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Facts
The assessee, an AOP, failed to file a return of income despite significant cash transactions including deposits of ₹4,57,58,900/-. The Assessing Officer initiated reassessment proceedings, issued notices, and eventually, due to non-compliance, added the cash deposits as unexplained money under Section 69A. The CIT(A) confirmed the AO's order and dismissed the assessee's appeal for non-prosecution, leading to the current appeal before the Tribunal.
Held
The Tribunal found that the CIT(A) failed to adjudicate the appeal on its merits and dismissed it merely for non-prosecution, which is contrary to the provisions of Section 250(6) and Section 251 of the Income Tax Act. Citing judicial precedents, the Tribunal held that the CIT(A) is obligated to pass a speaking order on merits. Therefore, the Tribunal set aside the CIT(A)'s order and remanded the matter back for fresh adjudication on merits after providing the assessee a reasonable opportunity of being heard.
Key Issues
1. Whether the CIT(A) can dismiss an appeal for non-prosecution without adjudicating on the merits. 2. The validity of the addition made under Section 69A for alleged unexplained cash deposits.
Sections Cited
250, 147, 144, 144B, 69A, 142(1), 133(6), 250(6), 251, 251(1), 251(2), 246A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, KOLKATA ‘D’ BENCH, KOLKATA
Before: SHRI PRADIP KUMAR CHOUBEY & SHRI RAKESH MISHRA
PER RAKESH MISHRA, ACCOUNTANT MEMBER:
This appeal filed by the assessee is against the order of the Commissioner of Income Tax (Appeals)-NFAC, Delhi [hereinafter referred to as Ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for AY 2018-19 dated 19.07.2024, I.T.A. No.: 476/KOL/2025 Assessment Year: 2018-19 Pallishri Samabaya Unanyan Samity Limited. which has been passed against the assessment order u/s 147 r.w.s. 144 of the Act r.w.s. 144B of the Act, dated 24.03.2023. 1. 1. The Registry has informed that the appeal filed by the assessee is barred by limitation by 157 days. An application seeking condonation of delay has been filed by the assessee stating as under: “That the Ld. CIT(A)-NFAC has passed the appellate order for the assessment year 2018-19 on 19.07.2024. 60 days thereafter was 18.09.2024. So, the due date for presenting the appeal before the Hon'ble ITAT has expired on 18.09.2024. The appeal is filed today with a delay of 167 days. That none of the members of your co-operative society has any knowledge or idea about e-filing portal of income tax department. The income tax matters of the appellant are being handled by Advocate Biplab Roy of Coochbehar, who did not notice the passing of appellate order by the Hon'ble CIT(A), NFAC on 19.7.2024 for assessment year 2018-19, served at ITBA portal. No physical copy of appellate order has been served on the appellant at any time. On receipt of a phone call from the department for payment of arrear tax demand, the appellant became aware about the passing of appellate order by the Hon'ble CIT(A) on 19.7.2024. Without wasting any time, the appellant has met with Advocate Biplab Roy of Coochbehar, who has advised the appellant to file appeal before the Hon'ble ITAT, Kolkaka and helped the appellant in depositing appeal fees of Rs.10,000/- on 22.2.2025. But, as the said Advocate Sri Biplab Roy does not deal in ITAT matters, he has expressed his inability to help the appellant to file their appeal before the Hon'ble ITAT, Kolkata. Then the appellant has approached Sri Sujit Basu, Advocate of Siliguri on 4.3.2025, who has prepared the appeal of the appellant and helped the appellant to file their appeal on today, the 6th March, 2025, but with a delay of 167 days. Under the abovementioned facts and circumstances your Honor is requested to condone the said delay and to hear the appeal on merits for the sake of justice as there was not default on the part of the appellant in filing the appeal late.” I.T.A. No.: 476/KOL/2025 Assessment Year: 2018-19 Pallishri Samabaya Unanyan Samity Limited.
Considering the application for condonation of delay and the reasons stated therein, we are satisfied that the assessee had a reasonable and sufficient cause and was prevented from filing the instant appeal within the statutory time limit. We, therefore, condone the delay and admit the appeal for adjudication.
The assessee is in appeal before the Tribunal raising the following grounds of appeal:
“1. For that on the facts and circumstances & legal position of the case, the order u/s 250 passed by the Ld. CIT(A), NFAC is against the principle of natural justice.
