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Facts
The assessee filed an income tax return for AY 2015-16. The Assessing Officer initiated reassessment under Section 148 due to alleged unaccounted cash credits (Section 68), non-genuine penny stock transactions, and unexplained expenditures (Section 69C). After the assessee failed to comply with notices, the AO completed the assessment under Section 147 read with Sections 144 and 144B, substantially increasing the income. The CIT(A) subsequently dismissed the assessee's appeal.
Held
The Tribunal found that the CIT(A) dismissed the appeal without examining its merits or providing the assessee sufficient opportunity to be heard, thus violating the principles of natural justice and Section 250(6) of the Income Tax Act. Citing various precedents, the Tribunal emphasized the CIT(A)'s duty to pass a speaking order with reasons. Consequently, the Tribunal set aside the CIT(A)'s order and remitted the matter back for fresh adjudication on merits, ensuring the assessee receives a reasonable opportunity of hearing.
Key Issues
Whether the CIT(A) erred in dismissing the appeal without considering the merits of the case, thereby violating the principles of natural justice and the statutory requirement under Section 250(6) to pass a reasoned speaking order.
Sections Cited
250, 148, 147, 68, 69C, 144, 144B, 250(6), 246A, 251, 250(4), 251(1), 251(1)(a), 251(1)(b), 251(2)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “D” BENCH KOLKATA
Before: SHRI DUVVURU RL REDDY & SHRI RAKESH MISHRA
Sudhir Jaiswal Flat No. 5C &5D, Aristo Signum ITO Ward No.37(1) Complex, 76/1 Bidhan Sarani, Vs. 3, Government Place, Kolkata- Beadon, Street SO Kolkata, PIN 700001, West Bengal 700006 West Bengal (PAN: ACRPJ6070G) (Appellant) (Respondent) Present for: Appellant by : Shri Prabhat Kumar Singh and Shri Anuj Musaddi, ARs Respondent by : Shri Sanat Kumar Raha & Shri S.B. Chakraborty, DR Date of Hearing : 16.06.2025 Date of Pronouncement : 17.07.2025 O R D E R
PER RAKESH MISHRA, ACCOUNTANT MEMBER:
This appeal filed by the assessee is against the order of National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to as “the Ld. CIT(A)”) passed u/s. 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for AY 2015-16 dated 21.02.2025.
The grounds of appeal raised by the assessee are reproduced as un- der:
1. “That on the facts and in the circumstances of the case, the CIT(Ap- peals) erred in not appreciating that the notice dated 27-03-2021 issued by the AO u/s 148 of the Act was bad in law and liable to be quashed.
2. That on the facts and in the circumstances of the case, the CIT(Ap- peals) erred in not appreciating that the order dated 28-03-2022 passed by the AO u/s 147 of the Act was bad in law and liable to be quashed.
3. That the contention of the CIT(Appeals) that the appellant had not filed any written submission was uncalled for as the detailed submission was al- ready filed in the income tax portal at the schedule date of hearing.
That the order passed by the CIT(Appeals) is without taking cogni- zance of the submissions/supporting's filed by the appellant and is against the principles of natural justice.
5. That on the facts and in the circumstances of the case, the Learned CIT(A) erred in confirming the addition of Rs. 83,95,000/- being unexplained cash credit u/s 68 of the Act.
6. That on the facts and in the circumstances of the case, the Learned CIT(A) erred in confirming the addition of Rs. 4,19,750/-being unexplained expenditure u/s 69C of the Act.
7. That on the facts and in the circumstances of the case, the Learned CIT(A) erred in confirming the addition of Rs. 46,02,580/- being unexplained expenditure u/s 69C of the Act.
That on the facts and circumstances of the case, Ld. CIT(A) erred in not appreciating the merit of the case in true spirit.
That the Ld. CIT(A) has erred in law and in facts in confirming the as- sessment order passed by the AO u/s 147/144 of the Act.”
Brief facts of the case are that the assessee is an individual who had filed his return of income for A.Y. 2015-16, declaring total income of ₹6,05,320/-. During the course of assessment proceeding, the Assessing Officer (“the Ld. AO”) had reasons to believe that the assessee had unac- counted cash credits amounting to ₹83,95,000/- by way of non-genuine transactions of sale of penny stocks besides commission of ₹4,19,750/- paid for accommodation entry and unexplained expenditure of ₹46,02,580/- was also made. Accordingly notice u/s 148 of the Act was issued but no compliance was made. Notices were issued but the assessee failed to provide the details as asked for. The Ld. AO assessed the total income of the assessee as ₹1,40,22,650/- and made the assessment u/s 147 read with section 144 read with section 144B of the Act on 28.03.2022. Aggrieved with the order, the assessee preferred an appeal before the Ld. CIT (A) who dismissed the appeal of the assessee.
4. Being aggrieved with the order of the Ld. CIT (A), the assessee has filed the appeal before us.
We have heard the rival submissions and perused the orders of the lower authorities. The Ld. Counsel for the assessee submitted before the Bench that the order passed by the Ld. CIT(A) u/s. 250 of the Act was passed without providing sufficient opportunity to the assessee and as such the order is bereft of principle of natural justice and is liable to be set aside. The Ld. AR requested for another opportunity so that the sub- missions could be made properly before the Ld. CIT(A).
On the other hand, the learned Departmental Representative did not object to such prayer made by the assessee before the Bench.
We, after hearing the submission of the parties and perusing the material available on record, find that the vide the impugned order the Ld. CIT(A) has decided the appeal without looking into the merits of the case and by simply dismissing the appeal of the assessee in the absence of any submission by the assessee. In this respect, it is relevant to exam- ine 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.”
8. 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 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.
7. 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.
9. 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) "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.' 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 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 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. It is further clarified that the assessee should also not seek any adjournments unless otherwise required for reasonable cause. Accordingly, the grounds taken by the assessee in his appeal are allowed for statistical purposes.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 17th July, 2025.