NAGARAJU KALIDAS,KARIMNAGAR V. ITO., WARD-2, KARIMNAGAR

ITA 220/HYD/2025

AI Insights

The case involves an appeal by Nagaraju Kalidas against the order of the Commissioner of Income-Tax (Appeals), which arose from an assessment order under Section 144 of the Income-tax Act, 1961. The Assessing Officer (A.O.) had treated substantial cash deposits in the assessee's bank account as unexplained money under Section 69A of the Act, due to the assessee's failure to file a return of income or provide explanations for the deposits. The CIT(A) upheld the A.O.'s decision, leading to the current appeal. The ITAT found that the assessee was not properly notified of the appeal hearings, as he had opted out of email notifications and did not receive physical copies of the notices, thus not being given a fair opportunity to present his case.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 46037 (ITAT-HYDERABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SM-A
• Assessment Year: 2017-2018
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Opportunity of being heard
• Section: 144; 142(1); 69A

Judgement Text

"1 आयर अपीलȣय Ûयायाͬधकरण मɅ, हैदराबाद ‘ए’ बɅच, हैदराबाद IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘ SM-A ‘ Bench, Hyderabad Įी रवीश सूद, माननीय ÛयाǓयक सदèय एवं Įी मधुसूदन सावͫडया जी, माननीय लेखा सदèय SHRI RAVISH SOOD, HON’BLE JUDICIAL MEMBER AND SHRI MADHUSUDAN SAWDIA, HON’BLE ACCOUNTANT MEMBER आयकरअपीलसं./I.T.A.No.220/Hyd/2025 (िनधाŊरण वषŊ/ Assessment Year:2017-18) Nagaraju Kalidas, Karimnagar. PAN: CLGPK0916A VS. Income Tax Officer, Ward-2, Karimnagar. (अपीलाथŎ/ Appellant) (ŮȑथŎ/ Respondent) करदाता का Ůितिनिधȕ/ Assessee Represented by : Smt. S. Sandhya, Advocate राजˢ का Ůितिनिधȕ/ Department Represented by : Shri Ashish Kumar Shukla, Sr.AR सुनवाई समाɑ होने की ितिथ/ Date of Conclusion of Hearing : 17.03.2025 घोषणा की तारीख/ Date of Pronouncement : 21.03.2025 O R D E R Ůित रवीश सूद, जे.एम./PER RAVISH SOOD, J.M. The present appeal filed by the assessee is directed against the order passed by the Commissioner of Income-Tax (Appeals), National Faceless Appeal Center (NFAC), Delhi, dated 18/12/2024, which in turn arises from the order passed by the A.O under Section 144 of the 2 Income-tax Act, 1961 (in short ‘the Act’) dated 07/11/2019 for the assessment year 2017-18. 2. The assessee has assailed the impugned order on the following grounds of appeal before us: “1. The order of the CIT(A) is erroneous both on facts and in law. 2. The Ld CIT(A) erred in deciding the appeal ex-parte without providing proper opportunity to the appellant herein. 3. The Ld CIT(A) erred in confirming the action of the Assessing Officer in treating an amount of Rs. 33,41,820/- as the income assessable U/s. 69A of the Act without considering the explanations submitted. 4. The Ld CIT(A) erred in confirming the action of the Assessing Officer in treating the amount of Rs. 3,63,919/- as the income of the appellant in addition to the income assessed U/s. 69A of the Act. 5. The Ld CIT(A) ought to have provided further opportunity and decided the issues on merit without deciding the appeal ex-parte. 6. Any other ground/grounds that may be urged at the time of hearing.” 3. Succinctly stated, the A.O. based on information that though the assessee during the subject year had made cash deposits in his bank account but had not filed his return of income, issued notice under Section 142(1) of the Act, dated 08/03/2018. As the assessee failed to file his return of income in compliance to the aforesaid notice issued by the A.O., therefore, the latter was constrained to proceed with and frame the assessment to the best of his judgment under Section 144 of the Act. 3 4. The A.O., observed that during the subject year there were cash deposits/credit entries in the bank account of the assessee aggregating to Rs. 33,41,820/-. As the assessee had failed to come forth with any explanation qua the source of the aforesaid cash deposits, therefore, the A.O was constrained to treat the entire amount as his unexplained money under Section 69A of the Act. Apart from that, the Assessing Officer made an addition of certain incomes that had surfaced in the course of the assessment proceedings, viz. (i). pension income: Rs. 3,32,709/-; and (ii). interest income: Rs. 31,210/-. 5. Accordingly, the Assessing Officer vide his order under Section 144 of the Act, dated 07/11/2019, determined the income of the assessee at Rs. 37,05,739/-. 6. Aggrieved, the assessee carried the matter in appeal before the CIT(A). As the assessee, despite having been afforded 4 opportunities had failed to participate in the appellate proceedings, therefore, the CIT(A) holding a conviction that the assessee was not interested in pursuing the appeal, upheld the view taken by the A.O and dismissed the appeal. 7. The assessee, being aggrieved by the order of the CIT(A) has carried the matter in appeal before us. 4 8. We have heard the learned Authorized Representatives of both the parties, perused the orders of the lower authorities and the material available on record. 