Facts of the Case

The assessee is an individual engaged in the business of trading in gold and silver jewellery under the name and style “Bhagwati Jewells”.

The return of income was filed on 30.10.2019 declaring total income of Rs.7,59,190/-.

The Assessing Officer issued notice under Section 142(1) dated 26.02.2021 fixing compliance on 05.03.2021. Since no compliance was made, another notice under Section 142(1) dated 09.08.2021 was issued fixing compliance on 18.08.2021. When no compliance was received, a show cause notice dated 21.09.2021 was issued fixing hearing on 24.09.2021.

As no compliance was made, the Assessing Officer completed the assessment ex-parte under Section 144 dated 28.09.2021 determining total income at Rs.98,84,378/- by making various additions.

The assessee preferred an appeal before the learned CIT(A), which was dismissed vide order dated 14.11.2024.

Issues Involved

  1. Whether the ex-parte assessment under Section 144 was valid in absence of proper service of notice.
  2. Whether the CIT(A) passed a proper speaking order.
  3. Whether additions under Section 68 (unexplained cash credit) and Section 69 (unexplained investment) were sustainable.
  4. Whether additions based on survey material and alleged “rough and corrupt data printouts” were justified without verification.

 

Petitioner’s Arguments

The assessee contended that:

  • The assessment framed under Section 144 was bad in law and on facts.
  • No notice under Section 142(1) was received by the assessee.
  • Both lower authorities failed to provide proper opportunity.
  • The CIT(A)’s order was not a speaking order, as the appeal was decided summarily without detailed findings on merits.
  • Survey was conducted in A.Y. 2020-21 and not in the year under consideration.
  • Additions were made on the basis of rough and dumb documents and alleged corrupt data.
  • Addition of Rs.54,37,966/- under Section 68 was incorrect as it represented cash balance and not cash credit.
  • Addition of Rs.13,05,000/- under Section 68 was unjustified since parties were identifiable, income tax assessees, and close relatives.
  • Additions relating to remuneration and unexplained investment were also unjustified.

The learned Counsel submitted that no notice was served and sought restoration of the matter to the Assessing Officer for fresh adjudication after providing reasonable opportunity.

 Respondent’s Arguments

The learned Departmental Representative supported the orders of the lower authorities. However, no objection was raised to the prayer of the assessee seeking restoration of the matter for fresh adjudication.

 Court Order / Findings

  • The assessment was completed ex-parte under Section 144.
  • The assessee contended that no notice was served.
  • The CIT(A) dismissed the appeal.
  • The Revenue did not object to restoration of the matter.

Considering the specific facts and circumstances of the case, the Tribunal set aside the impugned appellate order dated 14.11.2024.

The issues relating to various additions made by the Assessing Officer were restored to the file of the Assessing Officer with direction to pass a de novo assessment order in accordance with law after providing reasonable opportunity of hearing to the assessee.

Important Clarification

The Tribunal did not adjudicate on the merits of additions under Sections 68 or 69. The matter was restored solely to ensure that reasonable opportunity is granted and issues are examined afresh.

  • The requirement of proper service of notice.
  • The obligation to pass speaking and reasoned orders.
  • The importance of adherence to principles of natural justice in best judgment assessments under Section 144.

Link to download the order - https://www.mytaxexpert.co.in/uploads/1770885001_SAURABHRASTOGIALLAHABADVS.DCITACITCENTRALALLAHABADALLAHABAD2.pdf 

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