For that on the facts and circumstances & legal position of the case, the Ld. AO had erred in treating the collections of loan repayment amounts from the members of appellant co-operative society as unexplained money u/s 69A. The Ld. CIT(A) ought not to have confirmed the addition made by the Ld. A.O. without addressing the issue on merit and dismiss the appeal for non-prosecution.
For that on the facts and circumstances & legal position of the case, treating the collection of loan repayment amounts of Rs.4,57,58,900/- from the member loan debtors, duly recorded in the books of accounts of the appellant, as unexplained income u/s 69A of the Act by the Ld. A.O. was bad in law. The Ld. CIT(A) ought not to have confirmed the addition made by the Ld. A.O. without addressing the issue on merit and dismiss the appeal for non-prosecution.
That the appellant craves permission to add, amend, alter or vary all or any of the ground of appeal on or before the date of hearing of the appeal.”
Brief facts of the case are that the assessee is an AOP and it was noted by the Assessing Officer (hereinafter referred to as Ld. 'AO') that the assessee had entered into financial transactions amounting to ₹9,64,67,850/- which included cash deposits of ₹4,57,58,900/- and cash withdrawals of ₹5,07,08,050/- during the FY 2017-18 relevant to the AY 2018-19 but no return of income was filed. The Ld. AO therefore initiated proceedings u/s 147 of the Act and issued notice u/s 148 of I.T.A. No.: 476/KOL/2025 Assessment Year: 2018-19 Pallishri Samabaya Unanyan Samity Limited. the Act but no response was filed to the notice issued. Even in response to the detailed questionnaire u/s 142(1) of the Act dated 03.10.2022 which was followed by a reminder dated 04.01.2023, no response was furnished. The Ld. AO issued notice u/s 133(6) of the Act to the West Bengal State Co-operative Bank Limited, Kolkata and the bank furnished copy of bank statement but the same was not relevant therefore, another notice u/s 133(6) of the Act was issued. Subsequently, a show cause notice u/s 144 of the Act issued and as the assessee failed to furnish any reply, the variation in the cash transactions being cash deposit of ₹4,57,58,900/- in West Bengal State Co-operative Bank Limited mentioned in the show cause notice was added u/s 69A of the Act to the income of the assessee and the total income was assessed at ₹4,57,58,900/- u/s 147 r.w.s. 144 of the Act r.w.s. 144B of the Act. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A) who issued three notices to the assessee for hearing and as there was no compliance, he confirmed the order of the Ld. AO and dismissed the appeal. Aggrieved with the order of the Ld. CIT(A), the assessee has filed the appeal before the Tribunal.
Rival contentions were heard and the submissions made have been examined. The Ld. AR submitted that the deposits in the bank account were the repayment of loans which were disbursed to the members of the cooperative Society and which had been incorrectly added as unexplained money u/s 69A of the Act on account of non- representation before the Ld. AO. The loan disbursement was duly recorded in the books of account and even the collection of payment made from the members is duly recorded. It was submitted by the Ld. I.T.A. No.: 476/KOL/2025 Assessment Year: 2018-19 Pallishri Samabaya Unanyan Samity Limited. AR that the Ld. CIT(A) has summarily dismissed the appeal of the assessee without adjudicating the merits of the case.
We have considered the rival submissions. On perusal of the appellate order, it is noticed that while the Ld. CIT(A) has discussed non-compliance on the part of the assessee as the notices sent by e- mail were not complied with but he has not adjudicated the appeal on merit. In this respect, it is relevant to examine the provisions of section 250(6) which are reproduced as under: “250(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.”
Thus, section 250(6) of the Act casts a duty on the Ld. CIT(A) to pass an order in appeal which should state the points for determination and the decision as well as the reason for arriving at such decision. In the present case before us, the Ld. CIT(A) has not mentioned the reasons after examining the records while disposing of the appeal. The Ld. CIT(A) has neither adjudicated upon various grounds of appeal nor has passed a reasoned order for arriving at the decision, as is required u/s 250(6) of the Act. We further note that in Ajji Basha Vs. CIT (2019) 111 taxmann.com 348 (Madras) it has been held that a speaking order on merits with reasons and findings is to be passed by Commissioner (Appeals) on basis of ground raised in assessee's appeal; he cannot dispose the assessee's appeal merely by holding that Assessing Officer's order is a self-speaking order which requires no interference. The relevant extract from the order is as under:
“6. … The first respondent is the appellate authority. Needless to state that the Appellate Authority is also a fact finding authority and therefore, he has to consider the order of assessment on the grounds raised in the appeal and thereafter, pass a speaking order on merits and in accordance with law by I.T.A. No.: 476/KOL/2025 Assessment Year: 2018-19 Pallishri Samabaya Unanyan Samity Limited. giving his own reasons and findings as to whether the order of assessment can be sustained or not. In other words, the order passed by the Appellate Authority should explicitly exhibit his application of mind to the facts and circumstances and the objections raised in the grounds of appeal, also by expressing his reasons and findings in support of his conclusion.
