Shree Shivpur Dudh Utpadak Sahakari Mahila Mandali Ltd. Vs ITO (ITAT Surat)
Summary: This appeal was filed by the assessee against the ex-parte appellate order dated 30.05.2024 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, arising from the ex-parte assessment order passed under Section 144 of the Income Tax Act, 1961 for Assessment Year 2017-18.
The assessee had not filed its return of income under Section 139 of the Act for A.Y. 2017-18. A notice under Section 142(1) was thereafter issued. In response, the assessee filed a belated return but did not participate in the hearing proceedings, resulting in an ex-parte assessment order making an addition of Rs. 17,90,229/-.
The assessee filed an appeal before the CIT(A). The CIT(A) provided seven opportunities of hearing, which were not responded to by the assessee, and consequently dismissed the appeal for non-prosecution.
Before the ITAT, the assessee challenged the ex-parte proceedings and contended that notices were not properly served and that it had not been granted a fair, proper and meaningful opportunity of being heard. The assessee produced proof of replies filed on 04.09.2019, 23.09.2019 and 13.11.2019 and requested one more opportunity to explain its case.
The assessee’s grounds also challenged the addition of Rs. 17,90,229/-, the action under Section 144, the estimated net profit ratio, the alleged unexplained cash credit of Rs. 4,33,350/- under Section 68 read with Section 115BBE, and non-grant of deduction under Section 80P(2)(b). These were grounds raised by the assessee and were not finally adjudicated on merits by the Tribunal.
After considering the rival submissions and material available on record, the Tribunal set aside the ex-parte orders passed by the lower authorities and remitted the matter to the file of the Jurisdictional Assessing Officer. The Assessing Officer was directed to give one more opportunity of hearing to the assessee and examine the matter after the assessee produced all evidence in support of its case.
The Tribunal directed the assessee to make use of this final opportunity and produce all necessary details and documents before the Jurisdictional Assessing Officer for passing an order on merits. The appeal was treated as allowed for statistical purposes.
Background of the Assessment
This appeal is filed by the Assessee as against ex-parte appellate order dated 30.05.2024 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, (in short referred to as “CIT(A)”), arising out of the ex-parte assessment order passed under Section 144 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Year 2017-18.
The assessee did not file the return of income under Section 139 of the Act relating to the assessment year 2017-18. Therefore, a notice under Section 142(1) of the Act was issued. In response, the assessee filed belated return but did not participate in the hearing proceedings, which resulted in passing of an ex-parte assessment order making addition of Rs. 17,90,229/-.
Aggrieved against the ex-parte order, the assessee filed appeal before the CIT(A), who gave seven opportunities of hearing. These opportunities were not responded to by the assessee and the CIT(A) dismissed the appeal for non-prosecution.
Grounds Raised Before the ITAT
Aggrieved against the order of the CIT(A), the assessee filed an appeal before the Tribunal and raised the following grounds:
“1. On the facts and in the circumstances of the case as well in law, the learned CIT (Appeals) has erred both on facts and in law in deciding the appeal ex-parte in violation of the principles of natural justice and without granting to the assessee a fair, proper and meaningful opportunity of being heard and the inferences of the C1T (Appeals) that the appellant is not interested in pursuing the appeal is without jurisdiction, perverse, invalid, arbitrary, bad in law and hence, liable to be struck down.
2. On the facts and in the circumstances of the case as well in law, the learned CIT (Appeals) has erred both on facts and in law in making valid service of notice to the appellant on correct e-mail address and decided the appeal ex-parte without giving to the assessee a fair, proper and meaningful opportunity of being heard and hence, the order passed by the CIT(A) should be liable to be struck down.
3. The order CIT(Appeals), NFAC, Delhi confirming the order of the learned ITO, Ward 2, Bardoli (for the sake of brevity “The AO”) making ad-hoc additions of Rs. 17,90,229/- on misleading, baseless, arbitrary, and perverse observations, is contrary to law and facts of the case and hence, liable to be quashed.
4. On the facts and in the circumstances of the case as well in law, both the lower authorities have grievously failed to see and appreciate the submissions made on different dates in compliances to the notices u/s 143(2) / 142(1) of the Act in all the terms and hence, the action of the AO to assume the jurisdiction u/s 144 of the Act for passing the ex-parte order on mere estimates of net profit ratio and on alleged unexplained cash credit u/s 68 of the Act is being without jurisdiction, bad in law, illegal, invalid, arbitrary, void ab initio and hence, liable to be annulled in toto.
