KALURAMJI SUGANCHAND,CHENNAI vs. ITO, NCW-22(4), TAMBARAM

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ITA 3860/CHNY/2025Status: DisposedITAT Chennai27 April 2026AY 2017-189 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the CIT(A) is duty-bound to decide appeals on merits, even if ex-parte, and cannot dismiss them solely for non-prosecution. The matter was therefore remanded to the CIT(A) for de novo disposal.

What were the facts?

The assessee's appeal before the CIT(A) was dismissed for non-prosecution. The Assessing Officer had made significant additions to the assessee's income, particularly concerning cash deposits during demonetization, after the assessment order was set aside under Section 263.

What were the issues?

Whether the CIT(A) erred in dismissing the appeal for non-prosecution without adjudicating the grounds on merits. Whether the additions made by the Assessing Officer under Section 69A were justified.

Which sections of the Income-tax Act were involved?

Section 250,Section 263,Section 144,Section 144B,Section 69A,Section 115BBE

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, CHENNAI BENCHES “B” :: CHENNAI

Before: SHRI INTURI RAMA RAO & SHRI S.S.VISWANETHRA RAVI

Hearing: 02/03/2026Pronounced: 27/04/2026

Heard together (2 matters)

ITA No.3860/CHNY/2025
SA No.1/CHNY/2026

Read from the judgment's own cause title. This page is filed under one of them.

आदेश/ ORDER PER INTURI RAMA RAO, AM : This appeal filed by the Assessee directed against the order of ld.Commissioner of Income Tax(Appeal)[NFAC], dated 18.09.2024 passed under section 250 of the Income Tax Act, 1961 for the A.Y.2017-18. The Stay Application filed by assessee seeking stay of demand.

2.

The Assessee raised the following grounds of appeal : “1 The orders of the Commissioner of Income Tax (Appeals) ["CIT (A)"] and the Assessing Officer ["AO"] are against the law, the facts and circumstances of the case and violative of the principles of equity and natural justice.

2 The CIT(A) erred in dismissing the appeal for non-prosecution of appeal without adjudicating the grounds of appeal on merits.

3.

The CIT(A) erred in upholding the additions made in the assessment order in respect of all the credit entries in the Appellant's bank statement when the Appellant's case was selected for limited scrutiny of only cash deposit during the year and not other credit entries.

4.

The CIT(A) erred in upholding the additions made in the assessment order without appreciating that the Appellant had objected to the quantum of purported cash deposits during the assessment proceeding and the same was brought to his attention in the grounds of appeal.

5.

The CIT(A) erred in not appreciating that the assessing officer did not provide the Appellant with the basis for arriving at the quantum of purported deposits particularly when the quantum of the deposits were disputed by the Appellant thereby violating the principles of natural justice. 6 The CIT(A) erred in sustaining the addition made by the assessing officer who failed to appreciate that the provisions of section 69A of the Income Tax Act, 1961 ["Act"] is not applicable to the Appellant's case

7 The CIT(A) erred in sustaining the addition made by the assessing officer who failed to appreciate that the deposits made in the Appellant's bank account are out of explainable sources only and the addition under section 69A of the Act is liable to be deleted.

8.

The CIT(A) erred in sustaining the addition made by the assessing officer who failed to appreciate that the cash deposits and credit entries in bank account are duly recorded in the books of account of the Appellant and the addition under section 69A of the Act cannot be sustained.

9 The CIT(A) erred in sustaining the addition made by the assessing officer who failed to consider the turnover disclosed by the Appellant in the profit and loss account enclosed along with the tax audit report.

10.

The CIT(A) failed to appreciate that the Appellant had furnished explanations before the assessing officer regarding the source of cash deposits during the first round of assessment and the assessing officer failed to consider the same while completing the assessment under section 144 of the Act.

11.

Without prejudice to the ground that no addition can be sustained under section 69A of the Act, the CIT(A) erred in upholding the order of the assessing officer who failed to appreciate that the amendment in section 115BBE was not applicable in respect of transactions entered prior to 01.04.2017 and thus the tax rate of 60% could not have been applied to the Appellant's case.

12.

The Appellant craves the leave of the Hon'ble Tribunal to adduce additional grounds in support of his appeal before and during the course of hearing of the appeal.”

3.

Briefly the facts of the case are that appellant is an Individual. The Return of Income for the Assessment Year 2017-18 was filed on 23.01.2018 declaring income of Rs.5,01,220/-. Against the said return of income, assessment was completed by the Assessing Officer vide order dated 23.12.2018 at a total income of Rs.13,55,056/-. Subsequently, the ld.Principal Commissioner of Income Tax, Chennai-1 in exercise of power vested with him u/s.263 of the Income Tax Act, 1961, had set-aside the assessment order to pass the fresh assessment order after due verification of the sources of the cash deposits of Rs.4,92,52,008/- during the Demonetization Period in the bank account maintained with Canara Bank. The Assessing Officer passed the consequential assessment order to the 263 order, vide order dated 16.03.2023 passed u/s.144 r.w.s 263 read with section 144B of the Act at total income of Rs.2,44,42,673/-. While doing so, the Assessing Officer brought to tax total credits in the bank account aggregating to Rs.2,39,41,453/- for failure of the appellant to explain with supporting documentary evidence the source of the said credits.

4.

