R B DIAMOND HOUSE,JALGAON vs. PNE-C-1, RANGE -25, CIRCLE -1, OFFICE OF THE COMMISSIONER OF INCOME TAX- JALGAON

On the facts and circumstances of the case and in law, the ex parte order passed by CIT(A)/ NAFC is bad in law and violates principles of natural justice. This has lead to a denial of effective opportunity for a hearing. Ground No. 2: Violation of Section 250(6)

On the facts and circumstances of the case and in law, CIT(A)/ NAFC failed to comply with Section 250(6), requiring reasoned findings on each ground of appeal. Ground No. 3: Non-response of Notices Due to medical issue

On the facts and circumstances of the case and in law, hearing notices were not responded to due to the illness of Ms. Rupal Bagrecha who is taking care of accounting, all income tax and other statutory compliances. Her e-mail id rupalbagrecha21@gmail.com is registered on the Income tax portal. She was suffering from severe symptoms of epilepsy and undergoing medical investigation from February 2025 onwards, preventing timely communication of notices to the tax consultant, constituting reasonable and sufficient cause for non-response. ITA No.1948/PUN/2025, AY 2016-17 Ground No. 4: Failure to Adjudicate on Merits

On the facts and circumstances of the case and in law, CIT(A)/ NAFC failed to decide substantive grounds on merits despite detailed submissions was made in the form 35, Grounds of appeal and Statement of Facts. That the CIT(A)/ NAFC has erred in law and on facts in sustaining the assessment order passed by the Learned Assessing Officer. Ground No. 5: Addition u/s 69A - Rs.94,04,285/-

On the facts and circumstances of the case and in law, the Learned CIT(A)/NFAC erred in confirming the addition under Section 69A despite the appellant submitting a complete explanation with ledger extracts from books of accounts. The CIT(A) wrongly sustained the AD's erroneous conclusion by misconstruing the balances of trade payables in the books of M/s. Raisoni Bagrecha Diamonds Pvt. Ltd. (RBDPL) and trade receivables in the books of M/s. RB Diamond House (appellant) as undisclosed money, when in fact the balance in the appellant's books was grouped under 'loans & advances' and not under 'trade receivables', therefore, there is no concealment warranting addition under Section 69A. Ground No. 6: Interest Disallowance Rs.1,54,43,569/-

On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) ought to have considered and deleted the disallowance of Rs.1,54,43,569/- being interest on Cash Credit facility as the Cash Credit facility was properly reflected in the balance sheet. The facility was utilized for business purposes, including purchase of stock-in-trade and other allied business activities. The contention of disallowance, merely on the ground that there was no business income in a particular year, is unjustified. Ground No. 7: Brought Forward Losses - Rs.1,10,53,410/-

On the facts and circumstances of the case and in law, losses brought forward of Rs.1,02,52,172/- and unabsorbed depreciation of Rs. 8,01,238/- should be allowed as properly carried forward in the return of Income filed for AY 2016-17 which was available on the record and produced before the authorities i.e. income tax return filed for the year under consideration. Ground No. 8: Misapplication of Legal Precedents

On the facts and in the circumstances of the case and in law, the leamed Commissioner of Income Tax (Appeals) has erred in relying upon cases of willful non-cooperation, whereas in the present case the non-response was due to severe migraine and numbness in suffered due to epilepsy seizures to the person whose email was registered for hearing notices communication which constitutes reasonable and sufficient cause distinguishing the present case from cited precedents in para 3 of the impugned order. Ground No. 9: Breach of Principles of Natural Justice.

On the facts and in the circumstances of the case and in law, the impugned order is in gross violation of principles of natural justice as: a) No effective opportunity of hearing was provided b) The Appellant's explanations and evidence were not considered, wherein detailed grounds with supporting documents were filed in Form 35 demonstrating bona fide intention to contest on merits. c) The order lacks reasoning on substantive issues Ground No. 10: General Ground

On the facts and in the circumstances of the case and in law, the order passed by the learned Commissioner of Income Tax (Appeals) is against the weight of evidence on record, contrary to law and facts, bad in law, and deserves to be set aside.

