Case Law Details
Medway Educational Consultant Private Limited Vs AO (ITAT Delhi)
In the case of Medway Educational Consultant Private Limited Vs AO, the Income Tax Appellate Tribunal (ITAT), Delhi, restored the matter to the National Faceless Appeal Centre (NFAC) after observing that the appeal had been dismissed ex-parte without deciding the issues on merits.
The assessee company had filed its return of income for Assessment Year 2020-21 on 22-01-2021 declaring income of Rs.6,83,670. The case was selected for scrutiny because the net profit disclosed in the return was only 0.33%. Notice under Section 143(2) of the Income Tax Act was issued on 29-06-2021, followed by further statutory notices during assessment proceedings.
After considering the submissions furnished by the assessee, the Assessing Officer completed the assessment under Sections 143(3) read with 144B of the Act and made two additions. An addition of Rs.2,00,74,294 was made as unexplained expenditure under Section 69C of the Act, and another addition of Rs.35,00,000 was made as unexplained cash credit under Section 68 of the Act.
Aggrieved by the assessment order, the assessee filed an appeal before the NFAC. However, the NFAC dismissed the appeal vide order dated 31-12-2024 after noting that the assessee had not participated in the appellate proceedings despite opportunities being granted.
Before the Tribunal, the assessee argued that adequate opportunity of hearing had not been provided by the lower authorities. The Departmental Representative, on the other hand, submitted that the authorities had passed reasoned orders and that the assessee had failed to participate before the NFAC.
The Tribunal observed that it was an admitted fact that the assessee had not filed submissions before the NFAC despite multiple opportunities. However, the Tribunal held that the appeal ought to have been decided on merits in accordance with Section 250 of the Act rather than being dismissed ex-parte.
Considering the facts and circumstances of the case and in the interest of justice, the Tribunal restored the matter to the file of the NFAC with directions to provide one final opportunity to the assessee to substantiate its claims and decide the issues in accordance with law. The assessee was also directed to cooperate in the proceedings before the authorities. Accordingly, the appeal was allowed for statistical purposes.
ITAT Delhi Sends Back Faceless Appeal Due to Lack of Merit-Based Adjudication
SEO Description: ITAT Delhi held that the faceless appellate authority should decide disputes on merits instead of dismissing them solely for non-participation. The Tribunal restored the case involving additions under Sections 68 and 69C for fresh consideration.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal by the assessee is directed against the order of the National Faceless Appeal Centre (NFAC) Delhi [hereinafter referred to as “Ld. NFAC)”] vide order dated 31-12-2024 pertaining to A.Y. 2020-21 arising out the assessment order dated 21-09-2022 u/s.143(3) r.w.s. 144 B of the Income-tax Act, 1961, (in short ‘the Act’)
2. The brief facts of the case are that the assessee a company filed its return of income on 22-01-2021 declaring income at Rs6,83,670/- for the A.Y.2020-21. The case of the assessee was selected for scrutiny to verify the business expenses as the net profit shown in the ROI was merely 0.33%. Accordingly, notice u/s 143(2) of the Act was issued to the assessee on 29-06-2021. Subsequently, the AO issued the statutory notices on various dates. The AO completed the assessment after considering the submission furnished by the assessee by dis-allowancing and making the following additions as under:
(i) Disallowance of unexplained expenditure u/s 69 C of the Act Rs2,00,74,294/-
(ii) unexplained cash credit u/s 68 of the Act Rs.35,00,000/-.
3. Aggrieved the order of the ld. AO the assessee preferred the appeal before the Ld. NFAC who vide his order dated 3112-2024 dismissed the appeal. Being aggrieved the order of the Ld. NFAC the assessee is in appeal before the Tribunal.
4. The Ld. AR of the assessee submitted that the opportunity of being heard was not provided by the lower authorities. The Learned authorized representative for Department of Revenue submitted that departmental authorities have passed reasoned orders. He also submitted that the assessee has not taken part in the proceedings before the Ld. NFAC.The appeal was rightly rejected by the Ld. NFAC.
5. We have heard the Ld. DR and perused the material available on record. It is an admitted fact that despite opportunities granted by Ld. NFAC, the assessee did not file his submissions, for which the appeal was dismissed ex-parte, by the Ld. NFAC.
6. Since in the instant case the assesse has failed to file his submission after availing the various opportunity. The assessee did not appear before appellate authority and the Ld. NFAC dismissed the appeal ex-parte. The appeal should have been decided on merit as per the provision of the section 250 of the Act. The appeal was decided ex-parte without giving the opportunity of being heard to the assessee. Therefore, considering the totality of the facts and circumstances of the case and in the interest of justice, we deem it proper to restore the issue to the file of the Ld. NFAC with a direction to grant one final opportunity to the assessee to substantiate its claim and decide the issue as per fact and law. The assessee is also directed to appear before the Ld. Assessing officer and co-operate in the proceedings. The grounds raised by the assessee are accordingly allowed for statistical purposes.
7. In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court 30.04.2026.
Author Bio
