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Facts
The assessee, a partnership firm dealing in jewellery, filed its return for AY 2017-18. The AO made additions based on cash deposits and unsecured loans under Section 68 of the Act. The CIT(A)/NFAC dismissed the appeal for non-prosecution due to the assessee's non-compliance with notices.
Held
The Tribunal held that the CIT(A)/NFAC's order of dismissal for non-prosecution was in violation of Section 250(6) of the Act as it did not provide reasons for the decision. The Tribunal set aside the order and restored the appeal to the CIT(A)/NFAC for a decision on merits.
Key Issues
Whether the CIT(A)/NFAC rightly dismissed the appeal for non-prosecution without deciding on merits, and if the Tribunal should restore the appeal for fresh adjudication.
Sections Cited
68, 143(2), 142(1), 143(3), 250
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B” BENCH, PUNE
Before: SHRI R.K. PANDA & MS. ASTHA CHANDRA
Assessment Year : 2017-18 Shree Vishal Jewellers, DCIT, Circle-9, Pune Kohinoor Arcade, Nigdi, Pune-411044 Vs. PAN : ACHFS8052R अपीलार्थी / Appellant प्रत्यर्थी / Respondent Assessee by : Shri Sushant Padhye Department by : Shri Udaya Bhaskar Jakke Date of hearing : 11-11-2025 Date of 28-11-2025 Pronouncement : आदेश / ORDER
PER ASTHA CHANDRA, JM :
The appeal filed by the assessee is directed against the order dated 14.07.2025 of the Ld. Commissioner of Income Tax (Appeals), NFAC, Delhi [“CIT(A)/NFAC”] pertaining to Assessment Year (“AY”) 2017-18.
The assessee has raised the following grounds of appeal :-
1. Error in additions of Rs.6,25,94,300/- in respect of provision of Section 68 of the Act. The AO erred in appreciating the complexity of assessee's business and made addition based on conjecture rather than evidence. Addition was made merely by treating excess balance of cash as unexplained credits thereby ignoring the circumstances in which such cash was recorded.
2. Error in additions of Rs.82,96,610/- in respect of provision of Section 68 of the Act. the AO made an addition in haste without completely understanding the facts of the case. This addition belies a sense of proportion. a. Addition of Rs.46,96,610/- of unsecured loan forwarded by Mrs. Sangeeta Sonigara: The officer erred in appreciating the fact that the loan could have been given by the said person from gifts received or through other exempt income earned in the past. Merely because the person doesnt not have sufficient income in the immediately previous years does not invalidate the genuineness of the unsecured loan. b. Addition of Rs.37,00,000/- of unsecured loan forwarded by Mr. Ganesh Nadha: The said person is a third party. Unsecured loan given by the said party was invalidated as ingenuine because his financial statements could not be presented. The assessee submits that the officer made no attempt to independently acquire the said documents as such third parties would not present his own ITR and Balance sheet to the assessee.
3. Principle of natural justice. This was ignored while making additions in the order. Adhering to prejudices was preferred over careful perusal and study of facts of the case.
Leave to add amend or alter grounds of appeal. The appellant craves leave to add amend or alter any of the grounds of appeal.”
3. Briefly stated the facts are that the assessee is a partnership firm engaged in the business of gold jewellery, silver jewellery and diamonds. For AY 2017-18, the assessee filed its return of income on 31.10.2017 declaring total income at Rs.39,50,453/-. The case of the assessee was selected for scrutiny under CASS. Accordingly, statutory notice(s) u/s 143(2) and 142(1) of the Income Tax Act, 1961 (the “Act”) along with questionnaire were issued and served upon the assessee. In response thereto, the assessee filed its reply from time to time. During the assessment proceedings, the Ld. Assessing Officer (“AO”) observed that the assessee had made a cash deposit of Rs.6,25,94,300/- and had outstanding unsecured loans of Rs.45,96,610/- and Rs.37,00,000/- from Mrs. Sangeeta Sonigara and Mr. Ganesh Nadha respectively. Since, the assessee failed to adduce the satisfactory documents to substantiate its claim before the Ld. AO, the Ld. AO treated the said amounts of Rs.6,25,94,300/- and Rs.82,96,610/- as unexplained cash and unexplained credit u/s.68 of the Act respectively and added them to the total income of the assessee. Consequently, the Ld. AO completed the assessment u/s.143(3) of the Act on 29.12.2019 by computing the total income at Rs.7,48,41,363/-.
