KUNVARJI BHACHU SHAH ,MUMBAI vs. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE -31(2), MUMBAI

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ITA 1191/MUM/2025Status: DisposedITAT Mumbai05 September 2025AY 2013-146 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the appellate order passed by the CIT(A) was non-speaking and lacked independent application of mind, failing to consider the issues, assessment order, assessee's submissions, or grounds of appeal. The CIT(A) had confirmed the additions solely on the ground that the assessee failed to file supporting details before the AO, without adjudicating the merits. This was found to be contrary to the mandate of Section 250(6) of the Act, which requires the order to state the points for determination, the decision thereon, and the reasons for the decision. The Tribunal also noted that the CIT(A) did not make further inquiries as permitted under Section 250(4). Consequently, the Tribunal set aside the appellate order and restored the matter to the CIT(A) for de novo adjudication. The assessee was to be provided an adequate opportunity of hearing, to advance arguments, provide details, and submit additional evidence. The Tribunal clarified that this decision did not reflect on the merits of the dispute. It was also noted that the assessee had deceased on 01.07.2025, and the CIT(A) was to bring on record the legal heirs.

What were the facts?

The assessee, Kunvarji Bhachu Shah, filed an appeal before the Income-Tax Appellate Tribunal (ITAT) challenging the order of the Commissioner of Income-tax (Appeals) [CIT(A)] for Assessment Year 2013-14. The CIT(A) had upheld additions made by the Assistant Commissioner of Income Tax (ACIT) under Section 68 of the Income-tax Act, 1961. The additions comprised Rs. 57,39,796/- treated as unexplained agricultural income and Rs. 2,35,20,000/- treated as unexplained unsecured loans. The assessee had initially filed a return in response to a notice under Section 148, declaring business income and exempted agricultural income. During scrutiny, the Assessing Officer (AO) added the amounts as unexplained credits due to the assessee's failure to produce supporting details, citing illness. The CIT(A) confirmed these additions, stating the assessee failed to file supporting details before the AO.

What were the issues?

1. Whether the Learned CIT(A) erred in confirming the addition of Rs. 57,39,796/- as unexplained agricultural income under Section 68 of the Act, without appreciating the facts of the case? (Mixed law and fact) 2. Whether the Learned CIT(A) erred in confirming the addition of Rs. 2,35,20,000/- as unexplained unsecured loans under Section 68 of the Act, without appreciating the facts of the case? (Mixed law and fact) Assessee's Contentions: The assessee argued that the CIT(A) dismissed the appeal ex-parte without considering all relevant facts and contentions. The assessee also contended that the appellate order was non-speaking, lacking independent application of mind and failing to adjudicate the grounds of appeal clearly, thus violating principles of natural justice. Revenue's Contentions: The judgment records no specific contentions from the revenue's side regarding the merits of the additions or the procedural aspects of the CIT(A)'s order. The revenue was represented by a Senior DR.

Which sections of the Income-tax Act were involved?

Section 68,Section 143(3),Section 148,Section 250(4),Section 250(6),Section 251(1)(a),Section 251(1)(b),Section 251(2)

AI-generated summary — verify with the full judgment below

Before: SHRI NARENDER KUMAR CHOUDHRY & SHRI PRABHASH SHANKAR

For Appellant: Shri Siddharth Srivastava, AR
For Respondent: Shri Hemanshu Joshi, (Sr. DR)
Hearing: 24.07.2025Pronounced: 05.09.2025

PER PRABHASH SHANKAR [A.Μ.] :- The present appeal is filed by the assessee against the order passed by the Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”] pertaining to assessment order passed u/s.143(3) of the Income-tax Act, 1961 [hereinafter referred to as “Act"] dated 11.03.2016 for the Assessment Year [A.Y.] 2013-14. Page 2

2.

The grounds of appeal are as under:

1.

The Learned CIT (A), NFAC, Delhi erred in confirming the action taken by the Learned ACIT,Circle-31(2), Mumbai making an addition under section 68 of the Income-tax Act, 1961('Act') by erroneously treating an amount of Rs.57,39,796/- as Unexplained Agricultural Income without appreciating the facts of the case in the right perspective.

2.

