Harsha Rani vs Income Tax Officer Ward-3, Rohtak

PER RAJ KUMAR CHAUHAN (J.M.):

ITA No. 8251/Del/2025 is directed against the orders dated 21.11.2025 passed by the Commissioner of Income Tax (Appeals)/NFAC, Delhi under Section 250 of the Act, 1961 (in short ‘the Act’) whereby the assessment order dated 05.02.20224 u/s 147 r.w.s. 144 r.w.s. 144B of the Act was upheld and addition of Rs. 33,64,637 /-was confirmed.

Since the assessee is the same and all the proceedings emanate from the same assessment order, therefore, all the appeals are being disposed of by this common order, in order to avoid the multiplicity of the decision.

The facts in brief, as culled out from the orders of the lower authorities are that as per the specific information flagged as per Risk Management Strategy, the assessee has made following transactions during the F.Y. 2014-15, relevant to the A.Y. 2015-16 as under:

Since the assessee was a non filer, hence notices u/s 142(1) were issued on various dates in pursuance of the reopening of the assessment u/s 148 of the Act after issuing show cause notice u/s 148A(b) of the Act dated 22.03.2022 and the assessee has not responded to the said show cause notice. Since the assessee did not respond to the said notice and failed to comply with the statutory notices issued from time to time (as noted in para 1 of the assessment order), the assessment was completed u/s 144B of the Act which resulted into making addition of Rs. 63,64,637/- under section 69A r.w.s. 115BBE of the Act.

Since, the assessee did not file documents despite issue of the notice, the penalty u/s 271(1)(b) of the Act, subject matter of ITA No. 8252/Del/2025 alongwith the penalty u/s 271(1)(c) of the Act subject matter of ITA No. 8253/Del/2025 were imposed upon the Assessee/Appellant.

Aggrieved by the impugned assessment order as well as penalty orders, the assessee filed appeal before the ld. CIT(A) which were dismissed by the impugned orders upholding the addition made by the AO on account of failure of the assessee to respond to the various notices issued. Similarly, the appeals against the penalty proceedings were also dismissed for non-responding to the various notices issued.

We have heard the Ld. AR on behalf of the assessee who would submit that at the time of passing the impugned order against quantum proceeding as well as penalty proceedings, the appellant has not been given effective opportunity of hearing because there is nothing on record to show that the notices sent on various dates in the quantum proceeding were duly served upon the assessee. It is further submitted that similarly, the notices issued in the penalty proceedings were neither received nor served upon the assessee, and mere issuance of notices does not satisfy the requirement of providing an effective opportunity of hearing as envisaged under Section 250(2a) of the Act.

It is further argued by Ld. AR that the assessment has been completed under section u/s 144 of the Act as the notices of the proceeding of reopening of the assessment were never served upon the assessee, as a result without giving effective opportunity of hearing to the assessee, the assessment was completed and addition was made without granting an effective opportunity of hearing, rendering the same arbitrary and unsustainable in law. Hence, it is prayed, that the impugned orders in quantum as well as penalty proceeding be set aside and the matter be restored to the file of the Ld. AO for deciding afresh after providing adequate opportunity of hearing to the appellant/assessee.

The Ld. DR on the other hand, relying upon the orders of the Ld. Lower authorities, would submit that the assessee himself is responsible for the ex parte orders, as he has failed to respond to the notices on various dates. It was further contended that the assessee should not be granted relief for its own negligence, hence Ld. DR prayed for dismissal of the appeal and confirmation of the assessment order in quantum proceeding as well as in the penalty proceeding.

We have considered the rival submission and examined the record.

Section 250 sub section 2(a) of "the Act" provides as under:

We have examined the impugned order to find out that whether the effective opportunity of hearing has been given or not. We have noticed that in para 3.2 of the impugned order in quantum proceeding (ITA No. 8251/Del/2025 (Supra)] it is simply stated that the details of the opportunities given to the assessee, but nowhere we have noticed if the said notices were served upon the assessee or received by the assessee. It is well settled that the requirement of providing an effective opportunity of hearing under Section 250 sub section 2(a) of the Act is not a mere formality but it is the mandatory requirement of the said provision that the effective opportunity of hearing should be given to the assessee/appellant before completion of the assessment proceeding. In the impugned order, as noted above, it is nowhere mentioned that the said notices issued by Ld. CIT(A) were ever served in the quantum proceeding as well as in the penalty proceeding upon the assessee/appellant. In the impugned order regarding quantum proceeding in para 5.3 it is recorded that the appellant has not submitted any supporting documents in its support. In para 5.9, it is further observed by Ld. CIT(A) that since the appellant has not presented any arguments or submission or any paper filed in support of its claim, the appeal is decided judiciously based on materials available on record. The appeal was accordingly dismissed. The same approach has been followed in the case of penalty proceeding which were also dismissed on the same grounds.

In view of the above facts, we are of the considered opinion that the effective opportunity of hearing as contemplated by Section 250 sub section 2(a) of the Act has not been granted to the appellant/assessee during the assessment proceeding as well as during the appellate proceedings. For these reasons, the impugned order in the quantum appeal is also ex parte and accordingly set aside. Since the assessment order was also ex parte having been passed without providing effective opportunity of hearing, the matter is restored to the file of the Ld. AO for deciding the same afresh after providing effective opportunity of hearing. The appellant/assessee is also directed to submit the necessary documents within the period of 60 days from this order. Since the quantum proceedings are set aside and matter is restored to the Ld. AO, the impugned orders in the penalty proceeding automatically stands quashed.

In view of above discussion, the ITA No. 8251/Del/2025, 8252/Del/2025 and 8253/Del/2025 are accordingly allowed for statistical purposes in above terms.

In the result, all these appeals of the assessee are allowed for statistical purposes for above terms.