5. On the facts and in the circumstances of the case as well in law, both the lower authorities have grievously failed to appreciate that the appellant being the registered primary milk producers co-operative society engaged in supplying milk of its members to its federal co-operative society (SUMUL), duly eligible for deduction u/s 80P(2)(b) of the Act and hence, the ex-parte order passed by the AO treating the total transactions of depositing of cash and cheques for the aggregate amount of Rs. 1,69,58,487/- in the regular bank accounts arising purely out of the prime activity of supplying milk to its federal co-operative society, as the unaccounted income applying the notional and estimated NP ratio at the rate of 8% and not granting the deduction u/s 80P(2)(b) of the Act is, being without jurisdiction, unwarranted of facts, arbitrary, perverse, bad in law, illegal and invalid, liable to be struck down.
6. On the facts and in the circumstances of the case as well in law, both the lower authorities have erred in making addition of Rs. 4,33,350/- on account of alleged unexplained cash credit u/s 68 r. w. s. 115BBE of the Act, ignoring the explanations offered as to its nature and source of amount deposited in cash during the demonetization period with the regular/ disclosed bank account being the income earned/ transactions purely of the activity of supplying milk of its members to its federal co-operative society, eligible for deduction u/s 80P(2)(b) of the Act and hence, not justified.
7. The CIT(Appeals), NFAC, Delhi has erred in confirming the order of the AO in not considering the entire correspondences made in the course of assessment proceedings, already been supplied with the appeal memo forming part of the statement of facts including cogent explanations and submissions made in writing by the appellant on various dates along with the various enclosures attached with the said submission and hence, not justified.
8. Your appellant further reserves his rights to add, alter, amend or modify any of the aforesaid grounds before or at the time of hearing of an appeal.”
Assessee’s Submissions Before the Tribunal
The assessee claimed that notices were not properly served, which resulted in the passing of ex-parte orders before the lower authorities.
The assessee also produced proof of replies filed on 04.09.2019, 23.09.2019 and 13.11.2019 and requested that one more opportunity be given to explain its case.
The grounds of appeal also contained the assessee’s submissions concerning the addition of Rs. 17,90,229/-, the action under Section 144, alleged unexplained cash credit under Section 68 read with Section 115BBE, the aggregate cash and cheque deposits of Rs. 1,69,58,487/-, the estimated net profit ratio of 8% and the claimed eligibility for deduction under Section 80P(2)(b).
The assessee further contended that the explanations and submissions made during the assessment proceedings had not been properly considered by the lower authorities.
Tribunal’s Consideration
The Tribunal heard the rival submissions and perused the materials available on record.
The Tribunal recorded that the assessee claimed that notices were not properly served and that the assessee had produced proof of replies filed on 04.09.2019, 23.09.2019 and 13.11.2019.
Considering the submission of the assessee, the Tribunal decided to set aside the ex-parte orders passed by the lower authorities and remit the matter to the file of the Jurisdictional Assessing Officer.
Matter Remitted to Jurisdictional Assessing Officer
The Tribunal directed the Jurisdictional Assessing Officer to give one more opportunity of hearing to the assessee and to consider all evidence produced by the assessee in support of its case.
The Tribunal further directed that the assessee should make use of this final opportunity and produce all necessary details and documents before the Jurisdictional Assessing Officer for passing an order on merits.
The Tribunal’s order therefore restored the matter for consideration by the Jurisdictional Assessing Officer after providing the stated opportunity. The Tribunal did not decide the substantive grounds concerning the additions and deduction claims on their merits in the present order.
Final Decision
The Tribunal held that the ex-parte orders passed by the lower authorities were to be set aside and the matter was to be remitted to the file of the Jurisdictional Assessing Officer for providing one more opportunity of hearing to the assessee.
The appeal filed by the assessee was treated as allowed for statistical purpose.
Order is pronounced under the provisions of Rule 34(4) of IT(AT) Rules, 1963 on 30/07/2026.
FULL TEXT OF THE ORDER OF ITAT SURAT
This appeal is filed by the Assessee as against ex-parte appellate order dated 30.05.2024 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, (in short referred to as “CIT(A)”), arising out of the ex-parte assessment order passed under section 144 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Year 2017-18.
2. Brief facts of the case the assessee did not file the return of income under section 139 of the Act relating to the assessment year 2017-18. Therefore a notice under section 142(1) of the Act was issued. In response, the assessee filed belated return but not participated in the hearing proceedings, which has resulted in passing ex-parte assessment order making addition of Rs. 17,90,229/-.
