VIJAY ISRANI,DELHI vs. DCIT,CENTRAL CIRCLE-6, DELHI

3. That on the facts and circumstances of the case the Ld. CIT(A) has grossly erred in confirming the addition of Rs.1,01,00,000/- on account of unsecured loans received from the group company of the assessee made under section 68 on account of unexplained cash credits.

4. That on facts and circumstances of the case the Ld. CIT(A) has grossly erred in confirming the addition made on account of unexplained cash credit wherein the assessee being an individual was not required to prove the source of source of the loans received for the year under consideration under the provisions of section 68 of the Income Tax Act, 1961. On the contrary the assessee had duly explained the source of the money received which was not considered.

Vijay Israni 5. That on the facts and circumstances of the case the Ld. CIT(A) has grossly erred in confirming the additions made in the assessment order because, a) The income added to the total income of the assessee was already part of the books of accounts represented in the form of unsecured loans; b) The arbitrary list of the shareholders of the creditor company was looked into whereas the actual shareholders were not considered and the identity of the shareholders was already established through the statement of the common director under oath. c) the source of funds received by the assessee has been overlooked and the same was beyond the time frame as per law.

3. The relevant facts giving rise to this appeal are that the assessee filed his original Income Tax Return (‘ITR’) on 31.03.2015 declaring income of Rs.52,61,420/-. The case was scrutinized and consequential assessment was completed at income of Rs.1,00,12,660/- under section 143(3) of the Act. Thereafter, the case was reopened under section 148 of the Act on the reasoning that the credit/loan in the hands of the assessee were not genuine. The reopening challenged by the assessee vide writ petition was dismissed by the Hon’ble Delhi High Court (as detailed in para-7 of the assessment order). Consequential assessment was completed at income of Vijay Israni Rs.2,01,12,660/- by making addition of Rs.1,01,00,000/- under section 68 of the Act. Aggrieved, the assessee filed appeal before the CIT(A), who dismissed the appeal due to non-prosecution after providing 10 opportunities of being heard to the appellant assessee. (as detailed in para 4.2.1 of the impugned order).

4. 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 AO but also by the Ld. CIT(A) but in vain. He submitted that the appellant assessee tactfully ensured noncompliance to avoid proper investigations. 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).

6. 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 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 Vijay Israni 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.”