Facts of the Case

The assessee was engaged in the business of operating an LPG gas agency and did not file a return of income for Assessment Year 2018-19. During the relevant financial year, cash deposits aggregating to ₹2,40,14,266 were made in the assessee’s bank account. On the basis of these deposits, reassessment proceedings were initiated by issuance of notice under section 148.

Despite issuance of multiple statutory notices during reassessment proceedings, the assessee neither filed a return of income nor furnished any explanation or documents. Consequently, the Assessing Officer completed the assessment ex-parte under section 144 and treated the entire cash deposits as unexplained money under section 69A.

The assessee preferred an appeal before the Commissioner of Income Tax (Appeals). However, even during appellate proceedings, the assessee failed to comply with notices, resulting in dismissal of the appeal by the CIT(A) through an ex-parte order. Aggrieved, the assessee approached the Income Tax Appellate Tribunal.

 

Issues Involved

  1. Whether ex-parte assessment and appellate orders passed due to persistent non-compliance are sustainable without granting a final opportunity.
  2. Whether addition of entire cash deposits under section 69A requires reconsideration on merits.
  3. Whether the matter deserved to be restored for de novo assessment subject to conditions.

 

Petitioner’s Arguments

The assessee sought restoration of the matter, contending that one more opportunity should be granted to explain the nature and source of cash deposits and to pursue the appeal on merits.

 

Respondent’s Arguments

The Revenue relied upon the orders of the Assessing Officer and the CIT(A), submitting that repeated opportunities were granted at both stages and the assessee remained completely non-cooperative, compelling the authorities to pass ex-parte orders.

 

Court Order / Findings

The Income Tax Appellate Tribunal observed that both the assessment order and the appellate order were passed ex-parte due to consistent non-compliance by the assessee. The Tribunal categorically noted that the assessee was non-cooperative throughout assessment as well as appellate proceedings, and the authorities were left with no option but to proceed ex-parte.

However, considering the interest of justice, the Tribunal held that one final opportunity should be granted to the assessee to explain his case on merits. Accordingly, the order of the CIT(A) was set aside and the matter was restored to the file of the Assessing Officer with a direction to pass a de novo assessment order in accordance with law after providing reasonable opportunity of being heard to the assessee.

In view of repeated non-compliance, the Tribunal imposed a cost of ₹10,000 on the assessee, to be deposited within 60 days of receipt of the order.

 

Important Clarification

The Tribunal clarified that while persistent non-compliance justifies ex-parte proceedings, substantive justice requires that one final opportunity be granted before fastening tax liability on the assessee. The grant of relief was made conditional upon payment of costs, emphasizing the assessee’s duty to cooperate in statutory proceedings. The appeal was allowed for statistical purposes, and the stay application was dismissed as infructuous.

Link to download the order -  https://www.mytaxexpert.co.in/uploads/1770879228_HRIDAYESHKUMARVERMABANDAVS.INCOMETAXOFFICERBANDA2.pdf 

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