SANKARAPANDIAN MURUGAIYA,TENKASI vs. ITO, WARD-4,, TIRUNELVELI

The Assessee raised the following grounds of appeal :

The Learned CIT(A) erred in passing an ex-parte order after giving just 2 hearings which were 2 weeks apart, before passing the Appeal order.

The order of the Learned AO is void ab-initio as the proper and due process has not been followed.

The Learned AO ought to have noted that the re-opening of assessment has to be done by the FAO and not the JAO. However, in the present case, it has been issued by the JAO.

The Learned AO/CIT(A) has erred in treating 8% of Total Sales as business income, without considering the expenses and factual position of the books of account.

The Learned AO/CIT(A) failed to note that the actual margins in the business is less than 1.5% of the gross receipts.

The Learned AO/CIT(A) failed to benchmark the profits against the same industry and has instead used an ad-hoc rate of 8% without application of mind.

The Learned AO/CIT(A) ought to have seen the financial statements or bank statements/GSTR-1B of the Appellant before concluding the assessment.

Any other grounds as may be raised during the course of the hearing.”

Briefly, the facts of the case are that the appellant is an Individual. No regular return of income under the provisions of section 139 of the Income Tax Act, 1961 was filed by the appellant for the Assessment Year 2020-21. However, based on the information that the appellant made cash deposits in the bank account maintained with Tamilnadu Mercantile Bank Limited and cash withdrawals from the same bank account and reported sales as per GST Returns, the Assessing Officer formed an opinion that income got escaped assessment from tax, accordingly a notice u/s.148 of the Act was issued on 26.02.2024 calling upon the appellant to file the return of income after complying the procedure laid down u/s.148A of the Act. The appellant neither complied with the notice u/s.148 of the Act, nor the notice u/s.142(1) of the Act. In the circumstances, the e- Assessment Unit of the Department(hereinafter called ‘AO’) proceeded with framing best judgment assessment vide order dated 02.01.2025 passed u/s.147 r.w.s 144 read with section 144B of the Act, 1961 at Rs.28,73,040/-. While doing so, the Assessing Officer deducted the profit @8% on the turnover reported in GST Rs.3,59,13,000/-.

Being aggrieved by the assessment order, the appellant filed an appeal before the Learned CIT(A), who vide impugned order confirmed the action of the Assessing Officer for non- prosecution.

Being aggrieved by the assessment order, the appellant filed an appeal before the Learned CIT(A).

We have heard rival submissions and perused the material available on record. We find that the Learned CIT(A) dismissed the appeal of the appellant for non-prosecution without entering into the merits of the addition. The Learned 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 Learned 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 Learned 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) (Bombay)/[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.

Therefore, in the light of the above legal position, we are of the considered view that the matter requires to be remanded to the file of the Learned CIT(A) with the direction to dispose of the appeal de novo on merits after affording reasonable opportunity of hearing to the assessee. All the contentions raised by the appellant are left open for consideration before the ld.CIT(Appeals).

In the result, the appeal filed by the assessee stands partly allowed for statistical purposes. Order pronounced in the open Court on 31st August, 2026.