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Facts
The assessee filed an appeal against the CIT(A) order which dismissed his appeal without discussing the merits due to non-submission of reply to notices. The assessee claims the notices did not reach him due to an inaccessible email ID. The original assessment was a best judgment assessment under Section 144 as the assessee filed an invalid return.
Held
The Tribunal held that the CIT(A) failed to decide the appeal on its merits and instead dismissed it for non-prosecution. The Tribunal restored the issue back to the CIT(A) to decide the appeal afresh after granting the assessee an opportunity of hearing.
Key Issues
Whether the CIT(A) erred in dismissing the appeal for non-prosecution without deciding the merits, and whether the assessee was denied a proper opportunity of hearing?
Sections Cited
144, 142(1), 143(2), 69A, 115BBE, 234B, 250(6)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “SMC” BENCH : BANGALORE
Before: SHRI PRASHANT MAHARISHI
This appeal is filed by Shri Rangappa Byrappa (the assessee/appellant) for the assessment year 2017-18 against the appellate order passed by the National Faceless Appeal Centre, Delhi (NFAC) [ld. CIT(A)] dated 14.11.2024 wherein the appeal filed by the assessee against the assessment order passed u/s. 144 of the Income-tax Act, 1961 [the Act] dated 01.11.2019 by the ITO, Ward 3(2)(1), Bangalore [ld. AO] was dismissed. Therefore the assessee is in appeal before us as per following grounds:-
“ 1. The impugned order passed by the learned Commissioner of Income-tax [Appeals] u/s 250 by- upholding the Assessment order of the learned assessing officer passed under Section 144 of the Act to the extent which is against thee appellant is opposed to law, weight of evidence, probabilities, facts and circumstances of the Appellant's case.
The appellant denies his liability with regard the total Income confirmed by the CIT(A)-NFAC amounting to Rs. 13,66,976/- as against the income reported by the appellant of Rs 5,96,300/- (however taken return filed as invalid and return income as Nil) on the facts and circumstances of the case.
The impugned order of assessment passed by the learned assessing officer u/s.144 of the Act is bad in law for non- fulfilment of mandatory conditions laid down u/s.144[1] of the Act on the facts and circumstances of the case.
4. The impugned order of assessment passed by the learned assessing officer u/s.144 of the Act is bad in law for non-issue of mandatory notice u/s. 143[2] of the Act under the facts and circumstances of the case.
The learned assessing officer erred in not treating the return of income dt.19/09/2019 filed during the time of assessment as a valid return under the facts and circumstances of the case.
The learned CIT(A) ought to have provided meaningful opportunity and not as mere formality, for 15 days, that too uploading notice online on portal after substantial period of long time after filing appeal. Finding of Ld CIT(A) as "no clarification is given for any deficiency letter" / "not providing good reason for exemption" / "no response" and not interested in pursuing appeal is perverse finding contrary to weight of evidence available on record.
7. The Ld. CIT(A) is not justified to pass an order of dismissed of an appeal as "failure of reply to notices", holding as not represented.
The IA. Hon'ble CIT(A) is not justified in passing order without making any reference or reason on merits of the matter. The Ld. CIT(A) is obligated to adjudicate the matter on merits under section 250(6) even if order is passed ex-party.
The Learned CIT(A) not justified in upholding arbitrary additions of AO under section 69A under the assumption that the Rs 13,66,976 /- as unexplained cash deposit without any material evidence of any such cash deposits is liable to tax.
The Learned Assessing officer is not justified in levying tax on loan obtained from banks and friends & relatives, without proving that the amount deposited into bank due to demonetisation is an income of an assessee to fall within the scope of section 4.
11. The ld.CIT is not justified in not allowing the peak credit and telescoping benefits. 12. The Learned CIT(A) not justified in upholding addition under provisions of section 115BBE and taxing entire loan an personal savings. Other Issues 13. Principle of Natural Justice violated: The learned CIT(A) passed an order without providing sufficient opportunity, more specifically the learned AO has passed an order even without serving any hearing notice, the matter was dismissed for non- response to clarification on column 8 and 9, of form 35 on allegation of incomplete form 35. The said finding of fact is arbitrary and mere surmise. The form is complete in all aspects. Hence the order passed by the Learned CITA(A) is against the principles of natural justice and thus the additions confirmed needs to be deleted on the facts of the case. 14. Interest: Without prejudice to the right to seek waiver as per the parity of reasoning of the decision of the Hon'ble Apex Court in the case of Karanvir Singh 349 ITR 692, the Appellant denies herself liable to be charged to interest under section 234 B of the Income Tax Act on the facts and circumstances of the case. Further the levy of interest under section 234 B of the Act is also bad in law as the period, rate, quantum and method of calculation
adopted on which interest is levied are all not discernible from the assessment order and are wrong on the facts of the case. 15. The appellant craves leave of this Hon'ble Tribunal to add, alter, modify, delete or substitute any or all of the above grounds of appeal as may be necessary at the time of hearing of the appeal.
16. For these and other grounds that may be urged at the time of hearing of appeal, the Appellant prays that the appeal may be allowed for the advancement of substantial cause of justice and equity.”
