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Facts
The assessment for AY 2017-18 was completed ex-parte by the AO under Section 144, resulting in total additions of Rs. 1,15,80,018/- under various heads, including Sections 69A and 68. The CIT(A) subsequently passed an ex-parte order, dismissing the assessee's appeal due to non-compliance with notices and the failure to file an application for additional evidence under Rule 46A.
Held
The Tribunal found that the assessee was denied a proper opportunity to be heard, leading to a violation of natural justice at both the assessment and first appellate stages. Consequently, the entire matter was remitted back to the file of the Ld. CIT(A) to provide the assessee with a reasonable opportunity to present evidence and for re-adjudication.
Key Issues
Whether the CIT(A) erred in passing an ex-parte order and dismissing the appeal without granting sufficient opportunity of being heard, especially when the original assessment was ex-parte under Section 144, and in not admitting additional evidence under Rule 46A.
Sections Cited
Income-tax Act, 1961: Section 250, Income-tax Act, 1961: Section 144, Income-tax Act, 1961: Section 69A, Income-tax Act, 1961: Section 68, Income Tax Rules, 1962: Rule 46A
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PER ANIKESH BANERJEE, J.M:
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 08.01.2024.The impugned order was emanated from the order of the Ld. Income-tax Officer, Ward 24(3)(3),Mumbai (in short, ‘the A.O.’) passed under section 144 of the Act, date of order12/12/2019.
2 ITA No.1045 /Mum/2024 Paresh Valji Choudhary 2. The assessee has taken the following grounds of appeal:-
“1. On the facts and circumstances of the case as well as in law, the Learned CIT(A) haserred in passing the ex-parte order, without granting sufficient opportunity of being I heard to the appellant.
The learned C.I.T(A) ignored the submission made by the appellant filed along with appeal since application for admission of additional evidence under Rule 46A was not made by appellant.
On the facts and circumstances of the case the order appealed before C.I.T.(A) was against order passed by Ld. AO u/s.144 for non attendance by the assesse during assessment proceedings.
The Ld. CIT(A) failed to appreciate the such order passed by him is de novo \ adjudication order as no merits have been rendered in the findings made by the Ld. AO.
The Ld. CIT(A) notices issued on several occasions for hearing as mentioned in the order, but were never received by the appellant due to some technical glitches on the ITBA portal, neither the same were received physically or through mail on registered email id of appellant.
On the facts and circumstances of the case as well as in law, the Learned CIT(A) has erred in confirming the action of Learned Assessing Officer in making an addition on the following grounds without considering the facts & circumstances of the case as follows:-
a. An addition of Rs.14,63,7867- u/s 69A of the Income Tax Act, 1961 by treating the cash deposits as unexplained during the demonetization period.
b. An addition of Rs.11,38,4107- u/s 68 of the Income Tax Act, 1961
c. An addition of Rs.59,59,0007- u/s 69A of the Income Tax Act, 1961 by treating the investment in property as unexplained as no source is given.
3 ITA No.1045 /Mum/2024 Paresh Valji Choudhary d. An addition of Rs.6,90,0007- as per information displayed on AIR as rental income , whereas the same TDS was deducted on sale of property by appellant.
e. An adhoc addition of Rs. 71,771/- i.e 20% of outstanding creditors as unexplained an increase as compared to previous year.
f. An addition of Rs. 11,34,0377- paid towards interest as the same remains unexplained.
g. An adhoc addition of Rs. 38,3587-i.e 20% of Rs. 1,91,7907-as otherexpense claimed.
h. An adhoc addition of Rs. 10,68,5567-i.e 20% of total purchases of Rs. 5342780/-made during the year as unexplained.
i. An addition of Rs. 16100/-towards donation claimed by appellant as the same remains unexplained.
j. The appellant craves leave to amend, alter, vary or delete any of the above grounds of`appeal.”
Brief facts of the case are that the assessment was completed exparte qua under section 144 of the Act. In the impugned assessment year, the additions are made in several heads and total addition was made Rs.1,15,80,018/-. Aggrieved, the assessee filed an appeal before the ld. CIT(A). The Ld.CIT(A) passed an exparte order for non-compliance of the notices by the assessee& dismissed the assessee’s appeal. Being aggrieved, the assessee filed an appeal before us.
