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Facts
The assessee filed income tax returns for AY 2012-13 and AY 2017-18. The cases were reopened due to escapement of income and unexplained investments/cash deposits. The assessee failed to comply with statutory notices in both assessment proceedings.
Held
The Tribunal noted that the lower authorities decided the cases ex-parte without addressing the merits. Considering the appeals were not decided on merit and the assessee was denied a proper hearing, the Tribunal set aside the impugned orders.
Key Issues
Whether the lower authorities erred in dismissing the appeals for non-prosecution without affording proper opportunity and deciding the case on merits.
Sections Cited
148, 147, 144, VIA, 57
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘E’: NEW DELHI
Before: SHRI YOGESH KUMAR U.S. & SHRI AVDHESH KUMAR MISHRA
ORDER PER AVDHESH KUMAR MISHRA, AM Common facts and similar grounds arise in the above captioned appeals of the assessee; therefore, these appeals were heard together and are being disposed off by this common order.
The above captioned appeals for Assessment Years (‘AY’) 2012-13 and 2017-18 filed by the assessee are directed against two different orders dated 19.12.2024 of the Commissioner of Income Tax (Appeals), NFAC [‘CIT(A)’].
In the appeal of AY 2012-13, the assessee has challenged not only the reopening of the assessment but also on the merit of additions. However, the appeal of AY 2017-18 has been challenged only on the merit of the case. of AY 2012-13: 4. The relevant facts of AY 2012-13 giving rise to this appeal are that the appellant assessee filed his Income Tax Return (‘ITR’) on 02.07.2012 declaring income of Rs.33,72,440/-. Later, the case was reopened under section 148 of the Income Tax Act, 1961 (‘Act’) on the reasoning of escapement of income on account of capital gains and unexplained investments. But the assessee failed to ensure any compliance of statutory notices; therefore, the AO had no option except to complete the assessment ex parte under section 147/144 of the Act. The reopened assessment was completed at income of Rs.1,99,68,489/-. Aggrieved the assessee filed appeal before the CIT(A), who dismissed the appeal due to non-prosecution holding as under:
“4.1. The order of the Ld. AO passed u/s 144 dated 13/12/2019 as well as grounds of appeal and statement of facts filed by the appellant has been carefully considered. In essence, all the substantial grounds in the grounds of appeal taken by the appellant relate to the action of the Ld. AO regarding addition of Rs.80,00,000/- on STCG and Rs.1,19.68.485/-as Unexplained Investment on property of Income Tax Act. 1961. 4.2. This case was initially fixed for hearing on 24.02 2021 by a notice dated 17.02.2021 but no compliance was made. A communication window was opened by the department and communication to the appellant was made on 04.11.2022, but the appellant did not file any response to the same. As no compliance was received, nor was there any request for any adjournment, hearing notices were issued again on 20.12.2023, 19.04.2024 23.09.2024, 26.11.2024 but the Appellant failed to comply to these notices. The case was finally fixed for hearing on 18.12.2024 but the Appellant has not provided any response till date. It therefore appears that Shubham Yadav the appellant is not interested to pursue the matter. The law aids those who are vigilant, not those who sleep upon their rights This principle is embodied in well-known dictum, "vigilantibus et non dormientibus jura subveniunt Considering the facts and keeping in view the provisions of rule 19(2) of the Income-tax (Appellate Tribunal) Rules in the case of CIT V. Multiplan India (P) Uld [1991]
38. ITD 320 (Delhi), the appeal was treated as unadmitted. Similar view has been taken by the Hon'ble Madhya Pradesh High Court in the case of Estate of late Tukojirao Holkar v. CWT [1997] 223 ITR 480 wherein it has been held as under (headnote) "If the party, at whose instance the reference is made fails to appear at the hearing or fails in taking steps for preparation of the paper books so as to enable hearing of the reference, the court is not bound to answer the reference" Similarly, the Hon'ble Punjab and Haryana High Court in the case of New Diwan Oil Mills v. CIT (2008) 296 ITR 495/[2005] 149 Taxman 554 returned the reference unanswered since the assessee remained absent and there was not any assistance from the assessee. Their lordships of the Hon'ble Supreme Court in the case of CIT v. B. N. Bhattacharjee [1979] 118 ITR 461 held that the appeal does not mean, mere filing of the memo of appeal