ITAT Delhi Sets Aside Ex-Parte Order as Notices were never served to Assessee

Raj Rani Vs ITO (ITAT Delhi)

In the case of Raj Rani vs. Income Tax Officer (ITO), the Income Tax Appellate Tribunal (ITAT) Delhi bench set aside an ex-parte assessment order after it was found that assessment notices were not served to the assessee. The assessee challenged an order by the Commissioner of Income Tax (Appeals) [CIT(A)] which upheld a tax addition of ₹49,02,500 related to cash deposits in a Punjab National Bank account. The assessee argued that the notices from the Assessing Officer (AO), under Section 147 of the Income Tax Act, were never received, as they lacked her email address. As a result, the assessee was unable to participate in the assessment proceedings. Additionally, the CIT(A) dismissed her appeal without considering her response submitted on March 13, 2024, two days after the deadline set by the CIT(A) notice.

The ITAT reviewed the circumstances, including the lack of notice service and the fact that the assessee submitted a reply, though late. The Tribunal acknowledged the assessee’s right to be heard and deemed it appropriate to remand the case to the AO for a fresh assessment. ITAT directed the assessee to provide a current, functional email address for future notice delivery and advised her to respond promptly once notified. This decision emphasizes the importance of proper notice service in tax assessments and the right of taxpayers to a fair hearing before orders are finalized.

FULL TEXT OF THE ORDER OF ITAT DELHI

This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi (hereinafter referred to as ‘the CIT(A)’) dated 13.03.2024, for assessment year 2012-13.

2. Shri Samyak Jain, appearing on behalf of the assessee submitted that the assessment u/s. 147 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) was completed in an ex-parte proceedings. Alleged notices sent by the Assessing Officer (AO) were never served on the assessee. He furnished copy of the notices allegedly issued by the Assessing Officer. He pointed that a perusal of screen shot of the notices would show that email id of the assessee is not mentioned on the notice, on which the said notices were allegedly sent by the AO. He further stated that the CIT(A) has also decided appeal of the assessee ex-parte. Despite the fact the assessee has furnished complete reply on 13.03.2024 to the queries raised by the CIT(A) the said reply was not considered before passing the impugned order. The ld. Counsel submitted that AO had made addition of Rs. 49,02,500/- on account of cash deposits in saving bank account maintained with Punjab National Bank. The CIT(A) has upheld the same. He further stated that the assessee can explain the source of cash deposits, if an opportunity is granted to the assessee. The ld. Counsel prayed for restoring appeal to the AO for fresh assessment.

3. Per contra, Shri Sanjay Kumar representing the department vehemently defending the impugned order submits that the assessee has been non cooperative before the AO, as well as, the CIT(A). Despite repeated opportunities, the assessee did not comply with the notices. He pointed that the CIT(A) vide notice dated 23.02.2024 had given time to the assessee to furnish reply by 11.03.2024, whereas the reply was furnished by the assessee on 13.03.2024 i.e. after the due date. By that time, the CIT(A) had finalized the impugned order, hence, reply furnished by the assessee was not considered.

4. Both sides heard, order of the authorities below examined. The assessee is in appeal against an ex-parte order passed by the CIT(A). The assessee allegedly furnished reply to the notice issued by the CIT(A), however, the said reply was furnished beyond the date of compliance mentioned in the notice. The ld. Counsel for the assessee has pointed that the notices issued by the AO were never served on the assessee, hence, the assessee could not participate in assessment proceedings. Considering entire facts of the case, I deem it appropriate to restore appeal to the Assessing Officer for denovo assessment after affording reasonable opportunity of making submissions to the assessee, in accordance with law.

5. The assessee is directed to provide current/functional email id to the AO for service of notice. The assessee on service of notice shall respond to the same, without fail.

6. In the result, impugned order is set aside and appeal of the assessee is allowed for statistical purpose.

Order pronounced in the open court on Tuesday the 01^st day of October, 2024.