Facts of the Case

The assessee, an individual, is engaged in the business of two-wheeler dealership and authorized workshop of Honda Motor & Scooter India Ltd. under the name and style of M/s Shree Grand Auto. The return of income for Assessment Year 2017-18 was filed on 29.10.2017 declaring total income of ₹83,58,440.

The case was selected for scrutiny under CASS, and assessment was completed under section 143(3) of the Income-tax Act on 06.12.2019. The Assessing Officer determined total income at ₹2,49,13,482 by making an addition of ₹1,65,55,042 under section 68 on account of unexplained capital introduction.

Aggrieved by the assessment order, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals). However, the appeal was dismissed vide order dated 20.05.2025.

 Issues Involved

Whether the Commissioner of Income Tax (Appeals) was justified in dismissing the assessee’s appeal ex-parte without adjudicating the matter on merits and without providing adequate opportunity of being heard, particularly in relation to the addition made under section 68 of the Income-tax Act.

 Petitioner’s (Assessee’s) Arguments

The assessee contended that he was under a bona fide belief that his counsel was representing him and filing submissions before the CIT(A). Due to lack of proper representation, the appellate authority passed an ex-parte order. The assessee submitted that he was denied effective opportunity to rebut the findings of the Assessing Officer and requested restoration of the matter in the interest of substantial justice.

 Respondent’s (Revenue’s) Arguments

The Departmental Representative supported the assessment order and the order of the CIT(A). The Revenue opposed remanding the matter back to the lower authorities and placed reliance on the judgment in CIT v. SAS Educational Society [2009] 319 ITR 65 (P&H) to argue that non-prosecution of appeal justified dismissal.

 Court Order / Findings

The Income Tax Appellate Tribunal observed that the assessee was not properly represented before the CIT(A), resulting in an ex-parte appellate order. Considering the facts and circumstances of the case, and in the interest of substantial justice, the Tribunal held that the assessee should be granted another opportunity to present his case.

Accordingly, the impugned order passed by the CIT(A) was set aside, and the issue relating to the addition of ₹1,65,55,042 under section 68 was restored to the file of the CIT(A) with a direction to pass a fresh order in accordance with law after providing reasonable opportunity of being heard to the assessee.

The appeal was partly allowed for statistical purposes.

 Important Clarification

The Tribunal’s decision does not adjudicate the merits of the addition under section 68. The matter has been restored solely to ensure compliance with principles of natural justice, emphasizing that appellate proceedings should not be concluded ex-parte without affording reasonable opportunity to the assessee, even where the Revenue relies on precedents such as CIT v. SAS Educational Society.

Link to download the order - https://www.mytaxexpert.co.in/uploads/1770626900_ANKITGUPTAALLAHABADVS.DEPUTYCOMMISSIONEROFINCOMETAXRANGE11ALLAHABAD.pdf 

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