Facts of the Case

The assessee, Kuvar Giri Hiragiri Gosai, did not file a return of income for Assessment Year 2012-13. The Assessing Officer observed cash deposits aggregating to ₹20,00,000 in the assessee’s bank account and initiated reassessment proceedings under Section 147. The assessment was completed ex parte, treating the cash deposits as unexplained money under Section 69A and making an addition of ₹20,00,000 along with consequential interest and initiation of penalty proceedings. The appeal filed before the CIT(A), NFAC was also dismissed ex parte without adjudication on merits. Aggrieved, the assessee filed an appeal before the Tribunal with a delay of 72 days supported by an affidavit.

Issues Involved

Whether the delay in filing the appeal before the Tribunal deserved to be condoned, whether the ex parte order passed by the CIT(A) confirming addition under Section 69A was sustainable in law, and whether the matter required restoration for fresh adjudication after granting proper opportunity of hearing.

Petitioner’s Arguments

The assessee submitted that the delay in filing the appeal occurred due to reasons beyond his control, as his tax consultant could not file the appeal in time due to Diwali vacation. It was further contended that the CIT(A) passed the appellate order ex parte without appreciating facts, submissions and documentary evidence, thereby violating principles of natural justice. The assessee prayed that the matter be restored for adjudication on merits.

Respondent’s Arguments

No appearance was made on behalf of the Revenue before the Tribunal.

Court Order / Findings

The ITAT Ahmedabad first condoned the delay of 72 days, observing that the assessee had furnished a reasonable explanation supported by affidavit. On merits, the Tribunal noted that the CIT(A) had passed the impugned order ex parte without adjudicating the grounds raised by the assessee and without examining the explanation relating to cash deposits. The Tribunal held that appellate authorities are duty-bound to decide appeals on merits and cannot dismiss or confirm additions mechanically for non-prosecution. In view of the violation of principles of natural justice, the Tribunal set aside the order of the CIT(A) and restored the matter to the file of the CIT(A) for fresh adjudication in accordance with law after granting adequate opportunity of being heard to the assessee.

Important Clarification

The Tribunal clarified that confirmation of additions under Section 69A without affording proper opportunity of hearing and without reasoned adjudication is unsustainable. Appeals must be decided on merits, and ex parte disposal should be resorted to only after ensuring effective service and reasonable opportunity.

Final Outcome

The delay in filing the appeal was condoned. The appeal filed by the assessee was allowed for statistical purposes. The ex parte order passed by the CIT(A), NFAC was set aside and the matter was restored to the CIT(A) for fresh adjudication on merits after granting adequate opportunity of being heard to the assessee.

 Link to download order https://www.mytaxexpert.co.in/uploads/1769063738_KUVARGIRIHIRAGIRIGOSAIJUNAGADHVS.THEITOWARD12BHAVNAGAR.pdf

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