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Facts
The assessee, a Co-operative Society, filed its return declaring 'Nil' income. The AO made an addition of Rs. 1,95,65,389/- on account of unexplained credit under Section 68. The AO reopened the case under Section 148 and completed reassessment, adding the same amount.
Held
The Tribunal noted that the CIT(A) dismissed the appeal for non-prosecution without deciding on merits, violating Section 250(6) of the Act. 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 adjudicating on merits, and if the matter should be restored for fresh adjudication.
Sections Cited
68, 148, 144, 133, 147, 144B, 115BBE, 250
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “A” BENCH, PUNE
Before: SHRI R.K. PANDA & MS. ASTHA CHANDRA
The appeal filed by the assessee is directed against the order dated 19.12.2024 of the Ld. Commissioner of Income Tax (Appeals)/NFAC, Delhi [“CIT(A)”] pertaining to Assessment Year (“AY”) 2015-16.
Briefly stated, the facts of the case are that the assessee is Co- operative Society engaged in the business of manufacturing and sale of sugar. For AY 2015-16, the assessee filed its original return declaring total income of Rs. Nil on 29.09.2015. While assessing its income, the Assessment Unit, Income Tax Department (“AO”) made the disallowance/addition of Rs.1,95,65,389/- on account of unexplained credit u/s 68 of the Income Tax Act, 1961 (the “Act”) in its bank account with Union Bank of India received by the assessee from the society, named Dyaneshwari Multi Urban Co-operative Society. Subsequently, the case of the assessee was reopened by initiating reassessment proceedings under section 148 of the Act vide notice dated 19.07.2022. Accordingly, statutory notice(s) were issued and served upon the assessee. The assessee requested to treat its original ITR filed on 29.09.2015 as ITR filed in response to the notice issued under section 148 of the Act. The assessee furnished partial reply to the show cause letter issued under section 144 of the Act. Thereafter, for lack of compliance in response the final show cause notice and after obtaining information u/s 133(6) of the Act from Union Bank of India that during the relevant AY, the assessee received an aggregate amount of Rs.1,95,65,389/- from Dyaneshwari Multi Urban Co- operative Society reflected as credit entries in its said bank account, the details of which are reproduced in para 4.3 of the reassessment order, the Ld. AO completed the reassessment on 16.05.2023 u/s 147 r.w.s. 144B of the Act by making an addition of Rs.1,95,65,389/- observing that as the source and nature of the said credits in the bank account of the assessee remained unexplained, the same are treated as assessee’s income from undisclosed sources/unexplained credit under section 68 and is taxed as per the provisions of section 115BBE of the Act.
Aggrieved, the assessee preferred an appeal before the Ld. CIT(A)/NFAC. Before the Ld. CIT(A)/NFAC there was non-compliance of notice(s) of hearing.. The Ld. CIT(A)/NFAC confirmed the impugned addition made by the Ld. AO and dismissed the appeal of the assessee for non-prosecution observing that the assessee has failed to explain the nature of credits appearing in its bank account during the assessment as well as appellate proceedings before him.
Dissatisfied, the assessee is in appeal before the Tribunal raising the following grounds of appeal :
1. On the facts and in the circumstances of the case and in the law of the learned NFAC Commissioner of Income Tax (Appeals) Delhi, has erred in disallowing and added back an amount of Rs.1,95,65,389/- on account of Addition made on account of unexplained credit u/s 68 by the assessee.”
2. The appellant craves for the leave, add, alter, amend, modify and delete any or all the above grounds of appeals before or at the time of the hearing.”
The Ld. AR submitted that the assessee’s non-compliance to the notice(s) issued by the Ld. AO/CIT(A) was not intentional. 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 before the Ld. CIT(A) by filing the requisite submissions/ documentary evidences before in support of its claim. He, therefore, prayed that the matter may be restored to the file of the Ld. CIT(A) to decide the impugned issue afresh on merits, after affording an opportunity of being heard to the assessee.
The Ld. DR supported the order of the Ld. CIT(A) and submitted that the assessee was given adequate opportunities by the Ld. CIT(A) as well as Ld. AO. He, however, had no objection to the above request of the Ld. AR if the matter is set aside for denovo consideration of the Ld. CIT(A) on merit.
We have heard the Ld. Representatives of the parties and perused the material on records. The appellate order reveals that the Ld. CIT(A) has applied the decision of the Apex Court in the case of CIT Vs. B.N. Bhattarcharjee and Another, 118 ITR 461 (SC) and various other cases cited therein and dismissed the appeal of the assessee for non-prosecution. No doubt, the Ld. CIT(A) may decide the appeal ex-parte where the assessee does not prosecute his appeal inspite 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) has passed the order in concurrence of the order of the 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.
On the facts and in the circumstances of the case, we deem it fit, in the interest of justice and fair play, to set aside the order of the Ld. CIT(A)/NFAC, Delhi and restore the matter back to his file for adjudication afresh and pass speaking order on merits as per facts and law, after allowing one final opportunity of being heard to the assessee. Needless to say, the assessee shall provide the requisite support in terms of submitting the relevant documents/evidence as may be required/called upon on the appointed date without seeking adjournment under any pretext unless for sufficient cause, failing which the Ld. CIT(A) shall be at liberty to pass appropriate order as per law. We direct and order accordingly. The ground of appeal raised by the assessee is 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 30th June, 2025.