ITAT quashes Ex-Parte Order in Real Estate Cash Deposit Case Directing Fresh Hearing on Income Tax Additions [Read Order]
The Tribunal ruled that the remand report submitted by the Assessing Officer must be reviewed.
The bench of the Income Tax Appellate Tribunal, Ahmedabad, has set aside an ex-parte order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [CIT(A)], and remanded the matter for fresh consideration. The Tribunal held that the principles of natural justice were violated as the assessee’s submissions without due consideration of the remand report.
The appellant, Ghanshyambhai Nanalal Charandas, an individual engaged in the business of real estate, house property, and other sources of income, filed his return for the Assessment Year 2015-16 declaring income of ₹6,31,710 along with agricultural income of ₹28,00,000.
The case was selected for limited scrutiny. However, the Assessing Officer (AO) completed assessment under Section 143(3) of the Income Tax Act, 1961, determining income at ₹1,70,11,619 by making additions of ₹88,60,909 as unexplained cash deposits and ₹75,19,000 as unexplained investments in land.
Aggrieved by this the assessee filed an appeal before the CIT(A). Irrespective of eight opportunities granted to the assessee, the appeal was dismissed ex-parte on 29 December 2023, confirming the AO’s additions.
Therefore, the appeal before the Tribunal.
Represented by Anil Kshatriya, the Assessee argued that the assessment order was invalid as the AO travelled beyond the scope of limited scrutiny without necessary approval for conversion into complete scrutiny.
It was submitted that detailed written submissions had been filed before the CIT(A), who even called for a remand report from the AO in 2019. The AO submitted the remand report in July 2020.
However, after the case was migrated to CIT(A), these documents were not considered, and the appeal was dismissed ex-parte. It was contended that due to a change in tax consultant, the assessee was unaware of NFAC hearing dates, leading to non-appearance.
Represented by Nitin Vishnu Kulkarni, the Revenue submitted that the remand report dated 23 July 2020 was indeed on record. It was argued that the matter be restored to CIT(A) for proper adjudication on merits, rather than allowing the assessee’s appeal outright.
The Bench of comprising Judicial Member, T.R. Senthil Kumar and Accountant Member,Narendra Prasad Sinha observed that the CIT(A), had dismissed the appeal without considering either the assessee’s written submissions or the remand report filed by the AO. Thus, the Tribunal held, amounted to a violation of the principle of natural justice.
Accordingly, the matter was remanded back to the CIT(A), with a direction to adjudicate the case afresh on merits after granting the assessee proper opportunity of hearing.
The Tribunal also directed the assessee to fully cooperate and file all relevant documents, with liberty to raise additional grounds.
Thus, the appeal of the assessee was allowed for statistical purposes.
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