In a recent judgment, the Income Tax Appellate Tribunal ( ITAT ), a Delhi Bench, quashed an ex parte order passed by Commissioner of Income Tax (Appeals) of the National Faceless Appeal Centre ( NFAC ) against an assessee taxpayer noting that the assessee was not given an opportunity to properly canvas the appeal.
The assesseee/appellant in the case is Vikas Sharma, a Ghaziabad-based businessman.
The assesseee, the proprietor of M/s Pandit Homes, M/s Pandit Cements, and M/s Shri Bankey Bihari Builders and Developers, filed his income tax return for the financial year 2012-13, declaring an income of ₹24,55,050. However, after scrutiny under the Computer Assisted Scrutiny Selection (CASS) system, the Assessing Officer (AO) reassessed his total income at ₹2,91,77,466. This was based on additions of ₹78,69,000 for capital introduction, ₹1,59,08,016 for unsecured loans, and ₹29,45,400 for loans from Shri Bankey Bihari Builders and Developers. The AO also rejected the assessee’s books of accounts under Section 145(3) of the Income Tax Act 1961 (ITA), applying a net profit rate of 8% on contractual receipts and 3% on trading receipts.
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The assessee challenged the AO’s findings before the CIT(A), but the appellate authority upheld the additions, dismissing his appeal ex parte due to non-representation.
Aggrieved, the assessee approached the ITAT, arguing that he was not given a proper opportunity to canvas his appeal. His counsel submitted that procedural lapses and insufficient representation before the CIT(A) led to the adverse order, resulting in a gross violation of natural justice principles.
The appeal to the ITAT was filed with a delay of 71 days, attributed to the assessee’s illness. The tribunal condoned the delay, acknowledging the reasonable cause provided by the appellant. During the hearing, the assessee’s counsel stressed the need for a fresh opportunity to present his case fully before the appellate authority. The revenue department did not oppose this plea.
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After reviewing the facts, the ITAT bench of Mr Shamim Yahya and Mr Vimal Kumar noted that the decision was based on a lack of representation rather than substantive examination of the case. Recognizing the procedural shortcomings, the tribunal ruled that the assessee deserved a fair chance to contest the additions. In the interest of justice, the ITAT quashed the ex parte order and remitted the matter. The appellate authority was directed to issue a speaking order after granting the assessee an opportunity to be heard.
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