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Facts
The assessee filed appeals against orders dismissing their appeals for non-prosecution. The original assessment involved cash deposits made in a cooperative society, which the AO treated as unexplained income. The CIT(A) upheld the addition but dismissed the appeal for non-prosecution.
Held
The Tribunal held that the CIT(A)'s order was in violation of Section 250(6) of the Act as it did not decide the appeal on merits. The Tribunal set aside the CIT(A)'s order and restored the matter for fresh adjudication.
Key Issues
Whether the CIT(A) erred in dismissing the appeal for non-prosecution without deciding on merits, and whether the reassessment proceedings were validly initiated.
Sections Cited
148, 147, 153C, 69A, 142(1), 144, 144B, 250(6)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “A” BENCH, PUNE
Before: SHRI R.K. PANDA & MS. ASTHA CHANDRA
आदेश / ORDER PER ASTHA CHANDRA, JM : Two appeals filed by the assessee are directed against the separate orders both dated 17.01.2025 of the Ld. Commissioner of Income Tax (Appeals), NFAC, Delhi [“CIT(A)/NFAC”] pertaining to Assessment Years (“AYs”) 2014-15 and 2015-16. Since the issue(s) involved are identical, these were heard together and are being disposed of by this common order.
AY 2014-15 2. The assessee has raised the following grounds of appeal:-
1. “On facts and circumstances of the case and in law:- 1. Invalidity of Notice Issued Under Section 148 (a) The Learned Assessing Officer (AO) erred in issuing the notice under Section 148 of the Income Tax Act, 1961, in contravention of the Faceless Assessment Scheme as notified by the Central Board of Direct Taxes (CBDT), rendering the notice bad in law.
(b) The Learned AO erroneously issued the notice under Section 148 instead of Section 153C, which was the appropriate provision under the given circumstances.
Invalid Reassessment Proceedings (a) The Learned Commissioner of Income Tax (Appeals) [CTT(A)] erred in upholding the reassessment proceedings initiated under Section 147, despite the fact that the proceedings are legally unsustainable and void ab initio due to the absence of a valid "reason to believe" that income had escaped assessment. (b) The reassessment proceedings were initiated without conducting a proper inquiry and without the application of mind, based solely on information received from the Investigation Department, making them legally untenable.
3. Inconsistency with Prior Assessment Order The Learned AO and CIT(A) failed to consider the findings of the assessment order dated 20.11.2019 for Assessment Year (AY) 2012-13, wherein the issue of cash deposits in the bank account was already examined and held to be for business purposes. The non-adherence to the principles of consistency renders the reassessment unsustainable.
4. Non-Disclosure of Reasons for Reassessment The Learned AO failed to provide the appellant with the reasons recorded for issuing the notice under Section 148 during the assessment proceedings. This omission deprived the appellant of the opportunity to challenge the proceedings at an appropriate stage, thereby violating the principles of natural justice.
5. Erroneous Addition Under Section 69A The Learned CIT(A) erred in confirming the addition of Rs.1,87,42,250/- under Section 69A of the Income Tax Act, 1961, by treating cash deposits in Renuka Mata Multi-State Cooperative Credit Society Ltd. as unexplained income, without properly evaluating the nature and source of these deposits.
Failure to Consider the Source of Deposits The Learned AO and CIT(A) failed to appreciate that the cash deposits were part of regular business transactions, including withdrawals and redeposits. The authorities overlooked the evidence submitted, leading to an incorrect conclusion.
7. Violation of Principles of Natural Justice The Learned CIT(A) proceeded with the appeal ex parte, without granting the appellant a fair opportunity to furnish supporting documents, despite requests for adjournments. This constitutes a violation of the principles of natural justice 8. Incorrect Treatment of Entire Cash Deposits as Unexplained Income The Learned CIT(A) erred in treating the entire amount of cash deposits as unexplained income without verifying the nature and source of the transactions. This led to an excessive and unjust addition to the appellant’s taxable income.”
Briefly stated, for the AY 2014-15 the assessee filed his return of income on 20.11.2015 declaring total income of Rs.2,13,050/-. As per the information available with the department, the assessee had made cash deposits of Rs.1,87,42,250/- in his accounts maintained with Renuka Mata Multistate Urban Co-operative Credit Society Ltd. for the relevant AY 2014-15 under consideration. Accordingly, case of the assessee was reopened by issuance of a notice u/s 148 of the Income Tax Act, 1961 (the “Act”) on 30.03.2021. The assessee failed to file return in response to the said notice and subsequent notices issued under section 142(1) of the Act also remained uncomplied with. Due to lack of any acceptable and cogent explanation offered by the assessee regarding the source of the said cash deposits, the Ld. Assessing Officer (“AO”) proceeded to complete the best judgment assessment at the assessed income of Rs. 1,89,55,300/- by making an addition of Rs.1,87,42,250/- as unexplained money u/s 69A of the Act, to the income originally returned by the assessee of Rs. 2,13,050/- under section 144 r.w.s. 147 r.w.s. 144B of the Act vide order dated 23.03.2022.
