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Facts
The assessee's assessment for AY 2020-21 was reopened after a search operation in a third party's case led to the finding of incriminating material related to the assessee. The Assessing Officer made an addition of Rs. 9 lakhs as unexplained cash credit under Section 68 of the Income Tax Act. The CIT(A) dismissed the assessee's subsequent appeal for non-prosecution without deciding it on merits, despite the assessee having furnished some information during the assessment proceedings.
Held
The Tribunal held that the CIT(A) erred in dismissing the appeal for non-prosecution without deciding on merits, citing established legal principles that appeals should be decided on the basis of available material. It noted that the assessee had submitted some details to the AO. Therefore, the Tribunal set aside the CIT(A)'s order and remanded the case back for fresh consideration on merits, granting the assessee another opportunity of hearing.
Key Issues
Whether the CIT(A) was justified in dismissing the appeal for non-prosecution without deciding on merits, and the legality of the addition of Rs. 9 lakhs as unexplained cash credit under Section 68.
Sections Cited
153C, 68, 127, 143(2), 142(1), 250
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Income Tax Appellate Tribunal, HYDERABAD “A” BENCH: HYDERABAD
Before: SHRI MANJUNATHA G & SHRI RAVISH SOOD
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD “A” BENCH: HYDERABAD BEFORE SHRI MANJUNATHA G, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA.No.298/Hyd./2025 Assessment Year 2020-2021 People Media Factory The ACIT, LLP, Hyderabad. Central Circle-1(3), PIN – 500 084. Telangana. vs. Hyderabad. PAN AAUFP1726G Telangana. (Appellant) (Respondent) For Assessee : CA, A Srinivas For Revenue : Sri Madan Mohan Meena, Sr. AR Date of Hearing : 08.09.2025 Date of Pronouncement : 10.09.2025 ORDER PER MANJUNATHA G. :
The above appeal has been filed by the assessee against the Order dated 22.01.2025 of the learned CIT(A), Hyderabad-11, Hyderabad, relating to the assessment year 2020-2021.
The assessee pleads the following grounds in the instant appeal :
2 ITA.No.298/Hyd./2025 1. “The order of the Appellate Commissioner is contrary to law, facts and circumstances of the case.
2. The Appellate Commissioner erred in deciding the Appeal exparte.
3. The Appellate Commissioner erred in not deciding on the question of the legality of the Assessing Officer assuming jurisdiction u/s.153 C 4. The Appellate Commissioner erred in confirming an amount of Rs.9,00,000/- as unexplained cash credit u/s.68.
Any other grounds which the Assessee may urge either before or at the time of the hearing.”
Brief facts of the case are that, the assessee-firm is engaged in the business of production and exhibition of feature films. It had filed it’s return of income for the impugned assessment year 2020-2021 on 31.03.2021 by admitting an income of Rs.1,13,35,860/-. Consequent to search and seizure operation conducted on 28.01.2021 in the case of Sri V V Bala Krishna Rao (HUF), Prop: Usha Pictures and Financiers, Eluru, the case of the assessee was centralized to DCIT, Central Circle 1(1), Hyderabad vide order u/sec.127 of the Income Tax Act, 1961 [in short “the Act”] dated 22.03.2022 of Pr. CIT-1 Hyderabad. During the 3 ITA.No.298/Hyd./2025 course of search and seizure operation in the case of Sri V V Bala Krishna Rao, Prop: Usha Pictures and Financiers, certain loose sheets were found at the office premise of Sri V. V. Bala Krishna Rao, Raja Ram Mohan Rai Street, Powerpet, Eluru and seized vide Annxure: UPF/RP/EL-47 The said loose sheets contain promissory notes and receipt vouchers shows the payments made in cash for taking loans and repayments by way of cash. The seized material will have a bearing on determination of the income of the assessee. Therefore, the Assessing Officer after recording satisfaction note, as per the amended provisions of section 153C of the Income Tax Act, 1961, a notice u/s. 153C was issued to the assessee on 30.06.2022 through ITBA portal. In response, the assesse has filed its return of income for the assessment year 2020-2021 on 29.08 2022 by admitting an income of Rs.1,135,500/-. Subsequently, the Assessing Officer issued notices u/sec.143(2) and notice u/sec.142(1) of the Act was issued on 13.01.2023 and 13.03.2023 to the assesse calling for information/details. In response to the notices, the assesse-firm submitted the called for 4 ITA.No.298/Hyd./2025 information. After verification of the information submitted and also after verification of material available on record, the Assessing Officer noted that, the assessee-firm was in receipt of Rs.9 lakhs as advance towards A4 Express Movie West Distribution. The Assessing Officer issued show cause notice dated 13.03.2023 calling the assessee to furnish ledger copies of the above transaction containing description of the mode(s) of receipt/payment along with supporting bank statements and cash book also and to state whether the above transactions are reflected in the profit and loss account and balance sheet or not and provide relevant schedule along with breakup of the revenue. However, despite giving sufficient time and opportunity, the assessee- firm has not filed any reply in this regard and thereby failed to explain about the transaction. Therefore, the Assessing Officer observed that, “the assessee failed to provide any kind of explanation to substantiate the said amount received by it. Therefore, it is presumed that the assessee has no explanation to offer in this regard. Accordingly, the amount of Rs.9,00,000/- received as advance towards Al
5 ITA.No.298/Hyd./2025 Express movie - West distribution is treated as un-explained cash credits u/sec.68 of the Income Tax Act, 1961 and brought to tax”. Accordingly, the Assessing Officer completed the assessment by assessing the income of the assessee firm at Rs.1,22,35,860/- by making addition of Rs.9 lakhs as against the returned income of Rs.1,13,35,860/- vide order dated 30.03.2023 passed u/sec.153C of the Income Tax Act, 1961.
