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Facts
The assessee's appeal stems from an order of the CIT(A)-NFAC that confirmed the AO's action of estimating business income at 8% on kerosene sale deposits and adding demonetization period cash deposits as income. The assessee contended that the assessment was ex-parte and reasonable opportunity of being heard was not provided by the AO or CIT(A).
Held
The Tribunal acknowledged that while the assessee was non-cooperative and a non-filer, the assessment order was ex-parte, and the CIT(A)'s order was based on it without proper verification. In the interest of justice, the assessee should be given another opportunity to present their case.
Key Issues
Whether the assessment order and subsequent appellate order were passed without providing reasonable opportunity of being heard to the assessee.
Sections Cited
144, 69A, 115BBE, 142(1)
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Income Tax Appellate Tribunal, ‘C’ BENCH, CHENNAI
Before: SHRI MAHAVIR SINGHAND SHRI S.R. RAGHUNATHA
O R D E R PER BENCH: This appeal by the assessee is arising out of the order of the Commissioner of Income Tax (Appeal), National Faceless Appeal Centre, Delhi in Order No.ITBA/NFAC/S/250/2024-25/ 1064871278(1) dated 14.05.2024. The assessment was framed by the Income Tax Officer, Ward-1, Tiruchengode for the assessment
At the outset, the ld.AR for the assessee stated that the common issue in this appeal of assessee is as regards to the order of CIT(A)-NFAC confirming the action of AO in computing income from business by estimating the profit rate at 8% on deposits made out of sale of kerosene amounting to Rs.1,78,98,091/- and assessed the amount of Rs.33,10,709/- being cash deposit made during demonetization period added u/s.69A and taxed u/s.115BBE of the Act without providing reasonable opportunity of being heard either by the AO or by the CIT(A). The ld.AR for the assessee first of all stated that the assessment was framed ex-parte u/s.144 of the Act and the CIT(A)-NFAC has not considered the written submissions filed by assessee dated 07.01.2021 and 19.03.2024. The ld.AR took us through the assessment order and stated that the AO has treated the deposit of Rs.1,78,98,091/- as business receipts of the assessee and estimated the profit @ 8% of the total business turnover. He stated that the AO passed this assessment order ex-parte without providing reasonable opportunity of being heard to the assessee and the CIT(A)-NFAC also confirmed the same without considering the submissions of the assessee. Subsequently, the AO also added cash Rs.33,10,709/- u/s.69A of the Act and taxed the same u/s.115BBE of the Act without providing reasonable opportunity of being heard and the CIT(A)-NFAC also confirmed. Therefore he requested for an opportunity of being heard by the AO and hence, requested that the orders of lower authorities be set aside and matter be remanded back to the file of the AO for fresh adjudication after allowing reasonable opportunity of being heard to the assessee.
When these facts were confronted to ld.CIT-DR, he vehemently contested and stated that the assessee is a non-filer first of all and as noted by AO in para 4, lot of opportunities have been provided and notice u/s.142(1) of the Act was also served but no response. Hence the AO has no other alternative except to frame assessment ex-parte u/s.144 i.e, best judgment assessment based on material available with him. As regards to the order of CIT(A)-NFAC, the ld.CIT-DR stated that the CIT(A)-NFAC has passed the appellate order based on material available on record and on merits. Hence, he requested confirmation of order of CIT(A) and that of the AO.
4. We have heard rival contentions and gone through facts and circumstances of the case. We noted that the assessment order is best judgment assessment u/s.144 of the Act and the AO has allowed six opportunities to submit the details but the assessee is totally non-cooperative and careless. Similarly even before us, assessee has not filed any detail nor could explain the source of cash deposits except explaining that these are business receipts out of which deposits were made in bank. However, in the interest of justice, we feel that the assessment order is ex-parte and the order of CIT(A)-NFAC is also based on the same without calling for any details or remand report from the AO. Admittedly, the assessee is in the business of dealing in kerosene trading as a proprietor. But, it is also a fact that the assessee is a non-cooperative and non-filer. But to compute real income, assessee should be allowed one more opportunity. Hence, we set aside the order of CIT(A)-NFAC as well as that of the AO and remand the matter in entirety back to the file of the AO for fresh adjudication after allowing reasonable opportunity of being heard to the assessee. The assessee is also directed to cooperate with the AO and file all the necessary details as required as per law. However, this set aside is subject to a cost of Rs. 25,000/- (Rupees twenty five thousand only) to be paid to the Tamil Nadu State Legal Services Authority at Hon’ble High Court of Madras by the assessee within a month’s time from the date of receipt of this order. The assessee will pay this cost and produce the receipt before the AO. In term of the above, the matter is remanded back to the file of AO for fresh adjudication after allowing reasonable opportunity of being heard to the assessee. Accordingly, the appeal of the assessee is allowed for statistical purposes.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court at the time of hearing on 21stAugust, 2024 at Chennai.