4 ITA No.1045 /Mum/2024 Paresh Valji Choudhary 4. The Ld.AR filed the adjournment petition, but after considering the merit of the case, the adjournment petition is withdrawn, and matter is taken for hearing with the consent of the Ld. AR. The Ld.AR argued and placed that the order was passed exparte by the appellate authority. The assessee was ready to file the additional evidence before Ld. CIT(A) under Rule 46A of the Income Tax Rules, 1962. The assessee is not conversant with the internet system, so the notices are not complied with by the assessee during the appeal proceedings. Ld.AR further confirmed that they will be careful in the next hearing and prayed for setting aside the matter to the file of the Ld.CIT(A). 5. The Ld.DR had relied on the order of the revenue authorities and had not made any objection against the submission of the Ld.AR. The Ld.DR only invited our attention in appeal order paragraphs 6 & 6.1, which are reproduced as under:- “6. Appellant Findings Before considering the grounds of appeal filed by the appellant, it is pertinent to note that in order to decide this appeal in a timely manner notices/ communications were sent to the appellant on 03.03.2020, 15.01.2021. 06.10.2023, and 16.10.2023 and 20.12.2023. However, there has been no response from the appellant till date. The appellant has not filed any written submissions and there has been no compliance with the notices issued. 6.1 At the time of the filing of the appeal, the appellant has filed documents such as the ITR's for earlier years, some evidence regarding the agricultural income, bank statement, some papers relating to the purchase and sale of property, VAT returns, bank loan statement, etc. However since the assessment was completed u/s 144 of the Act due to non compliance, these details were not
5 ITA No.1045 /Mum/2024 Paresh Valji Choudhary before the A.O during the assessment proceedings and would amount of additional evidence. The appellant has not submitted any application for the admission of the additional evidence u/s Rule 46A in these proceedings. Accordingly, a notice was issued to the appellant on 20.12.2023 as under: " In connection with the appeal filed by you for AY 2017-18 you are requested to submit the following . 1. Kindly note that there has been no response to the notices issued dated 03.03.2020, 15.01.2021, 06.10.2023 and 16.10.2023. No written submissions have been filed till date.
The assessment was passed u/s 144 of the Act due to non compliance on your part. Thus the details provided in your submissions and the assertions made in the statement of facts were not before the Assessing Officer at the time of assessment. You are therefore requested to submit the detailed evidences/documents in support of your case along with an application requesting for the admission of additional evidence in accordance with the provisions under Rule 46A of the IT Rule, which will be subject to consideration.."
However, there has been no response to the notice issued till date and no application for admission of Additional evidence has been received. Accordingly, the additional evidence cannot be accepted or considered in the present proceedings.”
We heard the rival submissions and considered the documents available in the record. The Ld.AR argued and explained the reasons for noncompliance of the notices of the CIT(A). The assessment was passed exparte U/s 144 of the Act. The assessee was denied to submit the documents and unable to explain the addition. In both the stages in appeal and assessment, the assessee was not
6 ITA No.1045 /Mum/2024 Paresh Valji Choudhary allowed the proper opportunity. So, natural justice is denied in this case. On the other hand, the assessee is directed to submit the evidence before Ld.CIT(A) and the entire matter is remitted back to the file of Ld.CIT(A). Both the Ld.AR and the Ld.DR had not made any objection about the finding of the Bench. We are not expressing any view on the merit of the case which will impart the proceedings before the Ld.CIT(A). Needless to say, the assessee should get a reasonable opportunity of hearing in set aside proceedings. On the other hand, the assessee should be diligent and comply in the appeal proceedings for quick disposal of the appeal hearing. 7. In the result, the appeal of the assessee bearing ITA No.1045 /Mum/2024 is allowed for statistical purpose. Order pronounced in the open court on 12th day of June, 2024. Sd/- sd/- (GAGAN GOYAL) (ANIKESH BANERJEE) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai,दिन ांक/Dated: 12/06/2024 Pavanan
Copy of the Order forwarded to: अपील र्थी/The Appellant , 1. प्रदिव िी/ The Respondent. 2. आयकरआयुक्त CIT 3. दवभ गीयप्रदिदनदि, आय.अपी.अदि., मुबांई/DR, ITAT, 4. Mumbai ग र्डफ इल/Guard file. 5.
BY ORDER, //True Copy// (Asstt. Registrar), ITAT, Mumbai