FAHIMUDDIN INAMDAR,NAGPUR vs. INCOME TAX OFFICER, WARD 4(2), NAGPUR

Tersely stated facts of the case are that; 2.1 the assessee is an individual engaged in the trading business of immovable properties. The return of income filed by him declaring total income of ₹2,69,750/- was subjected for scrutiny. For assessee’s failure to substantiate with cogent evidences and explain nature & source of cash deposits of ₹88,69,700/- the ITAT-Nagpur Page 1 of 4 Ld. Income Tax officer Ward-4(2) framed the assessment u/s 143(3) of the Act by bringing to tax entire cash deposit as unexplained cash credit u/s 68 of the Act.

2.2 Aggrieved assessee carried the matter in appeal before first appellate authority u/s 246A(1)(a) of the Act. While dealing with assessee’s appeal the Ld. NFAC provided as much as four opportunities vide notice dt. 31/12/2020, 21/04/2021, 17/08/2021 and finally notice dt. 18/05/2023. However, the assessee did neither comply with any of these notices nor he could place any cogent material explaining the nature and source of cash credit to the satisfaction. In the absence of any response forthcoming from the assessee or the written submission in support of grounds raised by it, the Ld. NFAC after reiterating the findings of Ld. AO, has culminated the proceedings ex-parte and confirmed the additions by appending a decision para at page 12 of the impugned order which is reproduced herein below; ‘Decision

We have heard rival contentions, perused the material placed on record in light of rule 18 of ITAT-Rules 1963. We note that, upon appellant’s failure to place cogent evidence in support of his claim and effectively explain nature & source of cash deposit the Ld. AO added entire cash deposit as unexplained cash credit u/s 68 of the Act. Whereas, in an appeal, the Ld. NFAC confirmed former addition ex-parte for non-prosecution of appeal by the assessee.

We observed that, of the four notices issued by Ld. NFAC first three notices served calling upon the appellant to represent his case were indeed issued during subsistence of COVID-19. Owning to restriction placed and nationwide lock down the appellant did attend neither. The fourth & final notice dt. 18/05/2023 served during the appellate proceedings is the only effective notice which the appellant did fail to reply, based on which the Ld. NFAC without further notice and enquiry into the subject matter has culminated its proceedings by confirming the addition for non-prosecution by the impugned order dt. 24/05/2023.

First of all, we quote here that, plain reading of section 250 of the Act reveals that, it is incumbent upon the Ld. CIT(A) to make necessary enquiries before passing an order and while doing so it demands it to decide each of the points arising out of the appeal i.e. grounds on merits even in an ex-parte order. In view of Section 250(4) r.w.s. 250(6) of the Act, Ld. CIT(A) has no power to dismiss an appeal for non-prosecution, without discussing the merits of the case independently, and this proposition finds support in the decision of ‘CIT Vs Premkumar Arjunda’ [(2016) 240 TAXMAN 0133 (Bom)].

Secondly, the action of the Ld. NFAC has also suffered from sufficiency of reasonable opportunity to the appellant to adduce necessary evidential material in support of claim and to represent effectively vis-à-vis to comply with the final notice. It shall be worthy to underline that opportunity of being heard should be real, reasonable and effective and same should not be empty formalities, it should not be a paper opportunity. The doctrine of natural justice is a facet of fair play in action and no person shall be saddled with a liability without being heard. Placing reliance on Hon’ble High court of Patna judgement in ‘St. Paul’s Anglo Indian Education Society (2003) 262 ITR 377 (Pat)’, we hold the impugned adjudication is unjustified as the appellant was deprived of reasonable opportunity and time to produce all relevant documents to substantiate his claims in the return.

On former both scores, without commenting on merits, we deem it proper to set-aside the impugned order and remit the matter back to the Ld. NFAC for de- nova adjudication in accordance with law with a direction to accord not more than two effective opportunities to the appellant. Ergo ordered accordingly.

In result, the appeal of the assessee is allowed for statistical purposes. In terms of rule 34 of ITAT Rules, the order pronounced in the open court on this Friday, 22nd day of March, 2024.