Facts of the Case

During the demonetisation period, the assessee deposited cash amounting to ₹10,53,000. The assessee did not file a return of income for Assessment Year 2017-18 in response to notice issued under section 142(1) of the Income-tax Act, 1961. Consequently, the Assessing Officer completed the assessment ex-parte under section 144 and assessed total income at ₹12,92,040, treating the cash deposits as unexplained money under section 69A.

The assessee preferred an appeal before the Commissioner of Income Tax (Appeals). However, the appeal was dismissed ex-parte on the ground of limitation, as the request for condonation of delay was not accepted. Aggrieved, the assessee approached the Income Tax Appellate Tribunal.

 

Issues Involved

  1. Whether ex-parte assessment under section 144 and addition under section 69A without granting reasonable opportunity are sustainable in law.
  2. Whether dismissal of appeal by the CIT(A) on limitation, without affording adequate opportunity, is justified.
  3. Whether the matter deserved restoration for de novo adjudication.

 

Petitioner’s Arguments

No representation was made on behalf of the assessee before the Tribunal. However, the record reflected that the assessee had sought condonation of delay before the CIT(A) and that the assessment and appellate proceedings were completed ex-parte.

 

Respondent’s Arguments

The Revenue relied on the orders passed by the Assessing Officer and the CIT(A), submitting that the assessee failed to comply with statutory notices and did not pursue appellate proceedings diligently.

 

Court Order / Findings

The Income Tax Appellate Tribunal observed that both the assessment order and the impugned appellate order were passed ex-parte without providing reasonable opportunity of being heard to the assessee. The Tribunal noted that the Assessing Officer proceeded under section 144 without adequate opportunity, and the CIT(A) dismissed the appeal on limitation without meaningful consideration of the assessee’s request for condonation of delay.

Considering the principles of natural justice, the Tribunal held that the assessee deserved an effective opportunity to explain the cash deposits and contest the addition made under section 69A. Accordingly, the impugned appellate order dated 26.09.2024 was set aside, and the matter was restored to the file of the Assessing Officer for passing a de novo assessment order in accordance with law after providing reasonable opportunity to the assessee.

 

Important Clarification

The Tribunal clarified that dismissal of appeals and confirmation of additions without granting reasonable opportunity cannot be sustained. Even in cases involving demonetisation-related cash deposits and best-judgment assessments, adherence to principles of natural justice is mandatory. The appeal was allowed for statistical purposes.

Link to download the order -  https://www.mytaxexpert.co.in/uploads/1770880505_SHRIKISHANGUPTAKANNAUJVS.ITOWARD433KANNUAJKANNAUJ.pdf 

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