The appellant craves leave to add, alter or vary the grounds of appeal before or at the time of hearing.”

Briefly stated the facts are that the assessee is a partnership firm engaged in the business of jewellery. For AY 2016-17, the assessee filed its original return of income on 31.03.2017 declaring net loss of Rs.1,42,81,173/- u/s 139(4) of the Income Tax Act, 1961 (the “Act”). Based on the information received from the Investigation Wing that M/s Raisoni Bagrecha Diamonds P. Ltd. has claimed assessee to be a Trade Payable of Rs.94,94,285/- whereas the assessee has declared Sundry Debtors of Rs.3,39,679/- only, the reassessment proceedings u/s 147 were initiated and assessment order was passed by the Ld. Assessing Officer ("AO”) u/s 147 r.w.s.144B of the Act on 17.05.2023 assessing the total income at Rs.1,05,66,681/- by making an addition of (i) Rs.94,04,285/- holding it to be undisclosed money in the hands of the assessee, the source of which has not been explained u/s 69A of the Act and (ii) Rs.1,54,43,569/- on account of disallowance of expenses.

Aggrieved, the assessee carried the matter before the Ld. CIT(A)/NFAC. There was non-compliance by the assessee to the various notices issued by the Ld. CIT(A)/NFAC. The Ld. CIT(A)/NFAC therefore dismissed the appeal of the assessee for non-prosecution by observing as under:

DECISION

It is pertinent to state that to decide this appeal in a timely manner several notices u/s 250 of the Income Tax Act, 1961 (the Act) were issued to the appellant through ITBA portal, as noted in para 2 above, which amounts to service of notice as provided u/s 282 of the Act. However, there has been no response from the appellant till date. There is no gainsaying that once the appeal is filed by the appellant, it is obligatory on its part to pursue the same in a worthwhile manner, which the appellant has failed to do. Hence, in view of the aforesaid total noncompliance of the instant appeal on the part of the appellant, the instant appeal is adjudicated and disposed of, as under, ex- parte and on the basis of documentation available on record. ITA No.1948/PUN/2025, AY 2016-17

1 Firstly, it is stated at the outset, that in the situation as obtaining in the instant case, as seen from the above, this appeal is liable to be dismissed in terms of the ratio of the judgements of the Hon'ble Apex Court which held in CIT v. B.N. Bhattarcharjee and Another (10 CTR 354) that an appeal means an effective appeal and that to "prefer an appeal" would mean effectively pursuing an appeal purposefully and constructively. Therefore, preferring an appeal means not just formally filing it but effectively pursuing it and if a party retreats before the contest begins, it is as good as not having entered the fray.

2 It is relevant to add here that law assist those who are vigilant and not those who sleep over their rights. This principle is embodied in the well- known maxim "Vigilantibus non dormientibus jura subveniunt." It means equity comes to the aid of the vigilant and not the slumbering. In all actions, suits and other proceedings at law and in equity, the diligent and careful plaintiff is favoured. And the one who is careless is prejudiced. Viewed thus, it is presumed that the appellant has no further cogent reasoning or/and evidence to substantiate the grounds taken in this impugned appeal. It is trite that the onus is on person making the claim, and the primary onus for proving the claim made before the tax authorities (Assessing Officers/Appellate Authorities) lies with the assessee/appellant. In the present case, the appellant has not been able to even discharge the primary onus/burden statutorily and judicially cast upon it to substantiate the claims made in the grounds of appeal despite adequate time and opportunity given, as brought out in the foregoing paras.

