KESAR SINGH,SANGHOL, KHAMANON vs. ITO, WARD- SIRHIND, PUNJAB

In the present appeal Assessee has raised the following grounds: 1. That on the facts, circumstances and legal position of the case, the Worthy CIT(A), NFAC in Appeal No. CIT (A), Patiala/10608/2019-20 has erred in passing order dtd 08.08.2024 in contravention of provisions of S. 250 of the Income Tax Act, 1961 (hereinafter referred to as "Act"). 2. That on facts, circumstances and legal position of the case, Worthy CIT(A) has erred in upholding the action of Ld. AO of initiating, continuing and then concluding the impugned assessment u/s 148 r.w.s. 147 and hence the impugned assessment order deserves to be quashed. 3. That on facts, circumstances and legal position of the case, Worthy CIT(A) has erred in confirming the addition made by the Ld. AO of Rs. 9,50,000/- u/s 69A by treating the business cash found during the course of survey as unexplained excess cash. 4. That on facts, circumstances and legal position of the case, Worthy CIT(A) has erred in confirming the addition made by the Ld. AO of Rs. 65,50,000/- u/s 69 on account of alleged unexplained investment in building construction without any conclusive evidence. 5. That on facts, circumstances and legal position of the case, Worthy CIT(A) has erred in confirming the action of Ld. AO in imposing tax rate of 60% u/s 115BBE plus surcharge thereon on above addition made u/s 69A and u/s 69 in Ground No. 3 and 4, even when if the said addition the same could is accepted academically, only have been taxed at normal slab rates. 6. That on facts, circumstances Ld. AO and legal position of the case, the order passed by and then by Worthy CIT(A) u/s 250 deserves to be quashed since the same has been passed without affording reasonable opportunity of being heard to the appellant. 7. That the appellant craves leave for any addition, deletion or amendment in the grounds of appeal on or before the disposal of the same.

Briefly, the facts of the case are that the assessee is an individual engaged in the business of running an eating joint (Dhaba) situated on Ludhiana-Chandigarh Road. For the Assessment Year 2017-18, the assessee did not file the return of income. Based on information available with the Department, assessment proceedings were initiated under section 147 of the Income-tax Act, 1961 and completed under section 143(3) read with section 147 of the Act. During the assessment proceedings, the Assessing Officer made additions of Rs.9,50,000/- under section 69A of the Act on account of cash found during survey and further made an addition of Rs.65,50,000/- under section 69A treating the same as unexplained investment towards construction of the dhaba building. Consequently, the total income of the assessee was assessed at Rs.86,23,968/-.

Against the order of the Ld. CIT(A) the assessee preferred an appeal before the Tribunal. 9. During the course of hearing the Ld. AR submitted that the impugned order passed by the Ld. CIT(A) deserves to be set aside since the appeal has not been adjudicated on merits. It was contended that although certain notices were issued during the appellate proceedings, the assessee could not effectively participate in the proceedings due to unavoidable circumstances. The learned AR submitted that the non-appearance before the first appellate authority was neither deliberate nor intentional and the assessee should not be deprived of the valuable statutory right of appeal merely because of procedural lapses. 9.1 The Ld. AR further submitted that the assessee had raised various substantial legal as well as factual grounds before the Ld. CIT(A), including the validity of additions under section 69A, applicability of section 115BBE and the taxability of the amount of Rs.9,50,000/- as business income. However, none of these issues has been examined or adjudicated independently by the Ld. CIT(A). It was argued that the appellate order does not satisfy the mandate of section 250(6) of the Act requiring a speaking and reasoned order. 9.2 The Ld. AR, therefore, prayed that in the interest of substantial justice, the impugned order may kindly be set aside and the matter restored to the file of the Ld. CIT(A) for fresh adjudication on merits after granting one effective opportunity of hearing. The learned AR also undertook that the assessee shall fully cooperate in the appellate proceedings and shall file all documentary evidence and explanations as may be required by the appellate authority. 10. The Ld. DR strongly relied upon the orders of the lower authorities. It was submitted that adequate and sufficient opportunities had been afforded to the assessee by the Ld. CIT(A), but despite repeated notices, the assessee neither

We have heard the rival submissions and perused the material available on record. While the record indicates that the assessee failed to respond to multiple notices issued by the Ld. CIT(A), we find that the first appellate authority dismissed the appeal primarily for non-prosecution without independently adjudicating the substantial additions of Rs. 9,50,000/- and Rs. 65,50,000/- made under Section 69A read with Section 115BBE of the Act. It is a settled legal proposition that under Section 250(6) of the Income-tax Act, 1961, the Ld. CIT(A) is statutorily mandated to pass a speaking and reasoned order stating the points for determination and the decisions thereon on merits, even in an ex-parte proceeding. The taxpayer should not be deprived of their valuable statutory right of appeal due to procedural lapses, provided the non-appearance was not deliberate. Taking into account the solemn undertaking given by the Ld. AR that the assessee will fully cooperate in the fresh proceedings, and in the interest of substantial justice, we deem it fit to restore the matter to the file of the Ld. CIT(A) for fresh adjudication on merits, subject to the imposition of an appropriate cost to check any further negligence.