SANTHI,SALEM vs. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 1(1), SALEM, SALEM

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ITA 557/CHNY/2026Status: DisposedITAT Chennai27 April 2026AY 2020-218 pages
AI SummaryRemanded

What did the Tribunal hold?

The tribunal held that the CIT(A) is obligated to decide appeals on merits, even if dismissed for non-prosecution, and must provide a speaking order after affording a reasonable opportunity to the assessee.

What were the facts?

The assessee's appeals concerned additions made by the Assessing Officer on account of cash deposits during demonetization. The CIT(A) had dismissed the appeals for non-prosecution without considering the merits of the case.

What were the issues?

Whether the CIT(A) erred in dismissing the appeal for non-prosecution without adjudicating on the merits of the additions made by the Assessing Officer.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 250,Section 69A,Section 115BBE,Section 251

AI-generated summary — verify with the full judgment below

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

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

For Appellant: Mr. R.Venkataraman – CA
For Respondent: Mr. ARV Sreenivasan – CIT(DR)
Hearing: 17/03/2026Pronounced: 27/04/2026

आयकर अपीलीय अिधकरण ”डी” �ायपीठ चे�ई म�। IN THE INCOME TAX APPELLATE TRIBUNAL CHENNAI BENCHES “D” :: CHENNAI BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER आयकर अपील सं. / ITA Nos.556, 557 & 558/CHNY/2026 �नधा�रण वष� / Assessment Years: 2017-18, 2020-21 & 2021-22 Santhi, V Deputy Commissioner of Income 279/1, 5th Cross Periyasamy s Tax, Nagar, Circle-1(1), Salem. Periyapudur Fairlands, Salem – 636016 PAN: ARJPS8153J Appellant / Assessee Respondent / Revenue Assessee by Mr. R.Venkataraman – CA Revenue by Mr. ARV Sreenivasan – CIT(DR) Date of hearing 17/03/2026 Date of pronouncement 27/04/2026 आदेश/ ORDER PER INTURI RAMA RAO, AM : These three appeals filed by the Assessee directed against the separate orders of ld.Commissioner of Income Tax(Appeal)[NFAC], all dated 28.11.2025 passed under section 250 of the Income Tax Act, 1961 for the A.Y.2017-18, 2020-21 and 2021-22 respectively.

2.

Since identical facts and issues are involved in these three appeals, these appeals were heard together and disposed of by this common order. For the sake of clarity and convenience the facts relevant in the ITA No.556/CHNY/2025 for the Assessment Year 2017-18 are stated herein:

3.

The Assessee in ITA No.556/CHNY/2026 raised the following grounds of appeal : “1. That the Learned Commissioner of Income Tax (Appeals), NFAC, Delhi ["Ld.CIT(A)"] erred in not appreciating that the assessment order dated 25.12.2019 passed by the Assistant Commissioner of Income Tax, Circle 1 Hosur ['Assessing Officer"] u/s. 143(3) of the Income Tax Act, 1961 ['Act'], for the Assessment Year 2017-18 is invalid, void ab initio, and liable to be quashed as bad in law.

2.

That the Ld.CIT(A) is not justified in passing the appellate order without considering the submission of the appellant during the course of appellate proceedings.

3.

That the Ld.CIT(A) is not justified in confirming the addition of Rs.1,20,50,000/-made capriciously by the Assessing Officer treating the cash deposits in the bank account of the appellant as unexplained money u/s.69A r.w.s 115BBE of the Act.

4.

That the Ld.CIT(A) ought to have appreciated that the provisions of section 69A r.w.s 115BBEof the Act are not applicable to facts and circumstances of the case of the appellant.

5.

That the Ld.CIT(A) failed to take cognizance of the fact that the Assessing Officer made an addition in respect of cash deposits amounting to Rs.1,20,50,000/- despite the existence of prior cash withdrawals aggregating to Rs.2,00,00,000/- during the impugned Assessment Year 2017-18.

6.

That the Ld. CIT(A) failed to appreciate that the Assessing Officer himself used the expression "there is a possibility of entire money being paid to the broker which clearly indicates that the assessment order has been passed on mere conjectures and surmises, without any conclusive evidence, and is therefore arbitrary and vague.

7.

That the appellant craves leave to add to, alter, amend or modify any of the above grounds of appeal as may be necessary at the time of hearing.”

4.

Briefly the facts of the case are that appellant is an Individual deriving income under head “Income from House Property” and “Income from Other Sources”. The return of income for the assessment year 2017-18 was filed on 08.01.2018 declaring total income of Rs.28,09,030/-. Against the said return of income, assessment was completed by the Assessing Officer-ACIT, Circle-1, Hosur vide order dated 25.12.2019 (herein after called ‘AO’) assessment order passed u/s.143(3) of the Income Tax Act, at a total income of Rs.1,48,59,030/-. While doing so, the Assessing Officer made addition of Rs.1,20,50,000/- being the cash deposits in specified bank notes during the Demonetization Period. The factual background of the case is that the during the during previous year relevant to assessment year under consideration the appellant made a total cash deposits in a specified bank notes of Rs.1,67,00,000/- during the Demonetization Period. Out of the said amount, the Assessing Officer treated an amount of Rs.46,15,000/- as explained the source of cash deposits as the same was available out of the earlier withdrawals from the bank account. The balance amount was brought to tax for inability of the appellant to explain the source of cash deposits.

5.

Being aggrieved, an appeal was filed before the ld.CIT(A) who vide impugned order confirmed the action of the Assessing Officer.

6.

Being aggrieved, appellant filed an appeal before us in the present appeal. The ld.AR submits that ld.CIT(A) dismissed the appeal ex-parte without giving a proper reasonable opportunity of being heard to the appellant and therefore, the matter may be remanded back to the file of ld.CIT(A) for denovo adjudication in accordance with law.

7.

On the other hand, ld.Sr.DR had not serious objection to remand the matter back to the file of ld.CIT(A) for denovo adjudication of merits/

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.

9.

Therefore, in the light of above legal position, we are of the 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 stands partly allowed for statistical purposes.

ITA Nos.557 & 558/CHNY/2026 11. We find that the identical facts and issues are involved in assessee’s appeal bearing Appeal No.556/CHNY/2026 for A.Y.2017-18. Accordingly, our findings given above shall apply mutatis mutandis to both these appeals in ITA Nos.557/CHNY/2026 & ITA No.558/CHNY/2026 for A.Y 2020-21 & A.Y.2021-22 also, accordingly, we remit the matter back to the file of ld.CIT(A) for adjudication of the issues in appeal on merits after affording an opportunity of being heard to the appellant.

12.

Accordingly, appeal filed by the assessee in ITA Nos.557 & 558/CHNY/2026 are partly allowed for statistical purpose.

13.

To sum up, all appeals of the assessee are partly allowed for statistical purpose. 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, “डी” ब�च, 4. चे�नई / DR, ITAT Chennai. गाड� फ़ाइल / Guard File. 5.

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