3 In this regard, the decision of the Hon'ble High Court of Mumbai in the case of M/s Chemipol v/s. Union of India [Central Excise Appeal No.62 of 2009] clearly states, that every court, judicial body or authority, which has a duty to decide a matter between two parties, inherently possesses the power to dismiss the case in default. For the sake of reference, the relevant extract of the judicial pronouncement rendered by the Hon'ble High Court of Mumbai quoting decision of Hon'ble Supreme Court in Nandramda warkadas, AIR 1958 MP 260, is reproduced below: case of "Now the Act does not give any power of dismissal. But it is axiomatic that no court or tribunal is supposed to continue a proceeding before it when the party who has moved it has not appeared nor cared to remain present. The dismissal, therefore, is an inherent power which every tribunal possesses." 3.3.1 The principle that every court that is to decide on a matter of dispute, inherently possesses the power to dismiss the case for default, has been upheld by the Hon'ble Supreme Court in case of Dr. P. Nalla Thampy Vs. "That every court or judicial body or authority, which has a duty to decide a list between two parties, inherently possesses the power to dismiss a case in default. Where a case is called up for hearing and the party is not present, the court or the judicial or quasi-judicial body is under no obligation to keep the matter pending before it or to pursue the matter on behalf of the complainant who had instituted the proceedings. That is not the function of the court or, for that matter of a judicial or quasi judicial body. In the absence of the complainant, therefore, the court will be will without its juri iction to dismiss the complaint for non prosecution. So also, it would have the inherent power and juri iction to restore the complaint on good cause being shown for the non appearance of the complainant." 3.3.2 The Hon'ble Bombay High Court has also laid down the proposition that where the appellant in spite of notice is persistently absent and the Tribunal on facts of the case is of the view that the appellant is not interested in prosecuting the appeal, it can in exercise its inherent power to dismiss the appeal for non-prosecution. 3.3.3 The Hon'ble ITAT Delhi (ITR No.2006/Del/2011 dt.19.12.2001) in the case of Whirlpool of India Ltd. v. DCIT had dismissed appeal for non- attendance at hearings, inferring that assessee was not interested in prosecuting of appeal. Thereafter, in another decision, in the case of Chadha Finlease Ltd. V. ACIT (ITA No.3013/Del/2011 date of order 20.12.2011) the Hon'ble ITAT had dismissed the appeal for non attendance at hearings. 3.3.4 In a decision in the case of CIT v. Gold Leaf Capital Corporation Ltd. on 02.09.2011 (ITA No.798 of 2009), the Hon'ble High Court of Delhi had held that a negligent assessee should not be given many opportunities just because that quantum of amount involved is high. Necessary course of action is to draw adverse inference; otherwise it would amount to give premium to the assessee for his negligence. When the assessee is non-cooperative, it can naturally be safely concluded that the assessee did not want to adduce evidence as it would expose falsity and lack of genuineness.

4 Be that as it may, even if the issues involved are looked at from the point of view of merit, the fact remains that the appellant has failed to adduce any evidence required during the during the course of appellate proceedings. Despite being given sufficient opportunities, the appellant did not respond during appellate proceeding nor furnished requisite details/explanations which were required to adjudicate the present appeal. Hence, the appellant has been provided sufficient opportunities but appellant failed to submit any submission or evidence during appellate proceedings in support of grounds of appeal as well as statement of facts and remained noncompliant. 3.4.1 It is settled law that where the assessee fails to discharge the onus by producing cogent evidence and explanation, the AO would be justified in making the additions back into the income of the assessee as held in Kale Khan Mohammad Hanif v CIT [1963] 50 ITR 1 (SC) and Roshan Di Hatti v. CIT [1977] 107 ITR 938 (SC). The appellant has failed and therefore the grounds hold no merit and are dismissed.

5 It is trite that an appellate authority is essentially called upon to balance the two sides of an argument presented before him as held in Nirmal Singh and Others of the Hon'ble Punjab and Haryana High Court [Cr No. 3791 of 2013 (O&M) dated 01.05.2014] and in the absence of any reasonable, cogent and valid arguments/contentions advanced by the appellant in the instant appeal to counter the AO's decision as contained in the AO's order, I have no alternative left but to dismiss the appeal following the ratio of decision of the Hon'ble MP High Court in the case of Estate of Late Tukhoji Rao Holkar vs. CWT reported in 233 ITR 480 and the decision of Hon'ble ITAT, Delhi Branch "vigilantbus non dormentibus, jura subveniunt", all the grounds raised in this appeal as reproduced in para 1.1 supra are dismissed.”

Dissatisfied, the assessee is in appeal before the Tribunal and all the grounds of appeal relate thereto.

