SEENIVASAN VAIRA MUTHU,THANJAVUR vs. JURISDICTIONAL ASSESSING OFFICER, SALEM

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ITA 3607/CHNY/2025Status: DisposedITAT Chennai19 May 2026AY 2022-20236 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the CIT(A) is duty-bound to dispose of an appeal on merits, even if dismissed ex-parte for non-prosecution. The CIT(A) failed to follow the mandatory procedure of framing points of determination and providing a detailed discussion.

What were the facts?

The assessee's appeal was dismissed ex-parte by the CIT(A) for non-prosecution without considering the merits of the additions made by the Assessing Officer. The Assessing Officer had made additions on account of bonus and unexplained cash deposits in a gaming platform.

What were the issues?

Whether the CIT(A) can dismiss an appeal for non-prosecution without adjudicating on the merits of the case. Whether the CIT(A) followed the prescribed procedure for disposing of appeals.

Which sections of the Income-tax Act were involved?

Section 250,Section 143,Section 144B,Section 246A,Section 251

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, CHENNAI BENCHES, CHENNAI

Before: HON’BLE INTURI RAMA RAO & HON’BLE MANU KUMAR GIRI

Pronounced: 19.05.2026

आदेश / ORDER

PER INTURI RAMA RAO, ACCOUNTANT MEMBER: This appeal is filed by the Assessee against the order of Ld. Commissioner of Income-tax(Appeals)[NFAC] dated 12.09.20256 passed u/s.250 of Income Tax Act, 1961 for the Assessment Year 2022-2023.

2.

The Assessee has raised the following grounds of appeal:

“1. Appellant contended that online game was played during the Assessment Year 2022-23 by making Investment to the online gaming company. In the Online Game, amount has to be deposited and after winning the amount, it will be refunded/credited to the account when the game was won. Again, the amount is reinvested to play the game and the transactions continued till the end of the year.

2.

Assessing Officer on the contrary assessed that there were cash deposits made as income from undisclosed source. Appellant contended that there were no cash deposits made in the bank account.

3.

Appellant was working as a salaried person in leading Public Sector Undertaking earning around 800000/-per annum. With the own fund saved over a period of time had utilised to invest in the online game for earning.

4.

Appellant further contended that the investments were made from the amount received from his younger brother who was an NRI.

5.

As asserted by the assessing officer that the amount invested was from undisclosed income, Appellant cites that the amount was reinvested from the online game, his won earnings and the gift amount received from his brother. Appellant transfers the amount to the agent, and the agent invest in the online game on behalf of the Appellant.

6.

Appellant therefore asserts that the amount was not from undisclosed income.

7.

Based on the above facts, Appellant therefore contends that the assessment order passed by the adjudicating authority without going deep into the transactions made.

8.

Appellant therefore request the Hon'ble Income Tax Appellate Tribunal to set aside the assessment order.”

3.

Briefly stated the facts of the case are that the appellant is an individual deriving income under head “Salaries”. The Return of Income for the Assessment year 2022-23 was filed on 19.07.2022 disclosing a total income of Rs.5,08,800/-. Against the said return of income, the assessment was completed by the e-Assessment Unit of the Department (hereinafter called “AO”) vide order dated 05.03.2024 passed u/s.143 r.w.s 144B of the Income Tax Act, 1961 at a total income of Rs.33,11,115/-. While doing so, the Assessing Officer made addition on account of bonus of Rs.4,74,290/- and also made addition of Rs.22,02,100/- being the cash deposited on gaming platform rummy culture as unexplained money of the appellant. The Assessing Officer also brought to tax winnings from online games of Rs.1,24,839/-

4.

Being aggrieved, an appeal was filed before the ld.CIT(A). The ld.CIT(A) however dismissed appeal in ex-parte for non-prosecution without entering into the merits of the additions.

5.

Being aggrieved by the order of ld.CIT(A) challenging the additions made by the Assessing Officer, the appellant is in appeal before us in the present appeal.

6.

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).

7.

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.

8.

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 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).

9.

In the result, the appeal filed by the assessee stands partly allowed for statistical purposes.

Order pronounced in the open court on 19th May, 2026.

Sd/- Sd/- MANU KUMAR GIRI INTURI RAMA RAO JUDICIAL MEMBER ACCOUNTANT MEMBER Chennai; �दनांक / Dated : 19th May, 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. 4. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “ए” ब�च, चे�नई / DR, ITAT Chennai. गाड� फ़ाइल / Guard File. 5.

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