4. 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 without deciding the appeal on merits, by observing as under:
“4.1 During the course of appellate proceedings, the following notices u/s 250 were issued :
Sl. No. Date of Notice Date for compliance Remarks 1 29.12.2020 13.01.2021 No response 2 04.04.2025 15.04.2025 No response 3 15.05.2025 22.05.2025 No response 4 23.06.2025 04.07.2025 No response As can be seen from the above table, as many as four opportunities have been granted and the appellant has not furnished any written submissions or documentary evidences. On verification of the ITBA portal, it is observed that all the above-mentioned hearing notices got delivered klbchinchwad@gmail.com and copy marked subhash.jain132@gmail.com successfully. Final opportunity was granted to the appellant to email: to vide notice u/s 250 dated 23.06.2025 for compliance on 04.07.2025. Till date, the appellant has not complied. It is evident that the appellant is not interested in filing any details during the appellate proceedings and avail the opportunity under the principle of natural justice. In response to the notices issued, even adjournment was not sought. In such a situation, the only conclusion which can be drawn is that the appellant is not interested in pursuing the appeal. Therefore, the appeal is adjudicated on the basis of documents available on record. 4.2 Hence, it is evident that the appellant is not having any explanation about the cash deposit and credits in its bank account. Therefore, the appeal is adjudicated on the basis of documents available on record. It has been held by the Hon'ble Supreme Court in the case of B.N. Bhattacharjee and Another (118 ITR 461) that appeal does not mean merely filing of memo of appeal but also pursuing it effectively. In cases where the appellant does not want to pursue the appeal, appellate authorities have inherent power to dismiss the appeal for non-prosecution as held by the Hon'ble Bombay High Court in the case of M/s Chemipol vs. Union of India in Excise Appeal No. 62 of 2009. While deciding the issue, the Hon'ble High Court of Bombay has referred to the observations of Hidayatullah, Chief Justice (as His Lordship then was) in Sunderlal Mannalal Vs. Nandramdas Dwarkadas AIR 1958 MP 260 wherein it was observed: - "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..." 4.3 This appeal has been filed by the appellant with a prayer to this office that the addition made by the AO to be deleted. In such a situation, it is for the appellant to furnish submissions with relevant evidence(s), case laws, if any, to support the claim. The "burden of proof' is always on the person who makes the claim. From the conduct of the appellant as per the facts noted above, it is clear that the appellant does not wish to pursue the appeal. Further, from the records, it is observed that the appellant failed to give satisfactory explanation about the nature and source of cash deposit and credits during the assessment proceedings and has not submitted necessary evidences to satisfy the AO. Though the appellant filed appeal but remained non-compliant during the appellate proceedings also and not furnished any evidences to satisfy the appellate authority. Even otherwise on the merits of it also, I do not see any reason to differ with the findings of the AO since no attempt has been made by the appellant to discharge its onus, following the above-mentioned judicial pronouncements and in view of the facts of the case, the appeal is hereby dismissed.
Dissatisfied, the assessee is in appeal before the Tribunal and all the grounds of appeal relate thereto.
The Ld. AR submitted that the non-appearance/non-compliance before the Ld. CIT(A)/NFAC was not intentional. He submitted that at the time of appellate proceedings before the Ld. CIT(A)/NFAC, the firm had already dissolved. Further, the senior partner of the firm who was entrusted with responsibility of the tax related matters was medically unfit and other partners of the firm were not aware about the proceedings. He 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. 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, on the other hand, heavily opposed the arguments advanced by the Ld. Counsel for the assessee and submitted that despite number of opportunities granted, the assessee never bothered to make any submission before the Ld. CIT(A)/NFAC. He accordingly submitted that the order of the Ld. CIT(A)/NFAC dismissing the appeal filed by the assessee should be upheld and the grounds raised by the assessee should be dismissed.
We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and Ld. CIT(A)/NFAC. It is an admitted fact that despite number of opportunities granted, the assessee did not make any submission for which the Ld. CIT(A) / NFAC dismissed the appeal filed by the assessee. The Ld. AR has submitted that such non- compliance was not intentional but resulted on account of the reasons cited above. 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 applied the decision of the Apex Court in the case of CIT Vs. B.N. 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 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 one final 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.