant: Shri. Sujesh Suratwala
For Respondent: Shri. R. R. Makwana, Sr. DR

(Assessment Year : 2018–19) Tejal Nilesh Sorthi Vs. Income Tax Officer Near Civil Court Ward 1, Dahanu Road, Office of the Income Tax Palghar, Officer, 401602. Palghar, 401602. PAN/GIR No. DXVPS5353B (Appellant) .. (Respondent) Assessee by Shri. Sujesh Suratwala (virtually present) Revenue by Shri. R. R. Makwana, Sr. DR Date of Hearing 05/09/2024 Date of Pronouncement 09/09/2024 आदेश / O R D E R PER SUNIL KUMAR SINGH (J.M): 1. This appeal has been preferred against the impugned order dated 29.01.2024 passed in Appeal no. NFAC/2017- 18/10030780 by the Ld. Commissioner of Income– tax(Appeals)/ National Faceless Appeal Centre (NFAC) [hereinafter referred to as the “CIT(A)”] u/s. 250 of the Income- tax Act, 1961 [hereinafter referred to as "Act"] for the Assessment year [A.Y.] 2018-19, wherein learned CIT(A) has dismissed assessee’s appeal in default of the assessee.

Tejal Nilesh Sorthi 2. The brief facts under appeal state that the assessee e-filed his return of income for A.Y. 2018-19 on 28.12.2018, declaring total income of Rs. 2,31,570/-. The case was selected for limited scrutiny through CASS and notices u/s. 143(2) and 142(1) of the Act were issued and served upon the assessee. After taking uploaded response of the assessee, learned assessing officer added Rs. 24,68,645/- in the total income of the assessee.

3.

Aggrieved by the assessment order, assessee preferred an appeal before learned CIT(A), who dismissed assessee’s first appeal in default of assessee.

4.

Assessee has filed this second appeal on the ground that learned CIT(A) has erred in confirming the addition of Rs. 24,68,645/- u/s. 40A(3) of the Act, contrary to the evidence submitted during the assessment proceedings.

5.

In response to the notice issued by the tribunal, learned DR appeared and participated in the hearing.

6.

We have perused the records and heard learned representatives for both the parties.

7.

Learned representative for the assessee has, at the very outset informed that impugned order has been passed by learned CIT(A) ex-parte in violation of the principles of natural justice. Prayed to set aside the impugned order.

8.

Learned DR has submitted that assessee was provided sufficient opportunity of hearing by learned CIT(A) on seven occasions but for no avail. Learned DR has supported impugned order.

Tejal Nilesh Sorthi 9. We notice that the assessee did not respond to the various notices issued by the first appellate authority. However, it is further noticed that learned CIT(A) passed ex-parte impugned order without any discussion on the merits of the case, whereas learned CIT(A) was expected to state the points for determination, decision thereon and the reasons for the decision as provided u/s. 250(6) of the Act. In the circumstances and in the interest of justice and fair play, we deem it just and appropriate to afford last opportunity to the assessee and remit the matter back to the file of learned CIT(A) for adjudication on merits. We further direct the assessee to be diligent and cooperative in attending the hearings and making submissions before the learned CIT(A) for the expeditious and effective disposal. Assessee should refrain from seeking any adjournment but for compelling and unavoidable circumstances. Needless to say that learned CIT(A) shall ensure the observance of the principles of natural justice. It is made clear that we have not made any observation in respect of the merits of the case. The appeal is liable to be allowed.

10.

In the result, the appeal is allowed. Impugned order dated 29.01.2024 is set aside. The case is restored back to the file of the learned CIT(A) for statistical purposes. Order pronounced on 09.09.2024.

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