ITAT Sets Aside Ex-Parte Orders, Restores Assessee’s Appeal for Fresh Hearing on Unexplained Deposits and Penalty [Read Order]

The Income Tax Appellate Tribunal (ITAT) Delhi Bench has set aside ex-parte orders passed by the Commissioner of Income Tax (Appeals) [CIT(A)] in the case of Siddharth Sharma for the assessment year 2012-13. The tribunal restored the matter for fresh adjudication after noting that the assessee was not given a fair opportunity to present his case. The orders pertain to both the quantum additions and penalty proceedings related to unexplained deposits.

Siddharth Sharma, a resident of Vasundhara, Ghaziabad, had filed an appeal against the orders of the CIT(A), National Faceless Appeal Centre (NFAC), Delhi, dated June 19, 2024, and June 25, 2024, in ITA Nos. 3742 & 3743/Del/2024. The case originated from an assessment order wherein the Assessing Officer (AO) had made various additions totaling  Rs.86,04,875, including Rs. 27,61,000 as unexplained cash deposits and Rs. 37,75,000 as unexplained cheque deposits. The AO also recomputed the assessee's long-term capital gains, leading to an additional income assessment. Consequently, a penalty of Rs. 26,01,000 under Section 271(1)(c) of the Income Tax Act was levied.

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The CIT(A) dismissed the appeals ex-parte, stating that the assessee failed to appear despite multiple opportunities. However, the assessee contended that he had submitted an adjournment request on June 18, 2024, citing medical grounds, which was neither considered nor rejected before the ex-parte order was passed on June 19, 2024. A screenshot from the Income Tax portal was provided to substantiate this claim.

During the hearing before ITAT, the assessee was represented by Shri Sunil Kumar Tyagi, while the Revenue was represented by  Sahil Kumar Bansal, Senior Departmental Representative. The ITAT bench, comprising Judicial Member Vikas Awasthy and Accountant Member Renu Jauhri, took note of the procedural lapse and emphasized the importance of providing a fair opportunity for representation.

The tribunal observed that dismissing an appeal without addressing an adjournment request is a violation of the principles of natural justice. It held that since no effective opportunity had been given to the assessee, the matter required reconsideration. The ITAT directed the CIT(A) to provide a fresh hearing and adjudicate the matter on merits.

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The tribunal also restored the penalty appeal, citing that since the quantum appeal had been remanded, the penalty proceedings would also require a fresh review. The ITAT instructed the assessee to ensure proper compliance during the fresh proceedings.

With this decision, ITAT has reaffirmed the principle that appeals must be heard on merit rather than being dismissed on technical grounds. The matter will now be reconsidered by CIT(A) with due opportunity for the assessee to present relevant evidence.

To Read the full text of the Order CLICK HERE

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