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Facts
The assessee deposited cash during the demonetization period, and the Assessing Officer (AO) added Rs. 1,04,51,465/- to the total income under section 68 of the Income-tax Act, treating the deposit as an ingenuine transaction. The Commissioner of Income-tax (Appeals) [CIT(A)] passed an ex-parte order upholding the assessment. The assessee appealed this order.
Held
The Tribunal held that the CIT(A) passed an ex-parte order without considering the merits of the case, denying the assessee a reasonable opportunity to present their case. The Tribunal also noted that the revenue's representative did not strongly object to the assessee's plea for a fresh opportunity.
Key Issues
Whether the CIT(A) erred in deciding the appeal ex-parte and without considering the merits of the case, denying the assessee a proper opportunity to be heard.
Sections Cited
250, 143(3), 68, 115BE
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Income Tax Appellate Tribunal, MUMBAI BENCH “A”, MUMBAI
Before: SHRI PRASHANT MAHARSHI & SHRI ANIKESH BANERJEE
Instant appeal of the assessee is preferred against the order of theNational Faceless Appeal Centre, Delhi [for brevity, ‘Ld.CIT(A)’] passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’), for Assessment Year 2017-18, date of order 19.02.2024.The impugned order was emanated from the order of the ld. Income-tax Officer, Ward 9(1)(1),Mumbai (in short, ‘the A.O.’) passed under section 143(3)of the Act date of order28/12/2019.
Aamby Valley Global Sports Ltd 2. The assesseehas taken the following grounds of appeal:-
“1. That the Ld. CIT(A) has erred in law and on facts and circumstances of the case in deciding the appeal ex-parte.
That the Ld. CIT(A) has erred in law and on facts and circumstances of the case in not allowing a proper opportunity to the appellant to represent the case and the order passed is against the principle of audi alteram partem and not tenable in law and deserves to be vacated.
That the Ld. CIT(A) has erred in law and on facts and circumstances of the case in not deciding the various grounds of appeal taken by the appellant and not considering the statement of facts while deciding the appeal, which renders the order passed as not tenable in law and deserves to be vacated.
4. That the Ld. CIT(A) has erred in law and on facts and circumstances of the case in confirming the addition of Rs.1,04,51,465/- under section 68 of the Income-tax Ac t, 1961 without considering the fact that the addition has not been made by the Assessing Officerin respect of any cash credit or cash deposit in the books of the appellant, but is in the nature of an addition made for alleged unexplained deposit in the bank account.
5. That the Ld. CIT(A) has failed to appreciate that the appellant is a Limited Company and there is no income which can be attributed to earning of undisclosed income, which can be subjected to tax under section 68 of the Income-tax Act, 1961 and, therefore, the addition made by the Assessing Officer deserves to be deleted.
6. That the Ld. CIT(A) has failed to appreciate that the Assessing Officer has added a sum of Rs.1,04,51,465/- to the income of the appellant, which amount was already included in the receipts shown by the appellant to the credit of Profit & Loss account and voluntarily stood offered to tax and, therefore, there was no Aamby Valley Global Sports Ltd justification in adding the same by the Assessing Officer to the income of the appellant under section 68 of theIncome-tax Act, 1961.
7. That the Ld. CIT(A) has failed to appreciate that the addition made by the AssessingOfficer of the same amount which stands credited to the Profit & Loss accounttantamount to a double addition and for this reason alone, the same deserves to bedeleted.
8. That the appellant craves leave to add, alter, amend or withdraw any or all grounds ofappeal at any time before or 8. during the course of the hearing.”
3. The brief facts of the case are that the assessee deposited cash in the bank during the demonetization period. Out of the total cash deposit amount of Rs. 99,81,680/- part of SBN was deposited from dated09/11/2019 to29/11/2019. The assessment was framed under section 143(3) with the addition to Rs.1,04,51,465/- was added back with the total income of the assessee where the assessee has failed to establish the cash sale amount to Rs.1,04,51,465/- during the demonetization period and the Ld.AO has treated the deposit as ingenuine transaction and added back under section 68 of the Act. Accordingly, the tax was levied under section 115BE of the Act @60%. Aggrieved, the assessee filed an appeal before the ld. CIT(A). But ld. CIT(A) has passed an exparte order without considering the merit of the case and upheld the assessment order. Being aggrieved, assessee filed an appeal before us.
The Ld.AR argued and placed that the appeal order was passed exparte and the assessee was unable to comply with the notices due to lack of computer knowledge of accountant. The assessee is ready to explain the entire sale proceeds during the demonetization where the cash was deposited during this Aamby Valley Global Sports Ltd period. The Ld.AR prayed for setting aside the matter before the Ld.CIT(A) for further opportunity.
The Ld.DR argued and relied on the order of the revenue authorities. The Ld.DR invited our attention in appeal order para 4 & 5 which are reproduced as below: - “4. It is pertinent that in order to decide this appeal in a timely manner, a number of notices / communications / correspondences were made through ITBA portal to the appellant, viz., communications dated15.01.2021, 13.12.2023, 25.01.2024 and 08.02.2024. However, there has been no compliances from the part of the appellant till date. There is no gainsaying that once the appeal is filed by the appellant, it is obligatory on its part to purposefully and co-operatively pursue the same in a worthwhile manner, which the appellant has evidently failed to do. Hence, in view of the aforesaid total non-compliance of the instant appeal on the part of the appellant, the instant appeal is adjudicated and disposed of, as under, ex-parte, primarily on the basis of documentation available on record. The appellant has failed to avail the opportunity to file / furnish the submissions / documents in support of the grounds of appeal
though the appellant was offered for sufficient opportunity to file / furnish the submissions during the course of appellate proceedings. Furthermore, it is pertinent that the appellant has not sought any adjournment during the appellate proceedings.
5. In the result, the appeal of the appellant is dismissed.”
6. We heard the rival submission and considered the documents available in the record. The addition was made amount to Rs.1,04,51,465/- under section 68 of the Act for deposit the cash in bank account during demonetization. In assessment proceedings and in appeal, the assessee was unable to explain the cash sale related to its business. The reasonable opportunity is denied before Aamby Valley Global Sports Ltd Ld.CIT(A) as the Ld.CIT(A) has not considered the merit of the case. It will be justified that the assessee should get another opportunity before the ld. CIT(A) for representing the matter afresh. We are, therefore, of the opinion that interest of justice would be sub served if the matters are remitted back to the file of the ld. CIT(A) for consideration of assessee’s plea. The ld. DR has not made any strong objection against the submission of the ld. AR. We are not expressing any views on the merits of the case so as to limit the appeal proceeding before the Ld. CIT(A). Needless to say, the assessee should get a reasonable opportunity of hearing for setting aside proceedings. On the other hand, the assessee should be diligent in setting aside appeal proceeding for expeditious disposal of appeal.