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Facts
The assessee filed its return for AY 2016-17 and the case was selected for limited scrutiny. The assessee failed to comply with statutory notices and provide explanations for large sundry creditors and investment in property. Consequently, the assessment was completed ex-parte.
Held
The Tribunal noted that both the lower authorities decided the case ex-parte and not on merits. Therefore, the Tribunal set aside the impugned order and remitted the matter back to the AO for deciding the case afresh after providing adequate opportunity of being heard to the assessee.
Key Issues
Whether the lower authorities erred in deciding the case ex-parte without considering the merits of the case, and if so, whether the matter should be remitted back for fresh adjudication.
Sections Cited
69A, 69C, 144A, 144
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
A.Y. 2016-17 Gulshan Lal, Income Tax Officer, Khandsa Road, Sector -10, Ward-1(5), Gurgaon Vs. Income Tax Office, PAN: ABZPL7258D Udyog Vihar, Gurgaon (Appellant) (Respondent) Appellant by None Respondent by Sh. Dheeraj Kumar Jain, SR. DR Date of Hearing 26/08/2025 Date of Pronouncement 29/08/2025 ORDER
PER AVDHESH KUMAR MISHRA, AM
The appeal for the Assessment Year (‘AY’) 2016-17 filed by the Assessee is directed against the order dated 19.12.2024 of the Commissioner of Income Tax (Appeals), NFAC [‘CIT(A)’].
Following grounds are raised in this appeal: -
1. The assessment order passed in the present case is based on personal whims and fancies without ascertaining the facts and circumstances of the case. Hence liable to be quashed.
2. That the Ld. CIT(A), NFAC has erred on facts and in law in passing the ex-party order without proving opportunity to the appellant to explain the case and sustain the claim.
Gulshan Lal 3. That having regards to the facts and circumstances of the case, the Ld. CIT(A) erred in upholding the addition made by the Ld. AO of Rs. 1,52,70,000/- u/s 69A of the Act on account of Unexplained Investment in Property.
4. That having regards to the facts and circumstances of the case, the Ld. CIT(A) erred in upholding the addition made by the Ld. AO of Rs. 3,70,99,544/- u/s 69C of the Act on account of Unexplained Creditors.
5. That the appellant craves leave to add, amend, modify, rescind, supplement or alter any of the grounds of appeal
before the appeal is finally adjudicate upon.”
3. The relevant facts giving rise to this appeal are that the assessee appellant, book seller, filed its Income Tax Return (‘ITR’) of the relevant year on 14.10.2016 declaring income of Rs.8,90,990/-. The case was selected for limited scrutiny through CASS on the reasoning of large amount of sundry creditors of Rs.3,70,99,544/- and huge investment of Rs.1,52,70,000/- in the immovable property. During the course of assessment proceedings, the assessee was show-caused to explain the source of investment in the immovable property and sundry creditors. 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 144A of the Act. Aggrieved, the assessee filed appeal before the CIT(A), who dismissed the appeal due to non-prosecution holding as under:
“2.1. The assessee submitted his Return of Income for AY 2016-17 on 14/10/2016. The case was selected for limited scrutiny with two identified issues for verification. Firstly, the assessee disclosed very large amount, as outstanding sundry creditors and secondly, there had been an investment made in an immovable property by the assessee. During the scrutiny proceedings, the assessee did not comply with any of 2 Gulshan Lal statutory notices of enquiry as sent by the AO to clarity or submit relevant documentary evidences to explain the outstanding sundry creditors balance for Rs. 3,70,99,544/-, neither did he explain the source of investment made in the immovable property for a sum of Rs. 1,52,70,000/-. In absence of any credible explanation, the AO concluded the assessment on 13/12/2018 u/s. 144, where in addition to the returned income of Rs. 8,90,990/-, additions were made on account of Unexplained Investment in property for Rs. 1,52,70,000/- and an unsubstantiated amount of sundry creditor for Rs. 3,70,99,544/-. 2.2. Aggrieved with the order, the assessee submitted the appeal belatedly on 03/06/2019. However, he claimed that technically there was no delay as he claimed that he received the order only on 15/05/2019. 2.3. The appeal was filed before CIT(Appeal), Gurgaon-1 and later the appeal was migrated to NeFAC for disposal in a faceless manner. 2.3. During the appeal stage, several notices were issued to the assessee and time and again he had sought for adjournment, without submitting any evidentiary proof or document in support of his claim. In the appeal memo itself, he claimed that documents will be submitted with paperbook, but till date of passing of this order, no such paperbook was submitted. Under such circumstances, I am of considered view that either the assessee do not have evidentiary proof of the transactions recorded in his books of account, which can be substantiated or he does not want to pursue appeal.
Therefore, the appeal of the assessee is dismissed for non-persuasion and the additions made by the AO stands confirmed.”
Before us, the assessee was not represented by anyone. Therefore, we heard the Ld. Sr. DR, who defended the orders of the Authorities below. The Ld. Sr. DR, drawing our attention to various Para Nos. of the assessment order and impugned order, submitted that reasonable opportunities of being heard were provided to the appellant assessee by the AO and the Ld. CIT(A). However, the appellant assessee tactfully ensured 3 Gulshan Lal noncompliance to avoid proper investigations. Hence, he prayed for upholding of the authorities below. On specific query by us, he admitted that the issue in dispute had not been decided on merit either by the AO or the Ld. CIT(A).
We have perused the material available on the record. 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 case, we deem it fit to set aside the impugned order and remit the matter back to the file of the AO for deciding the case 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 the result, the appeal of the assessee is allowed for statistical purposes.