ITAT Restores Case to CIT(A) for Fresh Hearing, Citing Violation of Natural Justice and Procedural Lapses [Read Order]

The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) restored the case of the assessee to the Commissioner of Income Tax(Appeals)[CIT(A)] for fresh adjudication, citing a violation of natural justice and procedural lapses.

Sarojben Lalitbhai Vadhani,appellant-assessee,did not file her income tax return for Assessment Year (AY) 2012-13. Her case was reopened based on findings from a search on J.P. Iscon Group, which indicated she had paid ₹46,50,500 in unaccounted cash for a flat in Iscon Platinum, Ahmedabad.

Despite receiving several notices, she did not respond, leading the Assessing Officer (AO) to make an ex-parte addition of ₹46,50,500 as unexplained income. On appeal, the CIT(A) upheld this addition, citing her lack of participation in the appellate process.

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The tribunal reviewed the facts of the case, the assessee’s submissions, and the available records. It noted that the CIT(A) had issued an ex-parte order without providing the assessee a final chance to be heard, which violated principles of natural justice.

The assessee had shown that she responded to the AO's notices and provided explanations, which the lower authorities had not fully considered. Moreover, she had specifically requested the AO to disclose the reasons for reopening the assessment under Section 147, a legal obligation that the AO neglected, casting doubt on the validity of the reassessment.

The tribunal also found that the addition of ₹46,50,500 under Section 69A was based on information from a search on J.P. Iscon Group, alleging an unaccounted cash payment for property. However, the assessee claimed that her husband had booked the property, and this claim was not thoroughly examined by the AO or CIT(A).Although there was some negligence by the assessee in pursuing her appeal before the CIT(A), the tribunal decided that justice required a fresh review.

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The two member bench comprising Suchitra Kamble(Judicial Member) and Makarand V.Mahadeokar(Accountant Member)  set aside the CIT(A)’s ex-parte order and remanded the case for fresh adjudication, directing the CIT(A) to give the assessee a fair opportunity to present her case. A cost of ₹5,000 was imposed on the assessee, payable to the Prime Minister’s Relief Fund, due to her lack of diligence in the appeal.

In conclusion,the appeal was allowed for statistical purposes.

To Read the full text of the Order CLICK HERE

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