ITAT Remands Rs 3.08 Crore Unexplained Money Addition After Finding Assessment and Appeal Orders Passed Ex-Parte

The Income Tax Appellate Tribunal (ITAT), Pune, has restored a matter involving an addition of Rs 3.08 Crore under Section 69A of the Income Tax Act to the file of AO after noting that both the assessment proceedings and first appellate proceedings were concluded in the absence of the assessee.

The assessee is a partnership firm and had filed its return of income for assessment year 2015-16 declaring nil income and according to the information received by the department, the assessee depositing Rs 3.08 crore in a bank account has made the AO reopen the assessment under Sections 147 and 148 of the Act. There was no response by the assessee to the notices issued under Section 142(1) so the AO treated the entire bank deposit as unexplained money under Section 69A to complete the assessment under Section 144 read with 144B.

The assessee preferred an appeal before the CIT(A) but remained unrepresented, which resulted in the dismissal of the appeal without adjudication on merits. Before the ITAT, the assessee sought Condonation of Delay in filing the appeal and explained that one of the partners was attending to his daughter, who had been diagnosed with cancer, while another partner had allegedly absconded after committing fraud in the partnership firm, leading to criminal proceedings.

The ITAT examined all the evidence on record and, after considering the facts and submissions, observed that both the assessment order and the appellate order had been passed ex parte. Holding that the interests of justice would be served by providing the assessee an effective opportunity to present its case, the Bench set aside the order of the CIT(A) and remanded the matter to the Assessing Officer for fresh adjudication in accordance with the law.

Accordingly, ITAT directed the Assessing Officer to pass a fresh assessment order after granting a reasonable opportunity of hearing to the assessee and the appeal of the assessee was allowed for statistical purposes.