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Judgment
Per Raj Kumar Chauhan, Judicial Member:
The appeal of the assessee is directed against the order dated 14.01.2026 of Id. CIT(A)/NFAC, Delhi passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as "the Act") wherein the assessment order passed u/s 147 r.w.s. 144B of the Act was confirmed and the addition made vide assessment order dated 23.12.2021 was upheld.
Facts in brief as culled out from the orders of the authorities below are that the assessee filed ITR for the concerned year and has shown total income at Rs.2,19,500/- under the head business and profession. However, during the year under consideration, gross credit entries in his bank account was Rs.60,80,00,000/- and the source of the said credits remained unexplained. The notice u/s 148 of the Act dated 31.03.2021 was issued. The assessee neither filed return nor furnished any details. Hence, notice u/s 142(1) of the Act was issued alongwith questionnaire on 23.12.2021. The assessee has not responded to the above notices and the subsequent letter sent on 08.02.2022. Hence, in the absence of any submissions/response, the Assessing Officer made addition of 14% of the total credits in the account of Rs.60,80,00,000/- which comes to Rs.8,51,20,000/-. Penalty proceedings u/s 271(1)(c) of the Act were also initiated.
Aggrieved by the said assessment order, the assessee filed appeal before the Id. CIT(A) who dismissed the appeal on the ground that the assessee has failed to respond to the various notices issued u/s 250 of the Act. The addition made of 40% of the credit entries in his bank account was also confirmed on the ground that despite opportunity, the appellant has not filed any submissions in that regard.
Aggrieved by the impugned order, the assessee is in appeal before us and has raised the following grounds of appeal:
1.That the impugned Assessment order passed by the Hon'ble CIT (A) is bad in law, wrong on facts and against the Principal of natural justices hence is unsustainable.
2.That The Ld. AO NFAC has erred in law and on facts no submission was made details but ignored without any justification to the assessee against order passed by the Ld. AO. That the impugned Assessment order passed by the Ld. AO is wrong, having no base and against the circumstance of the case.
3.That on facts and circumstances of the case and in Law, the assessing officer had erred in assessing the income tax of the appellant at Rs.8,27,70,126/-, please be deleted.
4.That the Ld. Assessing Officer had erred on facts and circumstances of the case and in law in making an addition on account of non cash transaction of Rs 60,80,00,000/, being wholly based on conjecture and surmises and being untrue, the same must be deleted.
5.The Submission is not submitted by Assesses regarding non cash transaction large value transaction (sale of equity other than delivery). The Assessee have traded through Exchange in multi commodities and the Assessee had loss. Therefore, there cannot be any tax of Income tax act 1961.
6.That the Id. Assessing officer has not given proper opportunity of being heard to the appellant and has not provided and confronted the appellant with the material collected behind the back of appellant upon which the assessing officer had relied in making additions. The assessment order is therefore illegal being in violation of the principal of natural justice and unsustainable in law.
7.That the impugned assessment order is arbitrary, illegal, bad in law in violation of rudimentary principal of contemporary jurisprudence.
8.That the impugned Assessment order passed by Ld. Assessing Officer, Noida is a clear cut case of misunderstanding and wrong interpretation of Law.
9.That the appellant crave leave to add, alter, amend, delete or modify any or more of the ground of appeal before or at the time of hearing."
We have heard the Id. AR and the Id. AR. The Id. AR at the very outset submitted that both the assessment order as well as the order of the Id. CIT(A) have been passed ex-parte without affording the assessee an effective opportunity of being heard. It is therefore prayed that, in the interest of justice, the matter deserves to be restored to the file of the Assessing Officer for fresh adjudication after considering the submissions of the assessee and after affording a reasonable and effective opportunity of being heard.
The Id. DR on the other hand would submit that since the assessee himself did not respond to the various notices issued by the AO hence the Id. AO has rightly proceeded u/s 144 of the Act and the addition made were justified. It is further submitted that the assessee has not even responded to the notices u/s 250 sent by the Id. CIT(A) and has suffered ex-parte order deliberately to delay the finalization of the assessment and to defeat the demand raised by the department against him. Hence, the Id. DR prayed for dismissal of the appeal.
We have considered the rival submission and examined the record. Section 250(2)(a) lays down as under:
'250(2) The following shall have the right to be heard at the hearing of the appeal-
(a)the appellant, either in person or by an authorized representative;"
Thus, the hearing mandated by Section 250(2)(a) of the Act is not a mere formality but a mandatory statutory requirement for following the principle of natural justice by the quasi-judicial authority.
On perusal of the impugned order, we have noticed that the Id. CIT(A) has observed that notices u/s 250 of the Act were issued on 17.10.2024, 26.12.2024, 13.01.2025, 11.02.2025, 04.11.2025 and 02.01.2026 but appellant has neither requested for adjournment nor made any submissions on various grounds of the appeal. It was further observed that the appellant was not interested in pursuing its appeal hence the grounds raised from ground number 1 to 6 were dismissed. With regard to ground number 4, 5 & 7 regarding making estimated addition in respect of credit entries in the bank accounts, it was observed that during the assessment proceedings, in the absence of response from the appellant, the AO has made addition of Rs. 8,51,20,000/- being 40% of credit entries of Rs.60,80,00,000/- in bank accounts with SBI, PNB, OBC and ICICI bank. It was further observed in para 8.2 of the impugned order that despite giving opportunity of hearing many times, the appellant has not filed any submissions on this ground of appeal also during the appellate proceedings. Hence, the Id. CIT(A) proceeded to confirm the assessment order and also initiating penalty proceedings.
On perusal of the impugned order, we have noticed that there is only mentioning of issuing of various notices by the Id. CIT(A) but no material/evidence has been brought to our notice that the said notices were ever received or served upon the assessee. For these reasons, in the absence of any material regarding service/receiving of the notices issued by the Id. CIT(A) as well as by the Id. AO, we are convinced that impugned order as well as assessment order has been passed without granting effective opportunity of hearing to the assessee.
In these given facts and circumstances, we are of the considered opinion that ends of justice requires that one more opportunity be given to the assessee to present its case before the Assessing Officer by furnishing sufficient evidence/explanation with regard to the credit entries in his bank account, on the basis of which addition has been made. For these reasons, we accede to the request of the Id. AR and remit the matter to the file of the AO for deciding the assessment proceeding afresh after giving effective opportunity of hearing.
In the result, the appeal of the assessee is allowed for statistical purposes.