Due process requires genuine opportunity for the appellant to participate in proceedings, and non-compliance by the CIT(A) necessitates remand for fresh adjudication.

ORDER

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 08.11.2024, which in turn arises from the order passed by the Assessing Officer (for short “A.O.”) under Section 144 of the Income Tax Act, 1961 (for short “the Act”) dated 30.11.2019 for A.Y. 2017-18. The assessee has assailed the impugned order on the following grounds of appeal before us:

“1) The order of the learned CIT (A) is erroneous both on facts and in law;

2) The learned CIT (A) erred in deciding the issue without providing proper opportunity to the appellant herein;

3) The learned CIT (A) ought to have provided further opportunity to the appellant before deciding the appeal ex-parte;

4) The learned CIT (A) ought to have considered the issues on merits and held that the deposits were made from out of the business income of the appellant;

5) The learned CIT (A) ought to have found that the appellant is a registered Mundi Dealer and has sufficient funds for depositing the amounts in the bank account;

6) The learned CIT (A) erred in not deciding the grounds on merit and in deciding the appeal ex-parte;

7) Any other ground/grounds that may be urged at the time of hearing.”

2. Succinctly stated, the A.O. based on information gathered from the AIMS module of ITBA that the assessee firm during the demonetization period, i.e., 09.11.2016 to 30.12.2016, had made substantial cash deposits in his bank account with Andhra Bank, Branch: Pragathi Grameena Bank, Kadiri, but had not filed his return of income for the subject year, i.e. A.Y. 2017-18, issued notice u/s 142(1) of the Act, dated 27.12.2017, calling upon him to file his return of income. However, as the assessee firm had neither complied with the aforesaid notice u/s 142(1) of the Act and filed his return of income; nor participated in the assessment proceedings, therefore, the A.O. was constrained to proceed with and frame the assessment to the best of his judgment u/s 144 of the Act.

3. During the course of assessment proceedings, the A.O. called for the bank statement of the assessee, i.e., SB Account No.91078619820 held with Andhra Bank, Branch: Pragathi Grameena Bank, Kadiri under Section 133 (6) of the Act. On a perusal of the bank statement, it was observed by him that the assessee during the demonetization period had made cash deposits of Rs. 24,12,100/-. Further, the A.O. observed that the aggregate cash deposits made by the assessee in his aforementioned bank account during the subject year amounted to Rs. 25,02,100/-.

4. As the assessee had despite sufficient opportunity failed to respond to the notices that were issued by the A.O., therefore, the latter holding a conviction that the cash deposits made by him during the pre/post-demonetization period would have been sourced out of his trading activity, thus, did not draw any adverse inferences regarding the same. However, the A.O. held the balance amount of cash deposits made in the bank account during the demonetization period of Rs. 24,12,1000/- as having been sourced out of the assessee’s unexplained money u/s 69A of the Act.

5. Aggrieved, the assessee carried the matter in appeal before the CIT(A). Ostensibly, as the assessee despite having been put to notice about the fixation of hearing of the appeal on five occasions i.e. on 25.07.2024, 13.08.2024, 29.08.2024, 25.09.2024 and 01.05.2024 had failed to respond to the same, therefore, the CIT(A) dismissed the