AI Structured Summary
Not yet generated for this judgment
Judgment
Per Raj Kumar Chauhan, Judicial Member:
The appeal o f the assessee is dir ected against the order dated 07.10.2025 passed by Ld. Principal Co mmissioner of Income Tax (Appeals)-31, New Delhi (hereinafter referred to as the “PCIT(A)”) passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) wherein the additio n made by the Assessment order dated 29.12.2019 on account of deposit o f Rs.56,31,233/- during demonetization u/s 68 of the Act has been confirmed and penalty proceedings has been initiated.
None appeared on behalf of the assessee nor any adjournment letter was filed.
Facts in brief as culled out in the authorities below are that the assessee filed return o f income declaring income of Rs.8 ,59,990/-. The case was se lected for scrutiny under CASS by issuing no tice u/s 143(2) dated 10.08.2018. Thereafter notice u/s 142(1) alo ng with the questionnaire was issued. During the assessment proceedings, it has been noticed that the cash deposited during demonetization pe riod between 09.11.2016 to 3 1.12.2016 does not commensurate with the cash deposits in previous year as well as cash dep osited during Financial Year 2016-17. It was observed that the asse ssee has failed to prove the genuineness of the cash deposited during the demo netization period as he has failed to give any satisfactory explanation despite opportunity. The Assessing Officer therefore held the said amount of Rs.58,61,233/- as income from undisclosed sour ces by making addition of the said amount u/s 68 o f the Act.
Aggrieved, the assessee filed app eal before the ld. CIT(A) who has dismissed the same on the ground that assessee failed to avail the opportunities granted during the appeal and has confirmed the Assessment Order accord ing ly.
Aggrieved by the impugned ex-parte order, the assessee filed appeal befo re us and has raised the following grounds of appeal:
“I. That the l ear ned Commissioner of Inc ome Tax (Appeals ) erred in law and on facts i n passi ng t he impugned order ex parte, witho ut providi ng t he Appella nt a proper and eff ective opportuni ty of bei ng heard, thereby vi olati ng t he pri nciples of nat ural justic e.
II. That the impugned orde r s uffers from non-applicatio n of mi nd, i nas much as the l earned C IT(A ) proc eeded to deci de the appeal on merits ex parte solely on the basis of the ass es sme nt order, wi thout consideri ng the submissions, docum ents or conte nti ons of the Appellant.
III. That t he le arned CIT(A ) grossly erred i n holding tha t m ultipl e noti ces were issued and dul y served upon the Appellant for the appearance. The A ppella nt categorically submits that no such notice of appe aranc e was e ver recei ved.
I V . That the l earned CIT(A) failed to appreciate that valid s ervice o f notice is a condition prec edent for exerci sing appellate j urisdicti o n, and in abse nce of prop er, l awful , and ef fective ser vice o f notice, t he ex part e order is viti ated and liable to be quashed.
V. That, without prej udice, the learned CIT(A) erred i n confirmi ng t he additions/disallowanc es made by the Assessi ng Officer wit hout i ndepe ndent verification, contrary to the mandat e of secti on 250(6) requi ring a speaki ng and reasoned order.
VI. That on the facts and circ umst anc es o f t he case, the Ld. CIT(A ) has erred in law in impliedly confirming the order of the A.O. by maki ng the additi on of Rs. 58,61,233/-.
VII. That on the facts and circ umst anc es o f t he case, whil e confirmi ng the additi on made by the Ld. AO, the CIT (A ) has not considered that there are plausible legal grounds based o n the which the assessment order shall stands vitia ted, without consideri ng the same, only placi ng reliance on t he assessment order, the addition has b een sus tai ned i n a mec hanical ma nner.”
We have heard the ld. DR as no one argued on behalf of the assessee and none appeared during the hearing. Ld . DR at the very outset submitted that there is no merit in the grounds raised as sufficient opportunity was granted but the assessee has failed to avail and the impugned ex-parte order has been suffered deliberately by the assessee. Further, the ld. CIT(A) was constr ained to up held the Assessment Order in the absence of any submissions having been made by the assessee/appellant.
We have co nsidered the argument and examined the impugned order and the grounds raised before us. The primary concern raised in the appeal through grounds by the assessee is that the impugned order has been passed in violation of principle of natural justice as no effective opportunity of hearing has been granted and further that the ld. CIT( A) has not followed the provision o f section 250(6) of the Act as the impugned order is unreasoned. On examining the impugned order, we are convinced that there is force in the grounds raised in the appeal because in the imp ugned order it is simply mentioned that ”during the co urse of appellate proceedings, several notices were issued on various dates”. However, nothing is stated that the said notices were d uly served or received by the assessee . Section 250(2)(a) lays down as under:
“250(2 ) The fol lo wing shall have the right to be heard at the heari ng o f the appeal-
(a)the appellant, either i n person or by an authori zed repres entative;”
Thus, the hear ing mandated by Section 250(2)(a) of the Act is no t a mere formality but a mandatory statutory requirement for following the principle of natur al justice by the quasi-judicial authority.
It is thus clear from the ab ove provision that the opportunity of hearing is not a mere formality but a mandatory requirement of the Act and simp ly issuing of the notice without satisfaction that the same has been received or served upon the assessee re sult into no n-compliance of the said provisio n by passing the impugned order by the first appellate authority. Similarly, we have noticed that the ld. C IT(A) has up held the assessment order by observing in para Nos. 9 to 11, extracted below as under:
“9 . The appellant has not been able to effecti vely contro vert the above fi ndi ng of the A O. The appellant has hi ghli ght ed removal of so me conte nt of the ass essme nt order by the AO by way of rectification orde r u/s 154 of the Act to ar gue that the p ara 3 of the assessment or der was modified to exclude the ref erence of survey and that para 5.3 was deleted. This hardly has a b eari ng on t he merits of the c as e. The q uesti on is that the appellant has deposited t he cash during demonetizati on period for whic h it has no ex planatio n to offer to the satisfaction of the AO exc ept for a n. amount of R s. 15,00,000/- which was declared by t he appellant unde r PMGKY.
10.It may be see n that the appellant declared Rs.15,00,000/-und er PMGKY implying that the appella nt has been deal i ng in unexplained cash which it did no t declare ful ly eve n under PMGK Y and whic h was fi nal ly det ected by the AO t hr ough i nformation on system.
11.In vi ew of the fo regoi ng and upon c aref ul consideratio n of the fac ts, and circumstances of the case, I fi nd no i nfirmity in the order of t he AO and no merit in the cont entio n of t he appellant. Thus, the addition m ade by the AO , to my mind, is sustai nable i n law as well as on facts . I hold accordi ngly, Henc e, the additio n of Rs. 58,61,533/- made by the AO i s hereby confi r med.”
On perusal of this extracted portion of the impugned order, it becomes apparent that the same is no t a reasoned order and the pr ovision of section 250(6) has no t been followed by the ld. CIT(A) while passing the impugned order. For these reasons, i.e . for not follow ing the principle of natural justice in the absence of effective hear ing and not deciding the matter by a reasoned orde r has resulted into miscarriage o f justice and the impugned order is not therefore sustainable and is according ly set aside. T he end of justice shall be met in case the matter is restored to the file of ld. CIT(A) by deciding afresh by giving effective opportunity of hearing to the assessee/appellant w ho shall present its case before the ld. CIT(A) within 60 days of this order.
In the result, the appeal of the assessee is allowed for statistical purposes.