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Facts
The assessee filed an appeal against the order of the CIT(A) who dismissed the appeal due to non-prosecution, without deciding on merits. The assessee claimed to have not received notices due to unfamiliarity with the faceless regime. The AO had made an addition of Rs. 98,30,200/- on account of cash deposits under Section 69A read with Section 115BBE.
Held
The Tribunal held that the CIT(A) is not empowered to dismiss an appeal for non-prosecution and must decide the appeal on merits. The Tribunal condoned the delay in filing the appeal, finding sufficient cause and no malafide intent. The matter was remitted back to the CIT(A) for fresh adjudication.
Key Issues
Whether the CIT(A) was justified in dismissing the appeal for non-prosecution without deciding on merits, and whether the delay in filing the appeal should be condoned.
Sections Cited
69A, 115BBE, 271AAC(1), 254, 250(6), 251(1)(a), 251(1)(b), 251(2)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘E’: NEW DELHI
Before: SHRI YOGESH KUMAR U.S. & SHRI AVDHESH KUMAR MISHRA
ORDER
PER AVDHESH KUMAR MISHRA, AM
The appeal for the Assessment Year (‘AY’) 2017-18 filed by the assessee is directed against the order dated 27.01.2023 of the Ld. Commissioner of Income Tax (Appeals), NFAC, New Delhi [‘CIT(A)’].
The assessee has raised following grounds of appeal: - “1. On the point of facts and on point of law, the learned assessing officer erred in making an addition u/s 69A of The Income tax Act, 1961 amounting to Rs. 98,30,200/- being cash deposits in bank accounts on the basis of doubts and surmises and Ld. Appellant Commissioner was wrong while confirming addition. this 2. On the point of facts and on point of law the ld. Assessing officer erred by raising a demand of 1,05,84,184/-considering the addition u/s 69A and invoking the section 115BBE.
Deepak Chhabra, Delhi 3. The Ld. A.O. was wrong on the point of facts and point of law while imposing the penalty u/s 271AAC(1) of the Income Tax Act 1961. 4. That the assessee be allowed to amend, add, withdraw, delete, substitute grounds of appeal before disposal of appeal.
5. That the relief be given to assessee by quashing the assessment order and deleting the hypothetical additions made on account of cash deposit u/s 69A of the Income Tax Act 1961 and cancelling the demand.”
3. The relevant facts giving rise to this appeal are that the assessee filed his Income Tax Return (‘ITR’) on 02.01.2018 of the relevant year declaring income of Rs.9,33,800/-. The case was selected for scrutiny on the reasoning of abnormal cash deposits during the demonetization period. During the assessment proceedings, the Assessing Officer (‘AO’) noticed that the assessee had deposited cash of Rs.1,61,43,190/- during the relevant year. Out of the said cash deposits, the AO was not satisfied with the explanations of the assessee about the source of cash deposits aggregating to Rs.98,30,200/-. Hence, he taxed the cash deposits of Rs.98,30,200/-undfer section 69A rws 115BBE of the Act. Aggrieved, the assessee filed appeal before the Ld. CIT(A), who dismissed the appeal due to non-prosecution ex parte in limine without deciding the issues on merits as per law.
4. The condonation of delay in filing this appeal is on the record. It had been stated that the assessee did not receive any notice of hearing through the post from the office of the Ld. CIT(A). The notices sent on Income Tax Portal/email id remained uncompiled with due to non-frequent logging of Deepak Chhabra, Delhi Income Tax Portal/email id. The Ld. CIT(A) fixed the hearing by uploading the notice on Income Tax Portal. The assessee was unknown with faceless appellant regime, so there was no knowledge of any notice for hearing by the Ld. CIT(A) and the order of the Ld. CIT(A) until the assessee’s Counsel logged into the e-filing portal after a year as the assessee was not a internet-savvy. So, the delay was not due to any negligence or lack of due diligence and took longer time to file this appeal. There is no dispute that under section 254 of the Act, the Tribunal may pass such orders as it thinks fit. We are of the considered view that there was no malafide or deliberate delay in filing this appeal. In the interest of substantial justice, the delay in filing this appeal deserves to be condoned and this appeal be decided on merit. We do not see any prejudice which will be caused to the Revenue in deciding this appeal on merit. In case of HL Malhotra & Company Pvt. Ltd. Vs DCIT, Circle-12, New Delhi (ITA No. 211/2020 & CM Appeals 32045-32047/2020 dated 22nd December, 2020), the Hon’ble Delhi High Court has held that in absence of anything malafide or deliberate delay as a dilatory tactic, the Court should normally condone the delay as the intent is always to promote substantial justice following the Hon’ble Supreme Court decisions in the case of Collector, Land Acquisition, Anantnag & Anr. Vs Mst. Katiji and others (1987) 2 SCC 107 and N. Balakrishnan Vs M. Krishnamurthy 1998 (7) SCC 123.
