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Facts
The assessee firm availed a loan of Rs. 1.00 crore for project investment, but the project failed and the loan reverted. The AO treated this as an unexplained cash credit. The assessee's partner was intercepted with Rs. 10,00,000 cash, which was stated to be for labour and material purchases.
Held
The Tribunal held that the CIT(A) order was ex-parte and lacked adjudication on merits. Therefore, the Tribunal set aside the CIT(A)'s order and restored the matter back for fresh adjudication.
Key Issues
Whether the addition of Rs. 1.00 crore as unexplained cash credit is sustainable when the first appellate authority passed an ex-parte order without deciding the issue on merits.
Sections Cited
143(3), 153A, 68, 132
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Before: SHRI AMIT SHUKLA & SHRI. ARUN KHODPIA
O R D E R PER ARUN KHODPIA, AM:- This appeal is filed by the assessee against the order of the Commissioner of Income Tax Appeal, ADDL/JCIT (A)-4 Bengaluru, (In short “Ld ADDL/JCIT(A)’) dated 27.11.2024 for the assessment year 2010-11, which in turn arises from the order u/s. 143(3) r.w.s. 153A of the Income-tax Act (in short ‘the Act’) dated 30.12.2016 passed by ITO, W-17(2)(1) (in short ‘Ld. AO’).
The grounds of appeal raised by the assessee are extracted as under:
Ay 2010-11 I.Y. Constructions
Brief facts of the case, as referred in the impugned order of Ld. ADDL/JCIT(A), NFAC are culled out as under: Yunusali Ahmedali Sayyed being the working partner of M/s. I.Y.Construction was carrying cash of Rs.10,00,000/- on 13th April,2014(Sunday) from his residence at 702, Panchsheel Apartment, 1st Hasnabad Lane, Santacruz, Mumbai to their office at Shirin Mansion, Pydhonie, Mumbai for payment of labours and purchase of old building material from certain "Sunday Bazar" and since election was declared in the State of Maharashtra, people was forbidden to carry cash of Rs.10,00,000/- and above and thus the partner was intercepted by AEO and later on by I.T. upon issuing warrant U/s.132. The assessee firm has availed a loan of Rs.1.00 crore for the purpose of certain project investment, but since the project could not succeed to initiate and hence the loan reverted back. However, the Ld. A.O. treated this loan of Rs.1.00 crore as unexplained cash credit and added to the total income of the assessee.
Aggrieved with the addition by Ld. AO, assessee preferred an appeal before the Ld. ADDL/JCIT(A), but the same has been dismissed by confirming the addition made by Ld. AO, in absence of any compliance by the assessee on ex-parte basis. The findings of Ld. CIT(A) in the impugned order reads as under:
Ay 2010-11 I.Y. Constructions 4.10 Since, there is no response from the appellant and also in absence of any submission from the appellant, it is presumed that the appellant has nothing to say/submit in support of his claim in the present appeal and therefore, the action of the AO in computing the income as per the provisions of section u/s.143(3) of the I.T. Act, 1961 is hereby upheld. Therefore, the grounds no.1 to 4 raised by the appellant are dismissed.
Aggrieved with the aforesaid ex-parte order passed by the Ld. ADDL/JCIT(A). Assessee preferred the present appeal.
At the very outset, Ld. AR of the assessee submitted that there was no decision by the Ld. CIT(A) on merits of the issues, the appeal of the assessee has been dismissed only for the reason of non-prosecution. He, therefore, requested to remand back the matter for fresh adjudication of the issues on merits to first appellate authority.
Per contra Ld. SR DR supported the order of Ld. CIT(A) however, if the same is set aside for fresh adjudication he did not have any objection to it.
We have heard the rival submissions and perused the material available on record and case law riled upon by the assessee. Admittedly, in present case the order passed by Ld. CIT(A) is an ex-parte order, without any adjudication on merits of the facts. Further as fairly conceded by both the parties that appeal of assessee has been dismissed for non-prosecution by Ay 2010-11 I.Y. Constructions the Ld. CIT(A), we, therefore, without touching to the merits of the grounds, find it appropriate to set aside the order of Ld. CIT(A) and restore the mater back to his file for fresh adjudication, with reasonable opportunity of being heard to the assessee.
Our aforesaid decision is duly supported with the judgment of Hon'ble Mumbai High Court in the case of CIT vs. Premkumar Arjundas Luthra (HUF)- [2016] 69 taxmann.com 407 (Bombay).
In the result, appeal of the assessee is allowed for statistical purposes, in terms of our aforesaid observations. Order pronounced in the open court on 11.09.2025.
Sd/- Sd/- AMIT SHUKLA ARUN KHODPIA JUDICIAL MEMBER ACCOUNTANT MEMBER Place: म ंबई/Mumbai नदिधंक /Date 11.09.2025 आदेश की प्रनिनलनप अग्रेनर्ि/Copy of the Order forwarded to : 1. अपीलधथी / The Appellant 2. प्रत्यथी / The Respondent. आयकर आय क्त / CIT 3. 4. नवभधगीय प्रनिनिनर्, आयकर अपीलीय अनर्करण DR, ITAT, Mumbai 5. गधर्ा फधईल / Guard file. सत्यधनपि प्रनि //True Copy// आदेशधि सधर/ BY ORDER, सहधयक पंजीकधर (Asstt. Registrar)
Ay 2010-11 I.Y. Constructions आयकर अपीलीय अनर्करण/ ITAT, Bench, Mumbai.