Ex-Parte Order Which Resulted Into Denial Of Proper Opportunity Of Being Heard, Merits Remand: Mumbai ITAT

On finding that the order passed by the Commissioner is an ex-parte order which resulted into denial of proper opportunity of being heard, the Mumbai ITAT set aside the order passed u/s 144 of the Income Tax Act, and remanded the case back to the file of the Commissioner for decision afresh.

The ITAT also directed the assessee to deposit Rs.11,000/- in the Prime Minister's National Relief Fund (PMNRF) within 30 days of the order and to co-operate with the appellate proceedings and to file the relevant documents as would be essential and required for proper adjudication of the issues.

The Bench of the ITAT comprising of Narender Kumar Choudhry (Judicial Member) and Padmavathy S. (Accountant Member) observed that “both the authorities below more or less made the addition and sustained the same more or less on non-providing the relevant documents / explanation. Therefore, the assessee did not deserve any leniency. However, considering the peculiar facts and circumstances, as the authorities below, in the absence of relevant documents / explanations failed to decide the issues in its right perspective, therefore, for the just decision of the case and for the ends of justice, it would be appropriate to afford an opportunity to the assessee to substantiate its claim by filing relevant documents / explanations and also to seek opportunity through video conferencing in order to demonstrate its case properly.”

As per the brief facts of the case, the Assessee's return was selected for scrutiny, wherein AO seized the cash amounting to Rs.17,10,000/- from the assessee and consequently a statement u/s 131 (1A) was recorded wherein the assessee was asked to substantiate the source of said cash amount. The assessee more or less claimed that the assessee has collected the said cash amount against sales made on behalf of two entities. The AO, though considered the submissions of the assessee, however, was not found acceptable on the ground that the assessee was unable to explain the source of such cash amount as he failed to disclose the details like addresses of the aforesaid two parties and also failed to bifurcate the seized amount and also failed to produce any documentary evidence to support his claim in order to show that seized amount belonged to two entities. Hence, the AO passed the assessment order u/s 144.

The CIT also confirmed the addition made by the AO as the assessee failed to explain and prove the source of cash deposit.

The Bench noted that the assessment proceedings have been carried out during the Covid period.

The Bench observed from the assessment order that the show cause notice, u/s 144, the assessee, filed its reply and made certain submissions which were though considered by the AO, but not found acceptable and ultimately, the AO passed the assessment order u/s 144.

The Bench further observed that the assessee during course of appellate proceedings has filed his written submissions before the Commissioner, however, the assessee claimed that he was not given proper opportunity to explain the case.

Therefore, ITAT allowed the assessee's appeal for statistical purpose.

Counsel for Appellant/Taxpayer: Vimal Punmiya

Counsel for Respondent/Department: Srinivas

Case Title: Mohd Shahid Mohd Yusuf Qureshi verses Dy. Commissioner of Income-tax

Case Number: I.T.A. No.2788/Mum/2023

Click here to read/ download the Order