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Income Tax Appellate Tribunal, DELHI BENCH ‘E’: NEW DELHI
Before: SHRI S. RIFAUR RAHMAN & SHRI RAJ KUMAR CHAUHAN
O R D E R PER RAJ KUMAR CHAUHAN (J.M.): 1. This appeal is filed by the assessee /appellant against the order of Learned Commissioner of Income Tax (Appeals) / National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as the “CIT(A)”], passed under section 250 of the Income Tax Act, 1961 [hereinafter Ram Niwas Sharma referred to as “the Act”] dated 25.02.2025 for the A.Y. 2013-14, wherein the assessment order dated 30.03.2022 was upheld and a sum of Rs. 2,07,49,380/- was treated as income from undisclosed sources and addition made under section 69A of the Act was confirmed.
The facts in brief as culled out from the order of the authorities below are that the appellant/assessee, engaged in the business of selling footwear, had not filed return of income for A.Y. 2013-14 and the case of appellant was reopened by the Assessing Officer by issuing notice under section 148 of the Act on 24th March, 2021 and subsequently, the AO completed the assessment and passed order under section 147 r.w.s. 144/144B of the Act dated 30.03.2022 making addition of Rs. 2,07,49,380/- as income from undisclosed sources under section 69A of the Act.
Aggrieved by the assessment order, the assessee filed appeal before the Ld. CIT(A) who upheld the addition and dismissed the appeal by passing an ex parte order as assessee has failed to respond the various notices issued on email of the assessee. Thus, aggrieved by the impugned order of the ld. CIT(A), assessee has filed the present appeal before us and raised following grounds of appeal:
Ram Niwas Sharma “1. That in facts and circumstances of the case the Ld. AO has erred in law in granting mechanical/invalid approval u/s 151 of the Income Tax Act, 1961 which is against the principle of natural justice and procedure of law, hence entire assessment is liable to be quashed.
2. That in facts and circumstances of the case the Ld. CIT(A), NFAC has erred in law in not granting proper opportunity of being heard due to improper service of communication u/s 250 of IT Act, 1961 which is against the principle of natural justice and procedure of law. Therefore, requesting to kindly set aside the matter to CIT(A), NFAC.
3. That in facts and circumstances of the case, the Ld. AO has erred in law in making the addition of Rs. 2,07,49,380/- to the returned income of the appellant of Rs. 3,14,690/-by imposing section 69A of Income Tax Act, 1961, hence addition made by the Ld. AO is liable to be deleted. 4.That in facts and circumstances of the case, the Ld. AO has erred in law in forming and recording his reasons to believe on the basis of borrowed satisfaction which is not sustainable in law, hence assessment proceedings is liable to be considered as null and void.
That in facts and circumstances of the case, the Ld. AO has erred in law in disposing the objections of the appellant in a very summarized manner, without considering all objections of the appellant, without considering the proper contents of the appellant, without issuing separate order for disposal of objections etc which is against the principle laid down by Hon'ble Supreme court, hence such an action of the 14. AO, hence assessment proceedings is to be held as invalid.
6. That in facts and circumstances of the case, the Ld. AO has erred in law in completing the assessment by rejecting the 3 Ram Niwas Sharma submissions of the appellant in wrongful and vague reasoning which is against the principle of natural justice, hence addition made by the Ld. AO is liable to be deleted.
That in facts and circumstances of the case, the Ld. AO has erred in law in completing the assessment proceedings which is a high pitched assessment and completely rejecting the request for Peak Assessment in the case of appellant on the basis of invalid reasoning, hence addition made by the Ld. AO may kindly be restricted to additions made in peak assessment.
That in facts and circumstances of the case, the Ld. AO has erred in law in completing the assessment proceedings u/s 144 of Income Tax Act, 1961 whereas the appellant has duly filed all the submissions and duly filed return u/s 148 of Income Tax Act, 1961, hence provisions of section 144 of Income Tax Act, 1961 do not apply. Hence, assessment order passed u/s 144 of Income Tax Act, 1961 is liable to be quashed.
That in facts and circumstances of the case, the Ld. AO has erred in law in treating return u/s 148 of Income Tax Act, 1961 on vague reasoning as invalid, hence assessment completed is liable to be quashed.