but effectively pursuing the same. In cases where the appellant does not want to pursue the appeal, appellate authorities have inherent power to dismiss the appeal for non-prosecution as held by the Hon’ble Bombay High Court in the case of M/s. Chemipol vs. Union of India in Excise Appeal No. 62 of 2009. While deciding the issue, the Hon’ble High Court of Bombay has referred to the observations of Hidayatullah, Chief Justice (as His Lordship then was) in Sunderial Vs. Nandramdas Dwarkadas AIR 1958 MP 250 wherein it was observed: - "Now the Act does not give any power of dismissal But it is axiomatic that no court or tribunal is supposed to continue a proceeding before it when the party who has moved it has not appeared nor cared to remain present. The dismissal therefore, is an inherent power which every tribunal possesses…..” 4.3. On merits also, the appellant has no case. In ground no. 2 and 3 of appeal, the appellant has contested that the AO wrongfully made the Shubham Yadav addition to his total income. On perusal of the Assessment Order, it is clearly seen that the appellant was provided sufficient opportunity of hearing but the appellant failed to comply to any of the notices sent to him, resulting in the AO completing the assessment under best judgment During the course of appellate proceedings, the appellant failed to explain, the grounds taken against the issues. The reasons for additions were clearly mentioned in the assessment order. However, the appellant made no effort to counter the findings of the Ld. AO either by uploading relevant document(s) or explaining the matter in detail and chose to remain silent about the issue. The appellant was provided several opportunities for uploading written submission along with supporting evidence by issuing notices, however, the Appellant failed to explain the same. 4.4 In view of this. I find no reason to interfere with the order of the Ld. AO and the same is upheld accordingly. Therefore, all the substantial grounds taken by the appellant are dismissed.”
AY 2012-13: 5. The relevant facts of AY 2017-18 giving rise to this appeal are that the appellant assessee filed his ITR on 27.03.2018 declaring income of Rs.13,76,040/-. The case was picked up for scrutiny for the reasoning of cash deposits during the demonetization period. But the assessee failed to ensure any compliance of statutory notices during the assessment proceedings; therefore, the AO had no option except to complete the assessment ex parte under section 144 of the Income Tax Act, 1961 (‘Act’). The assessment was completed at income of Rs.70,97,654/- wherein the not only the cash deposits in bank account was treated unexplained but the AO also made disallowances of (i) cost of acquisition while computing capital gains, (ii) claim of deduction under chapter VIA of the Act and (iii) claim of deduction under section 57 of the Act against the interest income. Aggrieved Shubham Yadav the assessee filed appeal before the CIT(A), who dismissed the appeal due to non-prosecution.
& 1076/Del/2025 6. The Ld. Counsel submitted that the Ld. CIT(A) erred in confirming the following actions of the A.O. without providing due and adequate opportunity of hearing-
Before us, the Counsel of assessee prayed for remanding the matter back to the AO as none of the authorities below had decided the issues in dispute on merit either by the AO or the Ld. CIT(A).
The Ld. Sr. DR defended the orders of the Authorities below. The Ld. Sr. DR, drawing our attention to various Para Nos. of assessment orders and impugned orders, submitted that reasonable opportunities of being heard were provided to the appellant assessee in both cases by the AO and the Ld. CIT(A). However, the appellant assessee tactfully ensured non- compliance to avoid proper investigations. Hence, he prayed for upholding of the impugned orders.
We have heard both parties and perused the material available on the records of both years. We take note of the fact that the both Authorities below have decided the case ex-parte and not on the merits. Considering the facts in entirety and without offering any comment on merit of the cases, we deem it fit to set aside both impugned orders and remit the matter back to Shubham Yadav the files of the AO for deciding both the cases afresh/denovo, in accordance with law, after providing adequate opportunity of being heard to the appellant assessee. Ordered accordingly. The appellant assessee, no doubt, shall cooperate in remitted assessment proceedings in both years.
In the result, both appeals of the assessee is allowed for statistical purposes.
Order pronounced in open Court on 29th August, 2025