Assessee's Failure to Submit Evidence Leads ITAT to Remand Case for Fresh Hearing [Read Order]

Raju V. Mahakalkar, the appellant, who’s a resident of Wardha, had appealed against the orders of the Assistant Commissioner of Income Tax, Central Circle–2(1), Nagpur, challenging the additions made to his income from undisclosed sources. The case revolved around a sum of ₹21,30,000, which the Assessing Officer (AO) treated as income from undisclosed sources after the assessee failed to provide a cash book reflecting the receipt and repayment of the amount. The AO noted that Mahakalkar did not submit particulars of the customer involved in the transaction, nor did he provide documentary evidence to support his claim that the transaction pertained to a specific project which was later cancelled.

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Despite being granted several opportunities by the AO to furnish the necessary documents and clarifications, Mahakalkar did not respond to the queries. The AO, therefore, rejected his claims and made the addition to his income. The matter then went before the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi. However, the assessee again failed to attend the hearings or file any written submissions. The CIT(A), in his order dated 8 February 2024, observed that the assessee had shown a negligent attitude towards the proceedings and decided the matter ex-parte, dismissing Mahakalkar’s grounds of appeal based on the available material on record.

The facts and circumstances for the assessment years 2010-11 and 2011-12 were found to be similar, with variations only in the figures involved. In all three years, the appeals were dismissed due to the assessee’s non-cooperation and failure to substantiate his claims with evidence.

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When the appeals came up before the ITAT, the assessee was again unrepresented, with no application filed for adjournment. After hearing the submissions of the Departmental Representative, Shri Sandipkumar Salunke, and reviewing the records, the Tribunal noted that the CIT(A) had indeed provided opportunities to the assessee but was ultimately compelled to pass ex-parte orders in the absence of any response.

Presiding over the matter, V. Durga Rao, Judicial Member, held that, in the interest of natural justice, the assessee should be given one more opportunity to present his case and substantiate his claims before the appellate authority. The Tribunal set aside the ex-parte orders of the CIT(A) for all three assessment years and remitted the matters back to the CIT(A) for fresh adjudication on merit, with a direction to provide a reasonable opportunity of being heard to the assessee. The Tribunal also cautioned that the assessee should not seek adjournments without justified reasons.

In arriving at this decision, the ITAT followed the established principle that a party should not be denied the opportunity to present its case due to procedural lapses, provided there is no deliberate attempt to delay proceedings. The appeals were accordingly allowed for statistical purposes.

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