Ex-Parte Order Over Unexplained Income: ITAT Remands 1.41 Cr Tax Dispute to CIT(A) [Read Order]

In a recent ruling, the Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) remanded the case back to the AO, stating that the order made by tax authorities was taken Ex-parte, which violated the principles of natural justice.

The assessee, Dhirubhai BabuBhai Modi, filed an appeal against the order passed by the Commissioner of Income Tax (Appeal) [CIT(A)], National Faceless Appeal Centre (NFAC) for the assessment year 2017-18. The assessee filed his original return of income on 31.10.2017, declaring a total income of ₹(-) 44 Lakhs.

A scrutiny of the assessee’s case was conducted under Section 143(3) of the Income Tax Act, after which the income was assessed to be ₹2.3 Lakhs and allowing the loss for carry forwarding ₹44 Lakhs, thereby making an addition under section 68 of the Income Tax Act amounting to ₹1.41 Cr. This addition was made on account of unexplained income.

Comprehensive Guide of Law and Procedure for Filing of Income Tax Appeals, Click Here

Aggrieved by the assessment order, the assessee appealed to the CIT(A). However, the CIT(A) dismissed the appeal. Aggrieved by this, the assessee appealed to the ITAT. The authorised representative(AR) for the assessee submitted that the matter was decided ex-parte by the tax authorities, and it needs to be remanded back to the CIT(A) for proper adjudication of the issue on merit.

The departmental representative(DR) for the revenue upheld the orders passed by the Assessing Officer and the CIT(A), stating that such orders were justified in the present case.

On hearing both sides, the ITAT observed that the CIT(A) had passed its order Ex-Parte and had not given the assessee an opportunity for a hearing. The ITAT stated that it found it appropriate to remand the case back to the CIT(A) to properly verify all the details and records filed by the assessee.

Comprehensive Guide of Law and Procedure for Filing of Income Tax Appeals, Click Here

The Tribunal consisting of Dr BRR Kumar (Vice President) and Suchitra Kamble (Judicial member) held that the assessee needed to present his case and directed the tax authority to adjudicate the matter on merit as per the Income Tax statute. The tribunal upheld the importance of the principles of natural justice that mandate the importance of the opportunity of hearing to both parties to a dispute. As a result, the appeal filed by the assessee was partly allowed.

To Read the full text of the Order CLICK HERE

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