In this case, the Appellate Authority, after extracting the order of the Assessing Officer in full, has not given any other reason or finding to dismiss the appeal except by stating that he is of the considered view that the Assessing Officer's order is a self speaking order and does not call for any interference. In my considered view, such single line finding of the Appellate Authority, cannot be sustained as a proper exercise of the Appellate Authority, while disposing the appeal. Therefore, it is apparent that the order impugned in this writ petition is an outcome of total non-application of mind. Consequently, the impugned order cannot be sustained. It is further contended that before passing the order, the petitioner was not heard.”
1 It has also been held in the case of Commissioner of Income-tax (Central) Nagpur v. Premkumar Arjundas Luthra (HUF) [2016] 69 taxmann.com 407 (Bombay) that the law does not empower the CIT(A) to dismiss the appeal for non-prosecution as is evident from the provisions of the Act. The relevant extract is as under:
“7. An appeal is filed with the CIT(A) from appealable orders listed in Section 246A of the Act. We find that the procedure in appeal before the CIT(A) and the powers of the CIT(A) are governed by Sections 250 and 251 of the Act respectively. The relevant provisions for consideration are as under:— 'Procedure in appeal 250 (4) The Commissioner (Appeals) may, before disposing of any appeal, make such further inquiry as he thinks fit, or may direct the Assessing Officer to make further inquiry and report the result of the same to the Commissioner (Appeals). … (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. … Powers of the Commissioner (Appeals) I.T.A. No.: 476/KOL/2025 Assessment Year: 2018-19 Pallishri Samabaya Unanyan Samity Limited. "Section 251(1) In disposing of an appeal, the Commissioner (Appeals) shall have the following powers — (a) in an appeal against an order of assessment, he may confirm, reduce, enhance or annul the assessment. … (b) in an appeal against an order imposing a penalty, he may confirm or cancel such order or vary it so as either to enhance or to reduce the penalty." … (2) The Commissioner (Appeals) shall not enhance an assessment or a penalty or reduce the amount of refund unless the appellant has had a reasonable opportunity of showing cause against such enhancement or reduction. Explanation. - In disposing of an appeal, the Commissioner (Appeals) may consider and decide any matter arising out of the proceedings in which the order appealed against was passed, notwithstanding that such matter was not raised before the Commissioner (Appeals) by the appellant.'
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 co-terminus 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 I.T.A. No.: 476/KOL/2025 Assessment Year: 2018-19 Pallishri Samabaya Unanyan Samity Limited. 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.”
After examining the facts of the case, we deem it appropriate to set aside the order of the Ld. CIT(A) and remit the matter back to the Ld. CIT(A) for disposal of the grounds taken by the assessee on merit, by passing a speaking order. Needless to say, the assessee shall be given a reasonable opportunity of being heard to make any further submission it wants to make in support of its grounds of appeal and shall not seek unnecessary adjournments and rule 46A of the I.T. Rules, 1962 shall also be followed, if required. Accordingly, the grounds taken by the assessee in his appeal are allowed for statistical purposes.
In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open Court on 8th August, 2025. [Pradip Kumar Choubey] [Rakesh Mishra] Judicial Member Accountant Member Dated: 08.08.2025 Bidhan (Sr. P.S.) I.T.A. No.: 476/KOL/2025 Assessment Year: 2018-19 Pallishri Samabaya Unanyan Samity Limited. Copy of the order forwarded to:
Pallishri Samabaya Unanyan Samity Limited, Coochbehar II, P.O. Patlakhwa, Coochbehar Sadar, Coochbehar, West Bengal, 736165. 2. I.T.O., Ward-2(1), Coochbehar.
CIT(A)-NFAC, Delhi.
CIT-
CIT(DR), Kolkata Benches, Kolkata.
Guard File. //// By order