Deepak Chhabra, Delhi 5. The explanation of the appellant assessee therefore, becomes relevant to determine whether the same reflects sufficient and reasonable cause on his part in not presenting this appeal within the prescribed time. There should be some mechanism other than through the internet to make the person aware by getting the notice/order served physically for ensuring needful compliances/follow-up as many of taxpayers may not be internet savvy. In case of Collector, Land Acquisition vs MST Katiji (Supra), the Hon'ble Supreme Court has held that the expression ‘Sufficient Cause’ employed by the legislature is adequately elastic to enable the Courts to apply the law in a meaningful manner to sub-serves the ends of justice that being the life-purpose of the existence of the institution of Courts. It was further held by the Hon’ble Supreme Court that such liberal approach is adopted on one of the principles that refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this, when delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties. Another principle laid down by the Hon’ble Supreme Court is that when substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay. It was also held by the Hon’ble Supreme Court that there is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of malafides. A litigant Deepak Chhabra, Delhi does not stand to benefit by resorting to delay. In fact, he runs a serious risk. In the instant case, applying the same principles, we find that there is no culpable negligence or malafide on the part of the assessee in delayed filing of this appeal and he does not stand to benefit by resorting to such delay. Therefore, in the factual matrix of the present case, we find that there exists sufficient and reasonable cause for condoning the delay in filing this appeal as held by the Hon’ble Supreme Court, where substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserved to be preferred.
In light of aforesaid discussions, in exercise of powers under section 254 of the Act, we hereby condone the delay in filing this appeal as we are satisfied that there was sufficient cause for not presenting this appeal within the prescribed time.
Before us, none appeared on behalf of the assessee. Therefore, we heard the Ld. Sr. Departmental Representative (‘Sr. DR’). With the help of facts mentioned in orders of the Authorities below, the Ld. Sr. DR submitted that sufficient opportunities of being heard were provided to the appellant assessee not only by the Ld. CIT(A) but in vain. Hence, he prayed for dismissal of the appeal. On specific query by us, the Sr. DR admitted that the issue in dispute had not been decided on merit by the Ld. CIT(A).
Deepak Chhabra, Delhi 8. We take note of the fact that the Ld. CIT(A) has dismissed the appeal ex-parte due to non-prosecution and has not adjudicated the case on merits. It has been mentioned in the assessee’s affidavit that the assessee was not well conversant with faceless appellant regime and could not check notices uploaded on Income Tax Portal and in a result no replies were filed against the notices uploaded by the Ld. CIT(A).
We take note of the fact that the Ld. CIT(A) has not decided each ground of appeal after discussing the issues in detail and his reasons for agreeing with the assessment order though he, as per provisions of section 250(6) of the Act, is obliged to dispose of the appeal in writing with well- reasoned order on each point of determination arisen for his consideration. It is evident from the perusal of section 251(1)(a), 251(1)(b) and Explanation of section 251(2) of the Act that the CIT(A) is required to apply his/her mind to all the issues which arise from the impugned order before him/her, whether or not these issues have been raised by the assessee before him/her.
10. Section 251(1)(a) of the Act provides that while disposing of an appeal against assessment order, the Ld. CIT(A) shall have the power to confirm, reduce, enhance or annul the assessment. Similarly, the section 251(1) (b) of the Act provides that in disposing of an appeal against an order imposing a penalty, the Ld. CIT(A) may confirm or cancel such orders or vary it so as to either to enhance or to reduce the penalty. On cumulative consideration Deepak Chhabra, Delhi of the provisions of section 250(6) of the Act read with sections 250(4), 250(5), 251(1)(a), 251(1)(b) of the Act and Explanation of section 251(2) of the Act, it is concluded that the Ld. CIT(A) is not empowered to dismiss the appeal for non-prosecution of appeal and is obliged to dispose of the appeal on merits. In this regard, the finding of the coordinate bench in the case of MARC Laboratories Ltd. in 2732, 2733, 2730, 2734 & 2735/DEL/ 2022 is worth extracting as under:
“5. We straightway refer to Section 250(6) of the Act which enjoins that the CIT(A) shall state the points for determination before it and the decision shall be rendered on such points along with reasons for the decision. Thus, it is incumbent upon the CIT(A) to deal with the grounds on merits even in ex parte order. In view of Section 250(6) of the Act, the CIT(A) has no power to dismiss an appeal on account of non-prosecution. This view is also taken by the Hon'ble Bombay High Court in case of CIT vs. Premkumar Arjundas Luthra HUF, (2017) 291 CTR 614 (Bom.). A bare glance of the order of the CIT(A) shows that CIT(A) has not addressed itself on various points placed for its determination at all and dismissed the appeal of assessee for default in non-appearance. Needless to say, the CIT(A) plays role of both adjudicating authority as well as appellate authority. Thus, the CIT(A) could not have shunned the appeal for non-compliance without addressing the issue on merits.
6. In the totality of the circumstances, we consider it just and expedient to restore the matter back to the CIT(A) in the larger interest of justice with a view to enable the assessee to avail proper opportunity for disposal of appeal by the CIT(A) on various points. The assessee is cautioned to extend full co-operation to the CIT(A) without any demur, failing which, the CIT(A) shall be at liberty to conclude the appellate proceedings in accordance with law. Hence, the order of the CIT(A) appealed against, is set aside and all the issues raised in the impugned appeal are restored back to the file of the CIT(A) for fresh adjudication in accordance with law after giving reasonable opportunity of hearing to the assessee.”
Deepak Chhabra, Delhi 11. In view the above, without offering any comment on merit of the case, we deem it fit to set aside the impugned order and remit the matter back to the file of the CIT(A) for deciding the case afresh, in accordance with law, after providing adequate opportunity of being heard to the appellant assessee. Ordered accordingly. The appellant assessee, no doubt, shall cooperate in remitted appellate proceedings.
In the result, the assessee’s appeal is allowed for statistical purposes.
Order pronounced in open Court on 22nd August, 2025