The Learned CIT (A), NFAC, Delhi has erred in confirming the action taken by the Learned ACIT, Circle-31(2), Mumbai making an addition under section 68 of the Act has treating an amount of Rs.2,35,20,000/- as Unexplained Unsecured Loan without appreciating the facts of the case in the right perspective.

3.

Facts in brief are that the assessee filed return only in response to notices u/s 148 of the Act declaring income of Rs 1,00,437/-stated to be from the business of property. He also disclosed exempted agriculture income of Rs 57,39,796/-.During scrutiny, it was noted by the AO that that the assessee had made several cash deposits in the bank accounts claiming them to be agricultural income as also receipts from several persons. However, details sought were not produced on the ground of illness of the assessee. As a result, the AO added a sum of Rs. 2,35,20,000/- as appearing in the bank account in the names of various persons as unexplained credits u/s 68 of the Act. Besides, agriculture income in the absence of supporting details was treated as Income from Other Sources. Thus, the income was determined at Rs 2,92,39,700/-.

4.

In the subsequent appeal, the assessee agitated the action of the AO in adding unexplained agricultural income of Rs.57,39,796/- and Page 3 unsecured loan from various parties amounting to Rs.2,35,20,000 u/s 68 of the Act. The ld.CIT(A) upheld both the additions on the ground that the assessee failed to file supporting details before the AO.

5.

Before us, the ld.AR has argued that the ld.CIT(A) dismissed

the appeal of the assessee in an ex-parte manner without considering all relevant facts of the case as also the contentions of the assessee.

6.

We find that the appellate order has been passed in a rather non-speaking manner as neither the issues involved have been duly considered as also the contents of the assessment order, submissions of the assessee or the grounds of appeal have been adjudicated clearly. No independent application of mind is discernible from the appellate order as the ld.CIT(A) has completely failed to evaluate the points of consideration so as to give his own decision on objective analysis of all relevant facts and circumstances of the case in utter disregard to the principles of natural justice and fair play.

7.

In the light of above facts, we are of the considered opinion that the ld.CIT(A) has not decided the appeal on merits which is contrary to the mandate of section 250(6) of the Act. The same is reproduced here under for your ready reference: "(6) The order of the Commissioner (Appeals) disposing of the appeal shall be in writing and shall state the points for determination, the decision thereon and the reason for the decision." Page 4 7.1 A bare perusal of above provision makes it clear that the CIT(A) is bound to dispose of the appeal before him on merits. Once an appeal is preferred before him, then in disposing of the appeal, he is obliged to make such further inquiry that he thinks fit or direct the AO to make further inquiry and report the result of the same to him as per section 250(4) of the Act. 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 dear 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). The appellate order is therefore, deficient in this regard.

8.

During the course of hearing, we proposed to send the appeal back to the file of the ld.CIT(A) in the light of above discussion that as the assessee was not provided adequate opportunity of being heard, granting fresh opportunity to the assessee to advance his arguments/submissions before the ld. CIT(A) so as to provide details in connection with the merits of the case and additional evidences, if any to support his contentions. Both the sides did not object to this Page 5 proposition. Accordingly, in the substantial interest of justice, we set aside the appellate order and restore the entire matter back to him for passing the appellate order de novo after allowing adequate opportunity of hearing to the assessee's representative.

9.

Before parting, we may make it clear that our decision to restore the matter back to the file of the ld.CIT(A) shall in no way be construed as having any reflection or expression on the merits of the dispute, which shall be adjudicated by him independently and in accordance with law.

10.

It has been intimated vide letter on record that the assessee got deceased on 01.07.2025.Copy of death certificate is also placed on record. Accordingly, the ld.CIT(A) while passing de novo appellate order will bring on record the legal heirs as well.

11.

In the result, the appeal is allowed for statistical purposes. Order pronounced in the open court on 05.08.2025. NARENDER KUMAR CHOUDHRY (न्यायिक सदस्य / JUDICIAL MEMBER) PRABHASH SHANKAR (लेखाकार सदस्य/ACCOUNTANT MEMBER) Page 6 Place: मुंबई/Mumbai दिनांक / Date 05.09.2025 Lubhna Shaikh / Steno आदेश की प्रतिलिपि अग्रेषित/

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