2. Brief facts shows that assessee is an individual and on the basis of data analytics and information gathered during the face of online verification under operation clean money, the income tax department gathered a list of assessees who had deposited substantial cash in bank account during demonetisation period but has not filed the return of income for assessment year 2017–18. The data reveals that the assessee has deposited cash of ₹ 13,55,557 in his bank account during demonetisation period but has not filed any return of income. Therefore notice under section 142 (1) of the Act was issued to the assessee but the assessee did not file any return of income in response to that notice.
As per the information available assessee has deposited ₹ 593,000 3. between 9.11.2016 to 30.12.2016 during the FY 2016 – 17 relevant to AY 2017 – 18. Therefore as per provisions of section 144 (1) (b) of the Act, notice was issued for the best judgement assessment. However it was found that assessee has filed an invalid return of income for assessment year 2017 – 18 on 19/9/2019 declaring income from house property of ₹ 226,800 and income from agricultural activities of ₹
369,500. The assessee was also issued a show cause notice on 9/10/2019 calling for the details.
The assessee in its reply filed on 19/9/2019 has stated that he is having income from house property and agricultural income only. He has also stated that ₹ 552,000 out of the cash deposit of ₹ 593,000 during the demonetisation period is out of jewellery loan received on 5/11/2016 which is evidenced in his bank account statement and the same is accepted. He has also stated that he has income from agricultural income of ₹ 369,500. The assessee was requested to produce details of agricultural income like details of agricultural land holding etc. which was not produced by the assessee. Hence the claim of agricultural income stated to be earned by the assessee is rejected and accordingly same is added back to the total income. It was also found that assessee’s total credits in cash otherwise comes to ₹ 2,246,221/– out of this, the assessee has deposited during demonetisation period of sum of ₹ 593,000/– out of which the assessee has stated that an amount of ₹ 552,000 is from jewellery loan received on 5/11/2016 and withdrawn by the assessee on the same date. Out of the deposit of ₹ 593,000 during demonetisation period the amount of ₹ 552,000 stated to be deposited out of the loan amount was accepted and balance amount of ₹ 41,000 is added under section 69A. Further out of the total credits of ₹ 2,246,221/– the assessee has 5. claimed that sum of ₹ 573,376 is out of loan taken from the son, Girish Kumar, of ₹ 373,376 and loan taken from wife of Rs.2 lakhs. This submission of the assessee was not accepted and the amount of ₹ 373,376 is also added under section 69A of the Act. The assessee has stated that out of the total receipt of ₹ 2,246,221/– and amount of ₹ 324,000 is out of rental income which the assessee has declared in the invalid return of income filed for AY 2017 – 18. However as the same is declared in the return, it was accepted. Accordingly out of the sum of ₹ 2,246,221/– the balance amount of ₹ 1,366,976/– was not accepted and added under section 69A of the Act. Accordingly the return of income was taken as per invalid return of Rs. 2,26,800 and addition of ₹ 1,366,976 was added determining total income of the assessee at ₹ 13,66,976 by assessment order passed on 1/11/2019 u/s. 144 of the Act.
6. The assessee aggrieved with the same preferred an appeal before the learned CIT – A wherein the learned CIT – A noted that assessee has been issued notices for four times but the assessee has not submitted a reply. Therefore the learned CIT – A dismissed the appeal of the assessee without discussion on the merits and confirming the action of the learned assessing officer.
The assessee aggrieved with the same is in appeal before us.
8. The assessee submitted that the notices issued by the learned CIT – A did not reach the assessee as it was addressed to the email ID mentioned in F.No. 35 which was not accessible to the assessee and is belonging to the consultant. Therefore the assessee must be granted an opportunity of hearing. It was further stated that the learned CIT – A has to decide the issue on the merits of the case and as per statement of facts submitted before him. It was submitted that all the facts are stated in the statement of facts and on the basis of that the addition should have been deleted. It was further stated that there is a non-issue of a mandatory notice under section 143 (2) of the Act which makes the assessment order as invalid. The learned CIT – A did not decide this issue. With respect to the issue on the merits, it was submitted that the assessing officer has not accepted the loan received from the son and the wife of the assessee wherein the assessee has furnished confirmation which was not appreciated. The learned CIT – A did not consider the same at all. Therefore the order of the learned CIT – A suffers on the merits as well as on the issue of not deciding the appeal on its merit.
9. The learned DR vehemently submitted that the assessee has been given enough opportunity by the learned CIT – A which has not been availed by the assessee and therefore there is nothing else which learned CIT – A could have done, and therefore there is no infirmity in the order of the learned CIT – A.
10. We have carefully considered the rival contentions and perused the orders of the learned CIT – A and find that the learned CIT – A has not decided the issue on the merits of the case but has decided it holding that assessee is not interested in prosecuting the appeal and therefore there is nothing available before him to upset the order of the learned AO. We find that according to the provisions of the Income Tax Act the learned CIT – A should have decided the appeal on its merit and not on the issue that assessee is not interested in prosecuting the appeal. In view of the above facts we restore the issue back to the file of the learned CIT – A to decide the issue afresh after giving assessee an opportunity of hearing. The assessee has submitted his new email ID in F.No. 36 on which the notices may be issued. The assessee is also directed to intimate the new email ID to the learned CIT – A so that the necessary notices could be issued to the assessee.
In the result the appeal of the assessee is allowed for statistical purposes.
Pronounced in the open court on this 29th day of September, 2025.