Aggrieved, the assessee filed an appeal before the Ld. CIT(A)/NFAC who dismissed the appeal of the assessee for non-prosecution of the case before him without going into the merits of the case placing reliance on the decision of the Hon’ble Supreme Court in the case of B.N. Bhattacharjee and Another reported in 118 ITR 461 (SC) and in the case of M/s. Chemipol Vs. Union of India in Excise Appeal No. 62 of 2009 by observing as under : “6. It is seen that the appellant has not furnished the requisite explanation during assessment proceedings, he has not filed any submission or supporting documents, whatsoever, during appellate proceedings and his grounds of appeal also merely narrates the general facts and grounds with no supporting documents were filed. 6.1 As noted from the facts of the case and material available on record, the appellant failed to append any submission or supporting documents, either during assessment proceedings or during appellate proceedings in favour of his grounds of appeal. The Assessing Officer has made the additions after considering the facts of the case, response of the appellant and after marshalling the facts in details, available on record. There is no material before me to deviate from the order of the Assessing Officer. Therefore, it is held that the order of the Assessing Officer is based on proper examination and consideration of facts. Accordingly, Grounds appeal of the appellant are dismissed.”
Dissatisfied, the assessee is in appeal before the Tribunal and all the grounds of appeal relate thereto.
6. The Ld. Counsel for the assessee submitted that non-compliance before the Ld. CIT(A)/NFAC was not intentional but occurred due to certain unavoidable circumstances beyond the control of the assessee. The Ld. CIT(A) issued three notices and the assessee has sought adjournment but the same had not been considered by the Ld. CIT(A). He submitted that the assessee has a strong case on merits and given an opportunity the assessee is in a position to substantiate his 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) to decide all the issues raised by the assessee before him afresh 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 and also remained incompliant before the Ld. AO. 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 Ld. Representatives of the parties and perused the material available on record. The impugned order has been passed by the Ld. CIT(A)/NFCA ex-parte qua assessee. Admittedly, there was non-compliance of notice(s) of hearing before the Ld. CIT(A)/NFAC and Ld. AO as well. The Ld. CIT(A)/NFAC has dismissed the appeal of the assessee for non-prosecution and endorsing the findings of the Ld. AO. It is the submission of the Ld. Counsel for the assessee that given an opportunity, the assessee is in a position to substantiate its case by filing the requisite details/documents before the Ld. CIT(A)/ NFAC and therefore he has requested for remand of the matter to the file of the Ld. CIT(A)/NFAC for fresh adjudication on merits of the case. The appellate order reveals that the Ld. CIT(A)/NFAC has applied the decision in the case of CIT Vs. B.N. Bhattarcharjee and Another (supra) and other cases cited therein and dismissed the appeal of the assessee for want of prosecution.
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. We observe that the Ld. CIT(A)/NFAC has passed the order in concurrence of the order of Ld. AO without himself going into the merits of the case. Thus, in our view, his order is in violation of the provisions of section 250(6) of the Act.
Considering the totality of facts and in the circumstances of the case enumerated above, without going into the merits of the appeal, we deem it proper, in the interest of justice, to set aside the order of the Ld. CIT(A)/NFAC and restore the matter back to his file for adjudication afresh and pass speaking order on merits as per fact and law after allowing one final opportunity of being heard to the assessee. The assessee is also hereby directed to provide the requisite support in terms of submitting the relevant documents/ evidence as may be required/called upon on the appointed date and make his submissions without seeking any adjournment under any pretext, failing which the Ld. CIT(A)/NFAC shall be at liberty to pass appropriate order as per law. We direct and order accordingly.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
ITA No. 789/PUN/2025, AY 2015-16 11. Both the parties are unanimous in stating that the facts and the grounds of appeal in for AY 2015-16 is identical to the facts and grounds raised in AY 2014-15 except for the variance in amount. The Ld. CIT(A)/NFAC has passed ex-parte order for both the AYs involved for the same reasons reproduced in the preceding paragraph. Therefore our decision above in would mutatis mutandis apply to the appeal in as well. Accordingly, the grounds of appeal raised by the assessee in ITA No. 789/PUN/2025 are allowed for statistical purposes in the same terms.
To sum up, both the appeals of the assessee in & 789/PUN/2025 for AYs 2014-15 & 2015-16 are allowed for statistical purposes.
Order pronounced in the open court on 26th August, 2025.