Violation of Natural Justice: ITAT restores Addition on Demonitization Sales for Fresh Adjudication [Read Order]
The tribunal observed that the CIT(A)’s ex-parte order failed to deal with the assessee’s contentions and held that such adjudication without considering the appellant’s arguments amounted to a breach of the principles of natural justice
![Violation of Natural Justice: ITAT restores Addition on Demonitization Sales for Fresh Adjudication [Read Order]](https://www.taxscan.in/wp-content/uploads/2025/04/Natural-Justice-Demonitization-Violation-of-Natural-Justice-taxscan.jpg "Violation of Natural Justice: ITAT restores Addition on Demonitization Sales for Fresh Adjudication [Read Order]")
The Cochin Bench of the Income Tax Appellate Tribunal ( ITAT ) restored an addition made on account of demonetization-period sales to the file of the CIT(A) for fresh adjudication, citing violation of natural justice due to an ex-parte dismissal of the assessee’s appeal without addressing the grounds raised. Anupama Jewellery, (assessee) a partnership firm engaged in the jewellery...
The Cochin Bench of the Income Tax Appellate Tribunal ( ITAT ) restored an addition made on account of demonetization-period sales to the file of the CIT(A) for fresh adjudication, citing violation of natural justice due to an ex-parte dismissal of the assessee’s appeal without addressing the grounds raised.
Anupama Jewellery, (assessee) a partnership firm engaged in the jewellery business, filed its return of income for AY 2017–18 declaring income of Rs. 97,310. The Assessing Officer (AO), however, completed the assessment under Section 143(3) and determined a total income of Rs. 23,97,310.
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This included an addition of Rs. 23,00,000, representing 50% of the sales amounting to Rs. 46,00,000 made during the demonetization period. The AO alleged the sales were abnormal and unexplained.
Aggrieved by the AO’s order, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)]. However, the CIT(A) dismissed the appeal by holding that trading in illegal currency is unlawful.
The CIT(A) did not address the specific grounds of appeal or offer the assessee a proper opportunity of being heard. Aggrieved by the order of CIT(A), the assessee filed an appeal before the ITAT.
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The two-member bench comprising Inturi Rama Rao (Accountant Member) observed that the AO made an addition of 50% of the sales made during demonetisation period by holding that the assessee firm made abnormal sales.
The tribunal observed that the CIT(A)’s ex-parte order failed to deal with the assessee’s contentions. The tribunal held that such adjudication without considering the appellant’s arguments amounted to a breach of the principles of natural justice.
The Tribunal set aside the CIT(A)’s order and restored the matter to its file for a de novo adjudication. The CIT(A) was directed to decide the appeal afresh in accordance with law, after providing a reasonable opportunity to the assessee.
The appeal of the assessee was allowed for statistical purposes.
To Read the full text of the Order CLICK HERE
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