SAROJBEN LALITBHAI VADHANI,AHMEDABAD vs. THE ITO, WARD-3(3)(5), AHMEDABAD

The assessee, an individual, did not file her return of income for AY 2012-13. The case was reopened under Section 147 of the Act based on information received during a search operation on J.P. Iscon Group, revealing that the assessee had allegedly paid Rs.46,50,500/- as unaccounted cash ("on- money") for booking a flat (Unit No. 1/501) in Iscon Platinum, Ahmedabad. Despite several notices issued under Section 142(1) of the Act, the assessee allegedly failed to respond, leading to an ex-parte assessment under Section 144 of the Act, wherein the AO made an addition of Rs.46,50,500/- under Section 69A of the Act as unexplained money.

The assessee filed an appeal before the CIT(A), challenging the validity of the assessment as well as the addition. However, the CIT(A) passed an ex- parte order, confirming the addition made by the AO, citing the assessee's non-compliance and lack of prosecution during the appellate proceedings.

Aggrieved by the order of the CIT(A), the assessee is in appeal before us with following grounds of appeal:

The Ld. Chi(Appeal) has erred in law as well as in fact while confirming the addition made by the Ld. Assessing officer (NFAC) in the assessment order u/s 147 r.w.s. 144B, that is passed without giving proper opportunity of being heard to the assessee. The Ld. A.O has passed high pitch assessment u/s 147 r.w. 144 is against the principal of natural justice and therefore bad in law and required to be cancelled.

The Ld. CIT (Appeal) has erred on law as well as on facts while confirming the addition of Rs. 46,50,500/- made by Ld. A.O. on account of unexplained money u/s 69A. The Addition is confirmed on conjecture and surmises and on the basis of law and fact of the case the same is required to be deleted.

The appellant reserves the right to delete, add, alter, and/or modify the grounds of appeal either before or during the course of hearing of the appeal.

During the course of hearing before us, the Authorised Representative (AR) of the assessee submitted that the assessee had duly responded to the notices issued by the AO. The AR produced copies of the replies filed during the assessment proceedings, which included submissions dated 04/10/2019 and 25/11/2019, addressing the issues raised in the notices. In these replies, the assessee explained that she had not earned any income during FY 2011- 12 and that the property in question was booked by her husband, Mr. Lalit Asst. Year : 2012-13

The Departmental Representative (DR), on the other hand, stated that the assessee has not appeared before the AO as well as the CIT(A) and there was information with the AO based on the impugned excel-sheet and the AO had sufficient basis to conclude that the cash was paid at the time of booking and later received back on cancellation of booking.

Upon careful consideration of the facts of the case, submissions made by the assessee, and the material on record, we observe that the CIT(A) passed an ex-parte order without giving the assessee a final opportunity of being heard. The assessee has demonstrated before us that she had responded to the notices issued by the AO and provided explanations, which were not adequately considered by the lower authorities. The principles of natural justice demand that the assessee be provided with a fair opportunity to present her case. In this instance, it appears that the CIT(A) did not issue any final notice or provide the assessee with a chance to explain her case during the appellate proceedings. This procedural lapse renders the ex-parte order unsustainable.

The assessee had specifically requested the AO to provide the reasons for reopening the assessment under Section 147 of the Act. It is a settled principle of law that the AO must communicate the reasons for reopening, if Sarojben Lalitbhai Vadhani vs. ITO Asst. Year : 2012-13

The addition of Rs.46,50,500/- under Section 69A of the Act was made based on information obtained from the search on J.P. Iscon Group, which indicated that the assessee had paid unaccounted cash for the property. However, the assessee contends that the property was booked by her husband, and she had no role in the transaction. This explanation was not properly examined by the AO or the CIT(A). In light of these circumstances, the addition appears to have been made without fully investigating the assessee’s claims or considering relevant evidence.

While the assessee claims to have replied to the notices, there has been some degree of negligence in diligently prosecuting the appeal before the CIT(A). In the interest of justice, we deem it appropriate to restore the matter to the file of the CIT(A) for fresh adjudication, but we impose a cost of Rs.5,000/- (Rupees Five thousand only) on the assessee for her lack of diligence in the appellate proceedings, to be deposited in the Prime Minister’s Relief Fund and the receipt of the same be submitted to the Department and to the Registry of this office for record.

In view of the above findings, we set aside the ex-parte order passed by the CIT(A) and restore the matter back to the file of the CIT(A) for fresh adjudication on merits. The CIT(A) is directed to afford the assessee a proper opportunity of being heard and to pass a reasoned order in accordance with Sarojben Lalitbhai Vadhani vs. ITO Asst. Year : 2012-13

The order of the CIT(A) is set aside, and the matter is restored to the file of the CIT(A) for fresh adjudication. The assessee is directed to pay a cost of Rs.5,000/-, to be deposited in the Prime Minister’s Relief Fund, for her lack of diligence in prosecuting the appeal.

In the result, the appeal of the assessee is treated as allowed for statistical purposes. Order pronounced in the Open Court on 21st October, 2024 at Ahmedabad. (SUCHITRA KAMBLE) ACCOUNTANT MEMBER अहमदाबाद/Ahmedabad, िदनांक/Dated 21/10/2024 टी.सी.नायर, व.िन.स./T.C. NAIR, Sr. PS आदेश की #ितिलिप अ$ेिषत/Copy of the Order forwarded to : अपीलाथ% / The Appellant 1. #&थ% / The Respondent. 2. संबंिधत आयकर आयु' / Concerned CIT 3. आयकर आयु' अपील

( ) / The CIT(A)-(NFAC), Delhi िवभागीय #ितिनिध आयकर अपीलीय अिधकरण राजोकट/DR,ITAT, Ahmedabad, 5. , , गाड" फाईल /

Guard file.