The Ahmedabad Bench of the Income Tax Appellate Tribunal ( ITAT ) set aside the Ex-Parte dismissal order by the Commissioner of Income Tax (Appeals) [ CIT(A)] without adjudicating the unexplained cash deposit as it is not sustainable under section 250(6) of the Income Tax Act, 1961.
Assessee, Sardarbhai Ramsangbhai Dhuliya, a retired government employee failed to file his income tax return in the assessment year 2011-12. The department found that the assessee made cash deposits of Rs. 14,46,320 in the Bank of India and a commission income of Rs,19,990 was received from PACL India Ltd which were not declared for taxation.
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The Income tax Assessing Officer (AO) reopened the assessment under sections 147 and 144 of the Income Tax Act. The AO sent multiple notices to which the assessee failed to respond. The assessing officer passed an ex-parte assessment order by adding unexplained amounts to the assessee’s income.
The assessee appealed before the CIT(A) and the same first appellate authority issued multiple notices to the assessee for the proceeding and the assessee failed to comply with the notices. The CIT(A) dismissed the appeal and upheld the order passed by the AO. Aggrieved by this order, the assessee appealed before the ITAT, Ahmedabad. Despite the appeal delayed by 111 days, the tribunal condoned the delay due to the assessee’s reasoning.
The assessee’s counsel representing S.N. Divatia argued that the assessee was unaware of the reassessment proceedings due to a communication gap with his former tax consultant. The tax consultant never informed the assessee about the notices.
The counsel submitted that the deposited case was the assessee’s retirement benefits and was not taxable under the Income Tax Law. It was also submitted that the deposits in the bank account were old Fixed Deposits (FDRs) from previous years, not new deposits. The assessee’s counsel requested the acceptance of the additional evidence.
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The income tax department’s counsel represented by Sanjay Jain agrees that the matter may be set aside for fresh consideration based on the contentions and evidence presented by the assessee. The Tribunal noted the assessee’s explanation for nonappearance and as well as the assessee filed additional evidence under section 29 of the Income Tax Act.
The tribunal stated that the CIT(A) is required to adjudicate the issues on merit in accordance with the law provided under section 250(6) and the CIT(A) cannot simply dismiss the appeal due to non-appearance or didn’t comply with the notice such order is not sustainable under section 250(6) of the Income Tax Act. The tribunal ordered CIT(A) to allow the assessee to present the additional evidence and decide the matter on its merits.
The tribunal set aside the impugned order passed by the CIT(A) and allowed the appeal for statistical purposes.
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