BALAKRISHNA MURTY NUNNA,DRAKSHARAMAM vs. INCOME TAX OFFICER, WARD-1, KAKINADA

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ITA 697/VIZ/2025Status: DisposedITAT Visakhapatnam15 April 2026AY 2017-185 pages
AI SummaryRemanded

What did the Tribunal hold?

The ITAT held that the CIT(A) order was cryptic and dismissed the appeal for non-prosecution without considering the merits. The tribunal relied on a High Court decision stating that an appeal cannot be dismissed for non-prosecution.

What were the facts?

The Assessing Officer (AO) made an addition of Rs. 1.35 crores as unexplained cash credits under Section 68. The assessee claimed this was from cash sales of cool drinks, deposited into his bank account, and then paid to a wholesaler. The AO disbelieved this due to lack of purchase/sale bills and cash book.

What were the issues?

Whether the CIT(A) can dismiss an appeal for non-prosecution without deciding on merits, and whether the addition under Section 68 was justified without proper examination of the assessee's explanation.

Which sections of the Income-tax Act were involved?

Section 68,Section 147

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, Visakhapatnam Bench, Visakhapatnam

For Appellant: Shri D.Hema Bhupal

PER OMKARESHWAR CHIDARA, A.M: This appeal filed by the assessee is directed against the order of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [“Ld.CIT(A)”], Delhi, arising out of assessment order passed by the Ld.AO u/s 147 of the Income Tax Act, 1961 (“the Act”) dated 29.03.2022, pertaining to the assessment year 2017-18. 2. In the above cited appeal, the Ld.AO has made addition of Rs.1.35 crores towards unexplained cash credits u/s 68 of the Act. The Ld.AO was not satisfied with the explanation of the appellant that he bought a machinery product from Shri Sarvaraya Sugars Limited Bottling Unit and supplying cool drinks to shops on daily basis. As they are small units, assessee used to collect cash at the time of supply of goods or subsequently and deposit the same into his bank account for making payment to vendor. The appellant has made total cash sales of Rs.1.55 crores, out of which Rs.1.35 crores was deposited by way of cash into his SBI account. Since the appellant did not furnish purchase/sale bills and the cash book, the Ld.AO disbelieved the version of the appellant and made entire addition of cash deposits as unexplained cash credit u/s 68 of the Act.

3.

An appeal was filed before the Ld.CIT(A), where 5 opportunities on various dates were given. Since the appellant did not respond to these notices, the addition made by the Ld.AO was confirmed.

4.

Aggrieved by the order of the Ld.CIT(A), an appeal was filed before the ITAT. In the grounds of appeal, it was mentioned that, it is a genuine trade and wholesale cool drink products were sold to the retailers and the cash collected from the retailers on a day to day basis was deposited into the bank account and subsequently these amounts were paid to wholesale distributor of Coca Cola against purchases made by him. None represented from appellant’s side.

5.

From the Revenue’s side, the Ld.Sr.AR represented the case and it was argued that the appellant was not cooperating with the department by producing the required details and hence the Department was correct in making the addition as unexplained cash deposits and hence the same should be confirmed.

6.

Heard both sides. The Ld.AO made addition by disbelieving the version of the appellant stating that the sale proceeds received from retailers of Coca Cola product were deposited into his bank account and subsequently the same was paid to the wholesaler / distributor of Coca Cola. From the assessment order, it is not clear as to why the version of the appellant was disbelieved and the addition was made. The appellant claims that the required details were produced, whereas, the Revenue says no such details were produced. The order of the Ld.CIT(A) is a cryptic one and has repeated version of assessment order. The Ld.CIT(A) has dismissed the appeal of the appellant by stating that the appellant is not interested in prosecuting the appeal. If the appellant is not responding to the hearing notices, the Ld.CIT(A) is supposed to pass order on merits and he cannot dismiss the appeal as there was no response from the appellant. The Ld.CIT(A) is supposed to take into consideration material available on record including assessment order and grounds of appeal. In this context, reliance is placed on the decision of Hon’ble High Cour of Bombay in the case of CIT Vs.Prem Kumar Arjundas Luthra (HUF) 297 CTR 614, where Hon’ble Bombay High Court has held that CIT(A) does not have power to dismiss the appeal for non- prosecution and the appeal order is to be passed on merits. In view of the same, the Bench decides to set aside the matter to the file of Ld.CIT(A) with a direction to pass the order on merits after giving an opportunity to the appellant.

7.

In the result, appeal of the assessee is allowed for statistical purpose.

Order pronounced in the Open Court on 15th April, 2026. (रविश सूद) (ओम्कारेश्वर चिदारा) (OMKARESHWAR CHIDARA) (RAVISH SOOD) ऱेखा सदस्य/ACCOUNTANT MEMBER न्याययक सदस्य /JUDICIAL MEMBER Hyderabad, dated 15.04.2026. L.Rama/Sr.PS (on tour) आदेशकी प्रनतनलनप अग्रेनर्त/ Copy of the order forwarded to:- 1. निर्धाऩरती/The Assessee : Shri Balakrishna Murty Nunna, 1-173, Draksharamam, Ramachandrapuram, East Godavari 2. रधजस्व/ The Revenue : The Income Tax Officer, Ward-1, Income Tax Office, Kakinada

3.

The Principal Commissioner of Income Tax, Visakhapatnam 4. नवभधगीयप्रनतनिनर्, आयकर अपीलीय अनर्करण, हैदरधबधद / DR, ITAT, Visakhapatnam 5. गधर्ाफ़धईल / Guard file

आदेशधिुसधर / BY ORDER LOKIREDDI RAMA cn=LOKIREDDI RAMA c=IN o=INCOME TAX APPELLATE TRIBUNAL ou=INCOME TAX APPELLATE TRIBUNAL 2026-04-21 13:04+05:30 Sr. Private Secretary ITAT, Visakhapatnam

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