3. Aggrieved against the ex-parte order, assessee filed appeal before Ld. CIT(A), who have given seven opportunities of hearing which were not responded by the assessee, therefore, Ld. CIT(A) dismissed the appeal for non prosecution.
4. Aggrieved against the same the assessee is in appeal before us arising on the following Grounds of Appeal:-
“1 On the facts and in the circumstances of the case as well in law, the learned CIT (Appeals) has erred both on facts and in law in deciding the appeal ex-parte in violation of the principles of natural justice and without granting to the assessee a fair, proper and meaningful opportunity of being heard and the inferences of the C1T (Appeals) that the appellant is not interested in pursuing the appeal is without jurisdiction, perverse, invalid, arbitrary, bad in law and hence, liable to be struck down.
2. On the facts and in the circumstances of the case as well in law, the learned CIT (Appeals) has erred both on facts and in law in making valid service of notice to the appellant on correct e-mail address and decided the appeal ex-parte without giving to the assessee a fair, proper and meaningful opportunity of being heard and hence, the order passed by the CIT(A) should be liable to be struck down.
3. The order CIT(Appeals), NFAC, Delhi confirming the order of the learned ITO, Ward 2, Bardoli (for the sake of brevity “The AO”) making ad-hoc additions of Rs. 17,90,229/ – on misleading, baseless, arbitrary, and perverse observations, is contrary to law and facts of the case and hence, liable to be quashed.
4. On the facts and in the circumstances of the case as well in law, both the lower authorities have grievously failed to see and appreciate the submissions made on different dates in compliances to the notices u/s 143(2) / 142(1) of the Act in all the terms and hence, the action of the AO to assume the jurisdiction u/s 144 of the Act for passing the ex-parte order on mere estimates of net profit ratio and on alleged unexplained cash credit u/s 68 of the Act is being without jurisdiction, bad in law, illegal, invalid, arbitrary, void ab initio and hence, liable to be annulled in toto.
5. On the facts and in the circumstances of the case as well in law, both the lower authorities have grievously failed to appreciate that the appellant being the registered primary milk producers co-operative society engaged in supplying milk of its members to its federal cooperative society (SUMUL), duly eligible for deduction u/s 80P(2)(b) of the Act and hence, the ex-parte order passed by the AO treating the total transactions of depositing of cash and cheques for the aggregate amount of Rs. 1,69,58,487/ -in the regular bank accounts arising purely out of the prime activity of supplying milk to its federal co-operative society, as the unaccounted income applying the notional and estimated NP ratio at the rate of 8% and not granting the deduction u/s 80P(2)(b) of the Act is, being without jurisdiction, unwarranted of facts, arbitrary, perverse, bad in law, illegal and invalid, liable to be struck down.
6. On the facts and in the circumstances of the case as well in law, both the lower authorities have erred in making addition of Rs. 4,33,350/- on account of alleged unexplained cash credit u/s 68 r. w. s. 115BBE of the Act, ignoring the explanations offered as to its nature and source of amount deposited in cash during the demonetization period with the regular/ disclosed bank account being the income earned/ transactions purely of the activity of supplying milk of its members to its federal cooperative society, eligible for deduction u/s 80P(2)(b) of the Act and hence, not justified.
7. The CIT(Appeals), NFAC, Delhi has erred in confirming the order of the AO in not considering the entire correspondences made in the course of assessment proceedings, already been supplied with the appeal memo forming part of the statement of facts including cogent explanations and submissions made in writing by the appellant on various dates along with the various enclosures attached with the said submission and hence, not justified.
8. Your appellant further reserves his rights to add, alter, amend or modify any of the aforesaid grounds before or at the time of hearing of an appeal.”
5. Heard the rival submissions and perused materials available on record. The assessee claims notices were not properly served on the assessee, which has resulted in passing ex-parte order before the lower authorities. The assessee also produced proof of reply filed on 04.09.2019, 23.09.2019 and 13.11.2019, therefore, requested that one more opportunity be given to the assessee to explain its case. Considering the submission of the assessee we hereby set aside ex-parte orders passed by the lower authorities and remit the matter to the file of Jurisdictional Assessing Officer to give one more opportunity of hearing to the assessee to produce all evidences in support of its case. Needless to say that the assessee should make use of this final opportunity and produce all necessary details, documents before the JAO for passing order on merits.
6. In the result, appeal filed by the assessee is treated as allowed for statistical purpose.
Order is pronounced under the provisions of Rule 34(4) of IT(AT) Rules, 1963 on 30/07/2026.