Being aggrieved by the above assessment order, an appeal was filed before the ld.CIT(A) who vide impugned order dismissed the appeal for non- prosecution.

5.

Being aggrieved, appeal filed was filed before us in the present appeal. At the outset, we find that there is delay of 188 days in present appeal filed before us.

6.

The appellant filed an Affidavit seeking condonation of delay on ground that the appellant was not aware of the order passed u/s.250 of the Act till the receipt of the communication from Income Tax Department requiring the appellant to pay the demand. Thus, it is submitted that delay had occurred on account of the factors which are beyond his control. The averments made in the Affidavit remain uncontroverted by learned Departmental Representative. The Hon’ble Supreme Court in the case of M.Kalappa Sethi Vs. M.V.Laxmi Narain Rao AIR 1973 SC 627, it was held that an uncontroverted affidavit shall be taken as an affidavit on fact.

Therefore, in our considered opinion since the appellant prevented from filing of appeal for the reasons which are beyond his control, this would constitute a reasonable cause for delay. Accordingly, delay is condoned and appeal is admitted for adjudication on merits.

7.

On the other hand, the ld.Sr.Departmental Representative opposed the above submissions and submits that the order passed by ld.CIT(A) is justified as the appellant had not caused appearance before the ld.CIT(A).

8.

We heard rival submissions and perused the material available on record. We find that the ld.CIT(A) dismissed the appeal of the appellant for non-prosecution without entering into the merits of the addition. The ld.CIT(A) without dealing with the contentions of the appellant merely dismissed the appeal in limine for non-prosecution. As contemplated u/s.250(6) of the Act the ld.CIT(A) is required to frame points of determination followed by a detailed discussion thereupon before passing the order. It is the settled position of law that the ld.CIT(A), even while disposing of the appeal ex-parte, he is duty bound to dispose of the appeal on merits. Reliance in this regard can be placed on the decision of the Hon'ble Bombay High Court in the case of PCIT vs. Premkumar Arjundas Luthra 279 CTR 614. The Hon’ble Bombay High Court has held in the case of Pr.CIT(Central) Vs. Premkumar Arjundas Luthra (HUF) [2017] 297 CTR 614 (Bombay) as under : Quote, “8.From the aforesaid provisions, it is very clear once an appeal is preferred before the CIT(A), then in disposing of the appeal, he is obliged to make such further inquiry that he thinks fit or direct the Assessing Officer to make further inquiry and report the result of the same to him as found in Section 250(4) of the Act.

Further Section 250(6) of the Act obliges the CIT(A) to dispose of an appeal in writing after stating the points for determination and then render a decision on each of the points which arise for consideration with reasons in support. Section 251(1)(a) and (b) of the Act provide that while disposing of appeal the CIT(A) would have the power to confirm, reduce, enhance or annul an assessment and/or penalty. Besides Explanation to sub-section (2) of Section 251 of the Act also makes it clear that while considering the appeal, the CIT(A) would be entitled to consider and decide any issue arising in the proceedings before him in appeal filed for its consideration, even if the issue is not raised by the appellant in its appeal before the CIT(A). Thus once an assessee files an appeal under Section 246A of the Act, it is not open to him as of right to withdraw or not press the appeal. In fact the CIT(A) is obliged to dispose of the appeal on merits. In fact with effect from 1st June, 2001 the power of the CIT(A) to set aside the order of the Assessing Officer and restore it to the Assessing Officer for passing a fresh order stands withdrawn.

Therefore, it would be noticed that the powers of the CIT(A) is coterminous with that of the Assessing Officer i.e. he can do all that Assessing Officer could do. Therefore just as it is not open to the Assessing Officer to not complete the assessment by allowing the assessee to withdraw its return of income, it is not open to the assessee in appeal to withdraw and/or the CIT(A) to dismiss the appeal on account of non-prosecution of the appeal by the assessee. This is amply clear from the Section 251(1)(a) and (b) and Explanation to Section 251(2) of the Act which requires the CIT(A) to apply his mind to all the issues which arise from the impugned order before him whether or not the same has been raised by the appellant before him. Accordingly, the law does not empower the CIT(A) to dismiss the appeal for non-prosecution as is evident from the provisions of the Act.” Unquote.

Therefore, in the light of above legal position, we are of the 9. considered opinion and deem it proper to remit the matter requires to be remanded to the file of ld.CIT(A)/NFAC for de novo disposal of the issue on merits by passing a speaking order after allowing reasonable opportunity to the appellant, in accordance with law. All the contentions raised by the appellant are left open for consideration before the ld.CIT(Appeals).

10.

In the result, the appeal filed by the assessee in ITA No.3860/CHNY/2025 stands partly allowed for statistical purposes.

STAY APPLICATION No.1/CHNY/2026 11. Since the appeal is disposed, the Stay Application becomes infructuous, accordingly Stay Application is dismissed as not-maintainable. Order pronounced in the open Court on 27th April, 2026.

Sd/- Sd/- (SS VISWANETHRA RAVI) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER Chennai; �दनांक / Dated : 27th April, 2026 SGR, Sr.PS आदेश क� ��त�ल�प अ�े�षत / Copy of the Order forwarded to : अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The CIT Chennai/Madurai/Coimbatore/Salem. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “बी” ब�च, 4. चे�नई / DR, ITAT Chennai. गाड� फ़ाइल / Guard File. 5.

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