Lokesh Mittal vs Income Tax Officer, Ward-1(5)

Per Raj Kumar Chauhan, Judicial Member:

The appeal is directed against the order dated 10.12.2025 of Ld. Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre, Delhi (hereinafter referred to as the “CIT(A)/NFAC”) passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) wherein the appeal of the assessee was partly confirmed and addition made by the AO vide Assessment Order dated 30.12.2019 u/s 69A of the Act were confirmed.

Facts in brief as culled out from the order of authorities below shows that as per information gathered during online verification under Operation Clean Money, it was revealed that assessee deposited cash amounting to Rs.12,44,000/- in his bank account during demonetization period from 9^th December 2016 to 30^th December 2016, but has not filed the ITR for A.Y. 2017-18 within the time prescribed u/s 139(1) of the Act. The detail of the amount deposited is as under:

It was further noticed by the Income Tax Department system that assessee has filed ITR for A.Y. 2016-17 as well as for ITR 2018-19 and 2019-20, but has not filed his ITR for AY 2017-18, which was relevant to the financial year when the alleged amount was deposited during demonetization. Notice u/s 142(1) was issued on 13.03.2018, calling to file a true and correct return of income for A.Y. 2017-18. Subsequent further notices u/s 142(1) issued on various dates as detailed in para 3.3, extracted below as under:

Since assessee did not file any response accordingly the order u/s 144(1)(b) of the act was passed making an addition of Rs. 85,54,979/- u/s 69A of the Act. Penalty Proceedings u/s 271AAC and 271F were also initiated separately.

Aggrieved by the assessment order, assessee filed appeal before the Id. CIT(A) which was decided ex-pate as assessee has allegedly failed to respond to the notice of hearing on four dates as detained in paragraph 1 of the impugned order.

Aggrieved by the impugned appellate ex-parte order, the assessee is in appeal before us and has raised the following grounds of appeal:

We have heard the Id. DR who has supported the judgment of CIT(A) stating that the Id. CIT(A) has already given the substantial relief to the assessee and the addition confirmed has been lawfully done on the basis of meticulous examination of the material and further the assessee has failed to make any submissions despite service of notice on various date by the Id. CIT(A) and therefore prayed for dismissal of the appeal. No one argued on behalf of the assessee as no one appeared during the hearing.

We have considered the submissions of the Id. DR and examined the record. It is an admitted fact that the assessee could not participate in the proceeding before the Id. CIT(A) which is evident from para No. 1 where detail of notice issued and non-compliance made by the assessee is mentioned. We have noticed that further notices were issued from 21.03.2023 to 18.10.2024 but assessee has not filed any response. Accordingly, the Id. CIT(A) decided the appeal ex-parte and partly confirmed the ex-parte assessment order u/s 144 of the Act. Section 250(2)(a) provides as under:

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. From the perusal of the impugned order, we have noticed that only notices has been issued but nothing is mentioned if the said notices were ever served upon the assessee or were received by the assessee.

In these circumstances, we are satisfied that the effective opportunity of hearing as contemplated by section 250(2)(a) has not been granted by the Id. CIT(A). Further, we have noticed that the assessment order wherein the alleged addition sustained by the Id. CIT(A) was also ex parte as assessee could not join the proceedings because as observed in paragraph number 3.3 of the assessment order, the notices were sent on 5 dates but there was non-compliance as on some dates the notice was un-served when sent by speed post. No proof has been filed that the notice sent through speed post during the assessment proceeding was ever served upon the assessee. In these circumstances, because of ex-parte assessment order which was partly confirmed by the Id. CIT(A) and also the Id. CIT(A) order is ex-parte, the same has resulted into miscarriage of justice in respect of addition sustained during the first appellate authority proceedings. The assessee need to be given a fair opportunity with regard to the said addition made in the assessment order and sustained in the first appellate authority's order. The ends of justice shall be met in case the ground raised in the appeal is allowed qua addition of Rs.8,16,880/- confirmed in the impugned order and the appeal is allowed and matter is remitted back to the AO for limited purpose of hearing the assessee with regard to the addition of Rs. 8,16,880/- sustained in the impugned order passed by the Id. CIT(A). The impugned order is accordingly set aside to that extent only wherein addition of Rs. 8,16,880/- has been sustained. The assessee shall present its case in that regard before the Id. AO within a period of 60 days.

In the result, the appeal of the assessee is allowed in above terms for statistical purposes.