Aggrieved by the assessment order, the assessee preferred appeal before the learned CIT(A). Before the learned CIT(A), the learned CIT(A) has issued notices u/sec.250 of the Act on 6 occasions. Since, there were no response from the assessee firm to substantiate it’s claim, the learned CIT(A) respectfully following decision of Hon’ble Supreme Court in the case of CIT vs., BN Bhattacharjee and another 10 CTR 354 (SC) and also the decision of Hon’ble Delhi High Court in the case of CIT vs., Multiplan (India) Pvt. Ltd., 38 ITD 320 (Del.) has dismissed the appeal of the assessee firm for non-prosecution.
6 ITA.No.298/Hyd./2025 5. Aggrieved by the order of the learned CIT(A), the assessee firm is now, in appeal before the Tribunal.
CA, A. Srinivas, Learned Counsel for the Assessee submitted that, before the Assessing Officer the assessee firm has furnished relevant information. But, the Assessing Officer without considering the same, made the impugned addition of Rs.9 lakhs. Before the learned CIT(A), despite of various notices, the assessee could not respond due to the circumstances beyond his control. The learned CIT(A) dismissed the appeal of the assessee for non-prosecution and not decided the appeal on merits basing on the material available on record. Therefore, he submitted that, the assessee has not been provided with sufficient opportunity of hearing by both the lower authorities. He, therefore, pleaded that one more opportunity of hearing may please be provided to the assessee to substantiate his case in the interest of substantial justice.
6. Sri Madan Mohan Meena, learned Sr. AR for the Revenue, on the other hand, supporting the order of the 7 ITA.No.298/Hyd./2025 learned CIT(A) submitted that, the assessee failed to substantiate his case during the course of assessment proceedings with respect to addition of Rs.9 lakhs made by the Assessing Officer on account of receipt of advance towards A1 Express Movie West Distribution. Further, during the course of appellate proceedings before the learned CIT(A) also, the assessee did not file his submissions to substantiate his case, despite providing 6 opportunities of hearing. Therefore, in absence of any submissions from the side of the assessee, the learned CIT(A) has rightly sustained the addition made by the Assessing Officer and dismissed the appeal of the assessee for non-prosecution. He, therefore, submitted that, the order of the learned CIT(A) should be upheld.
We have heard both the parties, perused the material on record and gone through the orders of the authorities below. We find that, during the course of assessment proceedings the assessee firm had furnished certain information in respect of addition of Rs.9 lakhs made by the Assessing Officer on account of receipt of 8 ITA.No.298/Hyd./2025 advance towards A1 Express Movie West Distribution, but, could not file complete details. During the course of appellate proceedings before the learned CIT(A), despite issue of notices on several occasions, the assessee has not explained reasons for non-appearance. Therefore, the learned CIT(A) dismissed the appeal of the assessee for non- prosecution by following the decision of Hon’ble Supreme Court in the case of CIT vs., BN Bhattacharjee and another 10 CTR 354 (SC) and also the decision of Hon’ble Delhi High Court in the case of CIT vs., Multiplan (India) Pvt. Ltd., 38 ITD 320 (Del.). It is well established as per law by the decisions of various Courts and Tribunals that, even in a case of non-prosecution by the appellant or respondent, the appeal should be disposed of or decided on merits on the basis of material available on record. In the present, although, the assessee has furnished relevant details before the Assessing Officer in respect of the impugned addition and the learned CIT(A) without even considering the said information has disposed of the appeal of the assessee for non-prosecution. Since the learned CIT(A) has not decided
9 ITA.No.298/Hyd./2025 the issue on merits and disposed of the appeal for non- prosecution, in our considered view, the matter needs to be set-aside to the file of learned CIT(A) for reconsideration. Thus, we set-aside the order of the learned CIT(A) and restore the issue back to the file of learned CIT(A) for reconsideration. The learned CIT(A) is directed to reconsider the issue de-novo, after providing one more opportunity of hearing to the assessee. Needless to say, the assessee shall furnish relevant details as and when the case is posted for hearing.
In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 10.09.2025.