That the order passed by the learned Commissioner of Income Tax (Appeals) is bad in law, arbitrary, and against the principles of natural justice.
That the appellant craves leave to add, amend, vary or withdraw any ground of appeal at any stage of the proceedings.”
4. None argued on behalf of the assessee but it was ascertained from the grounds raised before us that the Ld. CIT(A) failed to grant proper opportunity of hearing due to improper service of communication under section 250 of the Act, and that the principle of natural justice has not been followed, which has resulted into miscarriage of justice and therefore, the assessee need to be given an opportunity of effective hearing and matter to be restored to the file of Ld. CIT(A) for deciding afresh.
5. Ld. DR has supported the judgment of Ld. CIT(A) stating that despite issuing the notice on various dates as mentioned in para 6.2 of the impugned order, the assessee has misarably failed to file any response and as such the Ld. CIT(A) has rightly dismissed the appeal.
We have considered the rival submission and examined the record in para no. 7 of the impugned order makes out the facts about the ex parte order which is extracted below as under:
7.0 In view of the discussion as above and facts of the case, it seems that the appellant has nothing to add in this matter, despite getting four (04) opportunities. The appellant has only filed an appeal in the form No.35. Even on merits it can be seen that Ram Niwas Sharma appellant has deposited cash of Rs 20749380/- in the bank. Appellant has not been able to prove with supporting documents that same is generated from some genuinely business activity as claimed. Even not a simple shop act registration certificate is submitted. By the amount of cash deposited, definitely the appellant is subjected to VAT/Sales Tax: No such registration or return under VAT/Sales tax is submitted. No audited books of accounts are submitted. The appellant has not filed any written submission/document with respect to ground raised in form-35. In the given circumstances and paucity of any evidence supporting the appellant's ground of appeal, it is difficult to take a view on merits against the Assessment order passed by the AO.
7. We have considered the submissions and examined the record. Section 250 sub section 2(a) of "the Act" provides as under:
Section 250 (2) The following shall have the right to be heard at the hearing of the appeal: - a. The appellant, either in person or by an authorised representative;
8. It is evident from the provision that the hearing to be given is not a formality but an effective hearing is sine qua non for the purpose of upholding the principal of natural justice. We have examined the impugned order and in para no. 5 of the Ld. CIT(A) observed as under: - 5. Appellate Findings: 4.1 During the course of appellate proceedings, appeal notices were issued to the appellant on 31.12.2020, 29.08.2022 and 06.10.2023 fixing the case for 06.01.2021, 13.09.2022 and 23.10.2023 respectively at e-mail id kalokhandwala@gmail.com and Ram Niwas Sharma mustansir.lokhandwala@gmail.com which are Primary Email Id as per Latest Return filed. In this regard, the appellant has not filed any written submission as well as not given any satisfactory evidence in support of grounds of appeal, hence the case is being decided on merits.
9. It is evident from the extracts of para no. 7 of the Ld. CIT(A)’s order that the appeal has been dismissed in absence of sufficient evidence. It has to be noticed that the contents of the grounds raised before us shows that the appellant has not received the notice issued by the Ld. CIT(A). On perusal of para 6.2 of the impugned order which details the notice issued, shows that no proof of service of the notice has been filed on 4 dates as mentioned therein. It is simply stated that the hearing notice has been delivered to the appellant by email ID. In absence of the proof of the service of notice, it cannot be concluded that the effective opportunity of hearing has been given to the appellant/assessee by the Ld. CIT(A) and the impugned order has been passed in the absence of the material/evidence having not been brought on record by the appellant/assessee. For these reasons, we are of the considered opinion that principal of natural justice has not been followed by the Ld. Appellate authority and for that reasons impugned orders suffers from illegality and is not sustainable and is accordingly set aside. The matter Ram Niwas Sharma is restored to the file of the Ld. CIT(A) for deciding it afresh after giving effective opportunity of hearing. The assessee/appellant shall present its case before the Ld. CIT(A) within 60 days of this order.
10. In the result, the appeal of the assessee is accordingly allowed as above terms for statistical purposes.
Order pronounced in open Court on 12th December, 2025