9. Smt. S. Sandhya, the Learned Authorized Representative (in short, “AR”) for the assessee, at the threshold of hearing of the appeal, submitted that as the assessee was not validly put to notice about the hearing of the appeal by the CIT(A), therefore, he had remained divested of an opportunity to assail the additions made by the A.O. Elaborating further on her contention, the ld. AR submitted that though, the assessee had in the Memorandum of Appeal, filed before the CIT(A) i.e., “Form-35” specifically opted out of receipt of notices/communications through e-mail but despite that on neither of the 4 occasions any hard/physical copy of notice intimating the fixation of the appeal was ever served upon him. The ld. AR to substantiate her contention had taken us through “Form-35” which substantiated her aforesaid claim. The ld. AR on specifically being queried as to whether or not on either of the occasions any of the notices intimating the fixation of the appeal was ever physically served upon the assessee, answered in the negative. The ld. AR stated at Bar that no hard/physical notice intimating the fixation of the hearing of the appeal was ever served upon the assessee by the office of the CIT(A). The ld. AR submitted that as the CIT(A) had disposed of the appeal without affording any opportunity of being heard to the 5 assessee, therefore, the matter in all fairness be restored to his file with a direction to him to re-adjudicate the same. 10. Per contra, the Learned Departmental Representative (in short “Ld. DR”) relied on the orders of the lower authorities. The Ld. DR submitted, that as the service of notices intimating the fixation of the appeal through physical mode had been dispensed with way back, therefore, the grievance of the assessee of not having been validly put to notice about the fixation of the appeal vide a hard/physical copy of the intimation was irrelevant. 11. We have thoughtfully considered the contentions advanced by the Learned Authorized Representatives of both the parties. Admittedly, it is a matter of fact borne from the record that the assessee had in his memorandum of appeal i.e., “Form-35” specifically opted out of receipt of notices/communications from the office of the CIT(A) through email. For the sake of clarity, the “Form-35” is culled out as under (relevant extract): 12. As the assessee had specifically opted out of service of notices/ communications from the office of the CIT(A) through email, therefore, 6 we find substance in the ld. AR’s claim that in the absence of service of a hard/physical copy of the notice intimating the fixation of the hearing of the appeal before the CIT(A) on either of the 4 occasions, it could safely be concluded that the assessee was not validly put to notice. Although, it is the Ld. DR’s claim that the Department had way back done away with the service of hard/physical copies of notices, but, we are of the firm conviction that as the assessee-appellants in “Form-35” are still provided with an option as to whether or not the notices/ communications be sent to them on email, therefore, the aforesaid contention of the Department is bereft of any substance and does not merit acceptance. 13. Be that as it may, we are of the firm conviction that as the assessee appellant had not been validly put to notice about the fixation of the hearing of the appeal before the CIT(A) on either of the 04 occasions, i.e., on 21/05/2024, 05/07/2024, 18/10/2024 and 16/12/2024, therefore, he for no fault on his part had remained divested of a sufficient opportunity to assail the additions made by the A.O before the first appellate authority. 14. Considering the aforesaid facts, we are of a firm conviction that the matter in all fairness be restored to the file of the CIT(A) with a direction to re-adjudicate the same. Needless to say, the CIT(A) shall, in the course of the set-aside proceedings afford a reasonable opportunity of being 7 heard to the assessee, who shall remain at liberty to substantiate his claim based on fresh documentary evidence, if any. The Ground of appeal No.2 is allowed for statistical purposes. 15. As we have set-aside the matter to the file of the CIT(A) for fresh adjudication, therefore, we refrain from adverting to and adjudicating the Grounds of appeal No(s). 3 and 4, which, thus, are left open. 16. Grounds of appeal No(s). 1, 5 & 6 being general in nature are dismissed as not pressed. 17. Resultantly, the appeal filed by the assessee is allowed for statistical purposes in terms of our aforesaid observations. 21st माच[, 2025 को खुलȣ अदालत मɅ सुनाया गया आदेश। Order pronounced in the Open Court on 21st March, 2025. Sd/- Sd/- (मधुसूदन सावͫडया) (MADHUSUDAN SAWDIA) लेखा सद˟/ACCOUNTANT MEMBER Sd/- Sd/- (रवीश सूद) (RAVISH SOOD) Ɋाियक सद˟/JUDICIAL MEMBER Sd/- Sd Hyderabad, dated 21.03.2025. ***OKK/sps आदेशकी Ůितिलिप अŤेिषत/ Copy of the order forwarded to:- 1. िनधाŊįरती/The Assessee : Nagaraju Kalidas, H.No. 8-6-16, Ganeshnagar, Ward No.8, Karimnagar, Telangana-505001. 2. राजˢ/ The Revenue : Income Tax Officer, Ward-2, Karimnagar, Telangana. 3. The Principal Commissioner of Income Tax, Hyderabad 8 4. िवभागीयŮितिनिध, आयकर अपीलीय अिधकरण, हैदराबाद / DR, ITAT, Hyderabad 5. The Commissioner of Income Tax 6. गाडŊफ़ाईल / Guard file आदेशानुसार / BY ORDER Sr. Private Secretary ITAT, Hyderabad "