Where an ex parte assessment and appellate order are passed due to the assessee's non-compliance, the Tribunal may set aside the order and restore the matter to the Assessing Officer for de novo adjudication in the interest of justice, subject to appropriate costs.

ORDER

PER RAKESH MISHRA, ACCOUNTANT MEMBER:

This appeal filed by the assessee is against the order of the Commissioner of Income Tax (Appeals)-NFAC, Delhi [hereinafter referred to as Ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for AY 2020-21 dated 18.11.2025.

2. The assessee is in appeal before the Tribunal raising the following grounds of appeal:

“1. That the order of the Ld. CIT(A), NFAC, dated 18.11.2025 is bad in law and on facts.

2. That the Ld. CIT(A) erred in sustaining the addition of ₹2,48,57,295/- without considering the statutory exemption available to the appellant u/s 10(26) of the Act.

3. That the Ld. CIT(A) erred in treating the entire bank credits of ₹9,94,29,182/- as turnover, ignoring that 70% thereof represents statutory levies (VAT and Excise) and only 30% is the basic value of sales.

4. That the Ld. CIT(A) erred in not appreciating that as per Government of Meghalaya Notification, the gross margin in bonded warehouses is fixed at 8% of basic value and net margin after expenses is only 2%.

5. That the estimation of profit @25% of gross credits is arbitrary, excessive, and contrary to law.

6. That the Ld. CIT(A) erred in dismissing the appeal for non-prosecution without adjudicating the merits, thereby violating principles of natural justice.

7. That the penalty proceedings initiated u/s 270A are unjustified, as the appellant's income is exempt and there is no misreporting or under-reporting.

8. The appellant craves leave to add, amend, alter, or withdraw any ground of appeal at the time of hearing.”

3. Brief facts of the case are that the assessee firm did not file the return of income as required under sub-section (1) of section 139 of the Act for A.Y. 2020-21. As per the information available with the Department, the assessee firm had entered into financial transaction during the F.Y. 2019-20 and therefore, the proceedings u/s 147 of the Act were initiated by the Assessing Officer (hereinafter referred to as Ld. 'AO') for the A.Y. 2020-21 and subsequently the assessment order was passed u/s 144 r.w.s. 147 r.w.s.144B of the Act after making addition of ₹2,48,57,295/- by estimating the business income at the rate of 25% on the total credits of ₹9,94,29,182/-. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A), who provided several opportunities of hearing to the assessee but the assessee remained non-compliant and the appeal was decided on the basis of facts and information available on record as per his findings as under:

“7. Ground of Appeal No. 1: The appellant has taken one sole ground that the Ld. ITO had erred in law as well as on the fact by making an addition of Rs.2,48,57,295/-.

7.1 The facts of the case are that the appellant has not pursued the appeal despite being granted several opportunities as elaborated supra. The notices have been duly served upon the assessee via e-mail. Regrettably no response whatsoever was forthcoming on the appointed date. Thus, nothing has been placed on record to substantiate as to why the addition made by the AO should not be sustained.

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7.3 Perusal of the facts of the case and AO’s order clearly shows that in spite of being given opportunities by the AO, the appellant failed to explain the transactions. The AO has held that the Firm has not filed any return of income and the transactions remained undisclosed. The appellant was asked by the AO to furnish/explain the source of the credits in the bank accounts aggregating to Rs. 9,94,29,182/- duly supported by documentary evidence. However, the appellant did not offer any explanation about the nature and source of such credits. Accordingly, in the absence of books of account/return of income for the period under consideration i.e. A.Y. 2020-21 the transactions remained undisclosed and unverified. Further, during the appellate proceedings, the appellant failed to file any submissions or evidence. The onus was on the appellant