Appeal Restored Due to Lack of Opportunity – Dharmendra Pratap Rathi vs ITO Ward-1(2), Ghaziabad

Case Summary: Dharmendra Pratap Rathi vs ITO Ward-1(2), Ghaziabad

Case Number: ITA 6062/DEL/2019
Appellant: Dharmendra Pratap Rathi, Ghaziabad
Respondent: Income Tax Officer (ITO), Ward-1(2), Ghaziabad
Assessment Year: 2010-11
Case Filed On: 16th July 2019
Order Type: Final Tribunal Order
Date of Order: 16th June 2021
Pronounced On: 16th June 2021

Introduction

The case of Dharmendra Pratap Rathi vs ITO Ward-1(2), Ghaziabad, revolves around an appeal filed by the appellant challenging the ex-parte order of the Commissioner of Income Tax (Appeals) [CIT(A)], Ghaziabad, which sustained the addition of unexplained cash deposits for the assessment year 2010-11. The appeal was restored to the CIT(A) by the Income Tax Appellate Tribunal (ITAT) after it was observed that the appellant was not given a proper opportunity to present his case.

Background of the Case

Shri Dharmendra Pratap Rathi, a resident of Ghaziabad, filed his income tax return for the assessment year 2010-11 on 19th May 2010, declaring a total income of Rs. 1,50,620/-. Subsequently, the Income Tax Department obtained information indicating that the appellant had made cash deposits totaling Rs. 14,61,300/- in his savings bank account during the financial year 2009-10. Based on this information, the Assessing Officer (AO) initiated proceedings under section 147 of the Income Tax Act, 1961, by issuing a notice under section 148 on 31st March 2017.

Despite receiving the notice, the appellant failed to file a return or respond to subsequent statutory notices issued by the AO. Consequently, the AO completed the assessment under section 144 of the Income Tax Act, 1961, on a best judgment basis. The AO determined the total income of the appellant at Rs. 16,11,920/-, which included an addition of Rs. 14,61,300/- as unexplained investment under section 69 of the Act, based on the unexplained cash deposits in the appellant’s bank account.

The appellant then filed an appeal before the CIT(A), Ghaziabad, but failed to appear or explain the delay of over three months in filing the appeal. As a result, the CIT(A) dismissed the appeal ex-parte without condoning the delay, which led the appellant to file the present appeal before the ITAT.

Tribunal’s Decision to Restore the Appeal

The ITAT, with Shri R.K. Panda as the presiding Accountant Member, heard the case on 16th June 2021. The appellant did not appear for the hearing, and the case was decided based on the material available on record and the submissions of the Senior Departmental Representative (DR), Shri R.K. Gupta.

The Tribunal noted that the CIT(A) had dismissed the appeal solely on the grounds of non-appearance and the appellant’s failure to explain the delay in filing the appeal. However, it was also noted that the CIT(A) had granted only one opportunity to the appellant to present his case, which the Tribunal considered insufficient to meet the requirements of natural justice.

In light of these observations, the Tribunal concluded that the appellant was not afforded a fair opportunity to explain the delay or to substantiate his case on merits. The Tribunal emphasized the importance of providing adequate opportunities to taxpayers, especially in cases involving significant additions, such as the Rs. 14,61,300/- in unexplained cash deposits.

Consequently, the ITAT set aside the ex-parte order passed by the CIT(A) and remanded the case back to the CIT(A) for fresh adjudication. The Tribunal directed the CIT(A) to grant one more opportunity to the appellant to substantiate his case, including explaining the reasons for the delay in filing the appeal. The Tribunal also instructed the appellant to cooperate with the proceedings and appear before the CIT(A) without seeking unnecessary adjournments, failing which the CIT(A) would be at liberty to pass appropriate orders as per the law.

Conclusion

The appeal filed by Dharmendra Pratap Rathi against the ex-parte order of the CIT(A), Ghaziabad, was allowed for statistical purposes by the ITAT. The case was remanded back to the CIT(A) for fresh adjudication, with directions to provide the appellant with a fair opportunity to present his case.

This case underscores the importance of adhering to the principles of natural justice in tax proceedings and ensuring that taxpayers are given adequate opportunities to explain their positions. The decision also highlights the Tribunal’s role in safeguarding the rights of taxpayers by ensuring that procedural fairness is maintained throughout the appellate process.

Order Pronounced in Open Court: 16th June 2021

Judicial Member: Shri R.K. Panda

Assistant Registrar: ITAT, New Delhi

Appeal Restored Due to Lack of Opportunity – Dharmendra Pratap Rathi vs ITO Ward-1(2), Ghaziabad