Exparte Order: Refusal of Unexplained Cash Deposits Set Aside by ITAT

Fact and issue of the case

This appeal filed by the assessee is directed against the order dated 30.11.2017 of the Commissioner of Income Tax (Appeals)-Ghaziabad relating to Assessment Year 2010-11.

Brief facts of the case as culled out from the material on

Assessee is an individual in whose case notice u/s 148 of the Act was issued for the reason that AO has received information that assessee had deposited cash amounting to 1,53,70,000/- in his Saving Bank account. Notice u/s 148 of the Act was issued on 25.03.2015 and served on the assessee. Thereafter, the case was taken up for scrutiny and assessment was framed u/s 143(3) r.w.s 147 of the Act vide order dated 11.03.2016 and the total income was determined at Rs. 1,39,47,280/-.

Aggrieved by the order of AO, assessee carried the matter before CIT(A) who vide order dated 30.11.2017 in Appeal 98/2016-17/GZB dismissed the appeal of the assessee. Aggrieved by the order of CIT(A), assessee is now in appeal and has raised the following grounds:

That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in framing the impugned reassessment order u/s 143(3)/1 47 and that too without assuming jurisdiction as per law and without complying with the mandatory conditions u/s 147 to 151 as envisaged under the Income Tax Act, 1961.

That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in framing the impugned reassessment order u/s 143(3)/147, is bad in law and against the facts and circumstances of the case.

That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the addition of Rs. 78,86,270/- allegedly on the ground that the cash deposits are unexplained and that too by recording incorrect facts and findings and without observing the principles of natural justice.

That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the addition of Rs. 78,86,270/- allegedly on the ground that assessee has failed to explain the cash deposit, received from his brother out of sale of land, is bad in law and against the facts and circumstances of the case.

That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the addition of Rs.59,05,225/- allegedly on the ground that exemption u/s 54F for investment in residential house is not allowable and that too by recording incorrect facts and findings and without observing the principles of natural justice.

That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other.

Before us, Learned AR at the outset, submitted that the appeal has been decided ex parte by CIT(A) and not on merits. It is the submissions of the Learned AR that the non appearance before CIT(A) was not due to any malafide intention but for the reason that no notice for hearing was received from CIT(A)’s office. He submitted that the notices for hearing has been issued at wrong address and therefore assessee did not receive it. In support of his contention that the notice have not been correctly addressed, he pointed to name and address of the assessee mentioned at page 1 of the order of CIT(A) wherein the village is stated as ‘Mahuali’ whereas the correct village of the assessee ‘Mehrauli’. He, therefore, submitted that assessee be given a chance to plead its case and assessee would appear before authorities and file all the necessary details.

Learned DR on the other hand supported the order of lower authorities but opposed the seeking of second innings by the Assessee.

Observation of the court

We have heard the rival submissions and perused the material available on record. Before us, it is assessee’s case that assessee did not have a chance to appear before CIT(A) as no notice of hearing from CIT(A)’s office was received by him as probably the notices for hearing were not sent at the correct We find force in the contention of the Learned AR, in view of the fact that in the assessment order passed by AO and in the Form No.36 that has been filed before Tribunal, the village of the assessee is stated as ‘Mahrauli’ whereas in the appellate order passed by CIT(A), address of the village of the assessee is stated as ‘Mahuali’. Before us, Revenue has not placed any material on record to demonstrate that the notices were issued to the assessee at his correct address and assessee had also received notices. In such a situation, we are of the view that by dismissing the appeal without considering the issue on merits, Learned CIT(A) has failed to follow the mandate required in Sub Section (6) of Section 250 of the Act. Further it is also a well settled principle of natural justice that sufficient opportunity of hearing should be offered to the parties and no parties should be condemned unheard. In view of these facts, we set aside the impugned order of CIT(A) dated 30.11.2017 and restore the issue to the file of CIT(A) for re-adjudication of the issues after granting sufficient opportunity of hearing to the assessee. Assessee is also directed to promptly furnish the details called for by the lower authorities. In view of our decision to restore the issue to CIT(A), we are not adjudicating on merits the grounds raised by the assessee. Thus the ground of assessee is allowed for statistical purposes.

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

Order pronounced in the open court on 13.06.2023