2023 (1) TMI 532 - AT - Income Tax

CIT(A) dismissed the appeal of assessee in ex parte proceedings - Addition on account of deposits in bank account by treating it as unexplained investment - NFAC/Ld. CIT(A) concluded that assessee is not interested to pursue his appeal and has not filed any materials available on record against the addition made by AO - HELD THAT - Considering the fact that assessee remained unrepresented before the lower authorities and substantial addition was made in the ex-party assessment, which was again confirmed in ex-party order by ld CIT(A), therefore keeping in view the principle of natural justice, we inclined to give one more opportunity to the assessee to contest his case on merit. Thus, the appeal is restored back to the file of assessing officer to decide the issue afresh. One more reason to restore the case to the file of assessing officer that entire cash was added in the income of assessee and the NFAC/Ld. CIT(A) has not decided the case as per the mandate to Section 250(6) of the Act, which mandates that the while deciding the appeal, the ld CIT(A) is required to pass order on points of determination (grounds of appeals), decision therein on and reasons for such decision. The grounds of appeal raised by assessee is restored back to the file of AO to adjudicate the issue of addition afresh in accordance with law. Needless to direct before passing the order, the Assessing Officer to provide reasonable opportunity to assessee. Appeal of the assessee is allowed for statistical purposes.

Summary

Issues:
1. Fair hearing and opportunities denied to the assessee leading to an ex parte order.
2. Addition of Rs.17,81,580 as unexplained investment by Assessing Officer.
3. Appeal process at National Faceless Appeal Centre (NFAC) and CIT(A) in Delhi.
4. Failure of the assessee to comply with notices and lack of representation.
5. Restoration of the case to the Assessing Officer for fresh adjudication.

Analysis:

1. The appeal raised concerns about the fairness of the proceedings as the assessee claimed that both lower authorities passed an ex parte order without providing adequate hearing opportunities. The Assessing Officer added Rs.17,81,580 as unexplained investment based on cash deposits in the bank account, leading to the appeal before the CIT(A) in Delhi/NFAC. The assessee argued for the restoration of the case due to lack of timely communication and representation.

2. The authorized representative for the assessee highlighted that the assessee was not informed about the hearings due to an incorrect email address provided in the appeal form. The representative assured vigilance in future compliance and requested the case to be sent back to the Assessing Officer for a fresh decision. The Senior Departmental Representative for the revenue contended that despite opportunities given, the assessee failed to comply, leading to the dismissal of the appeal by the CIT(A).

3. The Judicial Member carefully reviewed the submissions and orders of the lower authorities. The case was reopened under section 147 based on ITD data showing significant cash deposits compared to the declared income. Despite various notices, the assessee failed to comply, resulting in an ex parte assessment and confirmation of the addition by NFAC/CIT(A) due to the assessee's lack of interest in pursuing the appeal.

4. In light of the principles of natural justice and the need for a fair hearing, the Judicial Member decided to grant the assessee another opportunity to contest the case on merit. The appeal was restored to the Assessing Officer for a fresh decision, emphasizing the importance of complying with future hearings and providing complete details regarding cash deposits without seeking unnecessary adjournments.

5. The final decision allowed the appeal for statistical purposes, directing the Assessing Officer to provide reasonable opportunities to the assessee and ensuring vigilance in future compliance. The restoration of the case aimed to address the lack of representation and the need for a fair adjudication process in accordance with the law.

This detailed analysis of the judgment highlights the issues related to fair hearing, compliance, and the restoration of the case for fresh adjudication, ensuring a just and proper resolution in the interest of natural justice.