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Facts
The Assessing Officer reopened the assessment for AY 2017-18 based on information about Rs. 88,69,161 deposited in bank accounts during demonetization. The assessee failed to comply with notices, and an ex-parte assessment order was passed. The CIT(A) sustained the additions and dismissed the appeal. The assessee claims not to have received hearing notices and that income was from agriculture.
Held
The Tribunal observed that the lower authorities did not conduct independent investigation and failed to verify facts. The assessment order was passed ex-parte without proper inquiry. Principles of natural justice were violated.
Key Issues
Whether the assessment order passed ex-parte without affording proper opportunity of hearing and conducting due inquiry is sustainable, and if the additions were made without proper verification.
Sections Cited
147, 144, 69A, 148
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, JABALPUR BENCH “DB”, JABALPUR
Before: SHRI KUL BHARAT & SHRI, NIKHIL CHOUDHARY
PER KUL BHARAT, VICE PRESIDENT.:
This appeal, by the assessee, is directed against the order of the Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi dated 06.03.2025, pertaining to the assessment year 2017-18. The assessee has raised the following grounds of appeal: -
“1. The learned CIT(A) has erred in law and on facts of the case in passing order without affording opportunity of hearing. No notices of hearing were served to the assessee. The e mail id as mentioned in appeal order by CIT (A) at page No. 8 para five do not pertain to present assessee. The assessee has corrected his mail id and mobile No. On e portal at the time of filing of appeal before CIT Appeals. Even on form No. 35 the assessee has mentioned his corrected e mail id and mobile No. Neither the Notices were served to the assessee on his e maid id as mentioned on form no. 35 nor as reported on e-portal of Income Tax. The order passed by CIT (A) is against natural justice. The appeal order passed by National Faceless Appeal Centre may please be quashed and set aside to the file of CIT Appeal 2. Without prejudice to the above ground in the present case the assessment order was also passed by assessing officer u/s 147 r.w.s 144 of the Income Tax Act, without affording reasonable opportunity and considering the reply / submission/ explanation and documents submitted during assessment proceeding the assessment order passed by AO may please be set aside to the file of assessing officer for fresh consideration.
Page 2 of 5 3. That the CIT Appeal as well as assessing officer are not justified in passing ex party order by confirming/making addition of Rs. 2,53,74,889/- towards deposits in bank account. The bank deposits are from enter bank transactions and are from fully explained sources. The entire addition is illegal and should be deleted in toto.
That the CIT Appeal as well as assessing officer has erred in treating returned income of Rs. 178214/- as addition u/s 69 A of the Act without any basis and findings recorded. The income of assessee was below taxable therefore the assessee did not file his income tax return. The provision of section 69A do not apply. The returned income may please be considered as disclosed by the assessee.
5. Without prejudice to the above ground the return income disclosed by assessee are mainly from interest income. This amount has already been considered by the AO while making addition for entire deposits in bank account. Thus the same is double addition. The same may please be deleted.
6. That The applicant reserves his right to raise additional ground or grounds of appeal
those may arise at the time of hearing of this appeal.”
2. The facts in brief giving rise to the present appeal are that the Assessing Officer was having information regarding transaction amounting to Rs.88,69,161/- in the bank accounts of the assessee. It was noted by the Assessing Officer that the assessee had deposited cash during the demonetization period amounting to Rs.88,69,161/-, therefore on this basis, the Assessing Officer was of the view that the income which is chargeable to tax has escaped assessment for A.Y. 2017-18. Therefore, the Assessing Officer re-opened the assessment and issued notice u/s 148 of the Income Tax Act, 1961 (“Act”, for short) dated 29.03.2021. It was noticed by the Assessing Officer that the Income Tax Return which was required to be filed within 30 days, in response to the notice u/s 148 of the Act. However, it was filed belatedly on 31.05.2021. Further, the Assessing Officer noted that the total amount appearing in the bank accounts of the assessee was Rs.2,53,74,889/- since there was no compliance of notices by the assessee, the Assessing Officer proceeded to make assessment ex parte to the assessee. Thereby, he assessed income at Rs.3,30,68,650/- treating the money credited in his bank account as unexplained. Aggrieved by this, Page 3 of 5 the assessee preferred appeal before the Ld. CIT(A). It is noteworthy that there was no effective compliance before the Ld. CIT(A). He, therefore, sustained the addition and dismissed the appeal for want of requisite details. Now the assessee is in appeal before this Tribunal.
Apropos to the grounds of appeal, the Ld. Counsel for the assessee contended that the assessee did not receive any notices of hearing and there was no effective representation on behalf of the assessee before the lower authorities. He contended that the assessee is an agriculturist and only source of income is from agriculture. He contended that the entire addition has been made purely on the basis of conjecture and surmises without considering the submissions made in the form of statement of facts. Therefore, he prayed that the matter may be remanded back and the authorities below may be directed to provide adequate opportunity of being heard.
4. On the other hand, the Ld. Departmental Representative (DR) opposed the submission of the assessee and supported the orders of the lower authorities. He contended that the assessee was thoroughly negligent and did not file the requisite details as called by the lower authorities. He, therefore, submitted that the impugned addition may be confirmed.
We have heard the rival submissions and perused the material available on record. It is transpired from the record that the assessee had challenged impugned addition by filing of appeal before the Ld. CIT(A). It was contended before him that the assessee is an agriculturist and he had no source of income except the agriculture. The assessee had submitted that the money credited in the bank accounts of the assessee are from the sale of agriculture produce, loan amount and Inter Bank account Page 4 of 5 transactions. These facts are not examined by the lower authorities by making independent investigation by conducting further enquiry. In our considered view Section 144 of the Act cast, statutory obligation on the Assessing Authority that while framing best judgment ex parte to the assessee, he should consider all the materials placed before him and also verify their correctness by making independent enquiry. In the present case, there is no verification of the facts by the lower authorities. Therefore, considering the facts of the case and to sub-serve the interest of principles of natural justice, we hereby set aside the impugned order and restore the assessment to the file of the Assessing Authority to make assessment afresh. Needless to say, who would frame assessment after making due enquiry. The assessee would co-operate in the assessment proceedings and furnish requisite details in support of his claim regarding sale of agriculture produce holding of land and other transactions which are subject matter of the present proceedings. The assessee would pursue his case diligently and furnish all the relevant evidences for proper appreciation of the facts of the case. Grounds raised in this appeal are allowed for statistical purposes.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 28/08/2025.