The Ld. AR submitted that the assessee could not make proper and complete compliance before the Ld. AO because at the time of assessment proceedings, one of the partners, Mr. Pramod Raisoni, was under the police custody and the other partner, Mr. Pawan Bagrecha, was also under investigation by CID and the erstwhile tax consultant was also arrested. Thereafter, daughter of Mr. Bagrecha took charge of the tax matters and her email id was registered on the Income Tax portal. But unfortunately, she suffered from critical medical condition-epilepsy and seizures from February 2025 and therefore the notice of hearing which were issued by the Ld. CIT(A)/NFAC in the month of April and May 2025 remained un- complied with. He therefore submitted that non-compliance before the lower authorities was not intentional but due to the unavoidable circumstances beyond the control of the assessee. The Ld. AR submitted that the assessee has a strong case on merits and given an opportunity the assessee is in a position to substantiate its case by filing all the requisite details/ documentary evidence before the Ld. CIT(A)/NFAC to his satisfaction. He, therefore, prayed that in the interest of justice, the matter may be restored to the file of the CIT(A)/NFAC to decide the issues raised by the assessee before him afresh on merits, after affording an opportunity of hearing to the assessee.

The Ld. DR had no objection to the above request of the Ld. AR.

We have heard the Ld. Representatives of the parties and perused the material available on record. We find that the assessee made partial compliance before the Ld. AO but the reply of the assessee was not accepted by him and he made the impugned additions/disallowance for want of sufficient explanation not offered by the assessee. It is an admitted fact that despite number of opportunities granted, the assessee failed to comply with several notices issued by the Ld. CIT(A)/NFAC which constrained the Ld. CIT(A)/NFAC to dismiss the appeal filed by the assessee for non-prosecution. The Ld. AR has submitted that such non- compliance was not intentional but resulted on account of the reasons cited above. The Ld. AR has placed on record the medical certificates and treatment documentation of Ms. Rupal Bagrecha, in support of its claim. We find some force in the arguments of the Ld. AR that there was a sufficient cause/reason for non-compliance before the Ld. CIT(A)/NFAC. It is the submission of the Ld. Counsel for the assessee that the assessee has a strong case on merits and given an opportunity, the assessee is in a position to substantiate its case by filing the requisite details before the Ld. CIT(A) / NFAC. The appellate order reveals that the Ld. CIT(A)/NFAC has Bhattarcharjee and Another, 10 CTR 354 (SC) and the Hon'ble Bombay High Court in the case of M/s. Chemipol Vs. Union of India in Excise Appeal No. 62 of 2009 and various other cases cited in his impugned order and dismissed the appeal of the assessee for non-prosecution without himself going into the merits of the case. No doubt, the Ld. CIT(A)/NFAC may decide the appeal ex-parte where the assessee does not prosecute his appeal in spite of several opportunities. None-the-less, he has to adhere to the legislative mandate enshrined in sub-section (6) of section 250 of the Act which requires him to state the points for determination, the decision thereon and the reason for the decision. Thus, in our view, his order is in violation of the provisions of section 250(6) of the Act.

Considering the totality of the facts of the case and in the interest of justice and without going into the merits of the appeal, we deem it fit and proper to set aside the impugned order of the Ld. CIT(A)/NFAC and restore the issues raised by the assessee back to his file with a direction to decide the same on merits as per fact and law, after giving reasonable opportunity of being heard to the assessee. The assessee is also hereby directed to provide the latest and active email id to the Department for receiving notices of hearing and remain vigilant in accessing the email(s). Needless to say, the assessee shall appear and make submissions before the Ld. CIT(A)/ NFAC on the appointed date without seeking any adjournment under any pretext, unless required for the sufficient cause, failing which the Ld. CIT(A) / NFAC shall be at liberty to pass appropriate order as per law. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.

In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 19th December, 2025. (R.K. Panda) VICE PRESIDENT पुणे / Pune; दिनांक / Dated : 19th December, 2025. रवि (Astha Chandra) JUDICIAL MEMBER 8 ITA No.1948/PUN/2025, AY 2016-17 आदेश की प्रतिलिपि अग्रेषित /