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Facts
The assessee filed an appeal against the order of the CIT(A) which dismissed the appeal for non-prosecution. The Assessment Order was passed under section 144 of the Act for AY 2017-18 making an addition of Rs. 10 lakhs as unexplained cash, which emanated from deposits made during demonetization.
Held
The Tribunal held that the CIT(A) has the power to decide the appeal on merits and cannot dismiss it for non-prosecution. The appellate authority should provide an opportunity to the assessee and verify all facts to avoid double taxation.
Key Issues
Whether the CIT(A) is empowered to dismiss an appeal for non-prosecution without adjudicating on merits, and whether the assessee is facing double taxation.
Sections Cited
250, 144, 69A, 143(3), 271AAC, 142(1), 246A, 251(1)(a), 251(1)(b), 251(2)
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Income Tax Appellate Tribunal, PUNE BENCHES “SMC” :: PUNE
Before: MS.ASTHA CHANDRA & DR.DIPAK P. RIPOTE
आदेश/ ORDER
PER DR. DIPAK P. RIPOTE, AM:
This is an appeal filed by the Assessee against the order of ld.Commissioner of Income Tax(Appeal)[NFAC] passed under section 250 of the Income Tax Act, 1961 for A.Y.2017-18 on 22.01.2025 emanating from the Assessment Order u/s.144 of the Act, dated 27.12.2019. The Assessee has raised the following grounds of appeal :
“GROUNDS BEFORE ITAT CV KHANAPURE AY 2017-18 On the facts and circumstances of the case and in law the Leamed CIT Appeals erred in dismissing appeal for non prosecution without adjudicating the grounds of Appeal On the facts and circumstances of the case and in law the learned CIT A erred in not appreciating and verifying the facts of the case though the entire facts stated in the Appeal form have been reproduced in the order passed u_s 250 On the facts and circumstances of the case and in law the Learned CIT Appeals erred in dismissing appeal without appreciating the fact that the assessee has been assessed to tax with another PAN and a regular assessment has been finalised us 143.3 by ITO Wd 1 with whom the jurisdiction of the assessee lies.
On the facts and circumstances of the case and in law the Learned CIT Appeals erred in dismissing appeal without appreciating the fact that the ITO Wd 3 acted without assuming proper jurisdiction over the assessee as the assessee is already assessed to tax with ITO1 On the facts and circumstances of the case and in law the Learned CIT Appeals erred in dismissing appeal without appreciating the fact that the subject matter of aggregate cash deposits of ten lakhs has been verified by the ITO Wd 1 with reference to the sources of such deposits during assessment proceedings with PAN and accepted the submissions..
On the facts and circumstances of the case and in law the Leamed CIT Appeals erred in dismissing appeal by sustaining the additions made by the ITO ward 1 by applying to sections 69A 115bbe and initiating the penalty proceedings u_s 271AAC of the Act.
The appellant craves leave to add or alter or delete any of the grounds during appeal proceedings.”
At the outset of hearing, no one appeared for the assessee. No adjournment letter was filed.
Findings & Analysis : 3. We have heard ld.DR for the Revenue and perused the records. In this case, Assessment order was passed u/s.144 of the Act for A.Y.2017-18 making an addition of Rs.10 lakhs as unexplained cash. In the assessment order dated 27.12.2019, it is mentioned that Assessing Officer received information through ITBA Portal that assessee has deposited an amount of Rs.7,50,000/- and Rs.2,50,000/- in Bhagyalakshmi Mahila Sahakari Bank during Demonetization. It is also alleged in the assessment order that assessee had not filed Return of Income. There was no submission by the Assessee during the assessment proceedings. Aggrieved by the assessment order, assessee filed appeal before the ld.CIT(A).
3.1 The ld.CIT(A) in his order has reproduced statement of facts filed by Assessee in paragraph 2.1 of the order. The said statement of fact is reproduced here as under : “The assessee has been been assessed twice for the AY 2017.18 owing to the fact that there are two PANs in his name. However, the PAN AARP K2843C is regularly used whereas the PAN AROPK0786G is not in use. The assessee with PAN AARPK2843C has filed his Return of Income on 07.07.2017 declaring total income of Rupees 865030.00. Whereas no return has been filed by the assessee with PAN AROPK078 6G. The subject matter of this appeal is the assessment finalized with PAN AROPK0786G on 27.12.2019 determining total income at Rupees 1000000.00. As per the information received through ITBA in connection with Operation Clean Money the assessee has made two deposits of 750000.00 and 250000.00 in Bhagyalaxmi Cooperative bank during the period of demonetization. As the assessee has neither filed any Return of Income nor he has complied with the notices under section 142.1 the assessment has been completed by invoking the provisions of section 144 of the Act. The ITO treated the entire deposits of Rupees 1000000.00 as unexplained investment in the bank account as deemed income as per section 69A of the Act. The facts in relation to the return filed with PAN AARPK2843C are that the assessee has filed the return of income declaring income at Rupees 865030.00. The sources of income are bank interest and salary. The case was also selected for scrutiny under CASS in connection with the bank deposits made during the demonetization period. Regular assessment under section 143.3 has been completed on 29.11.2019 on an income of Rupees 1031040.00. The difference in income returned and income assessed is attributable to the interest income on bank deposits shown less by Rupees 166010.00. While finalizing the assessment vis a vis while verifying the sources of deposits the ITO accepting the explanation submitted by the assessee has recorded the facts in para 4 of the assessment order. The accepted facts are that assessee was suffering from Parkin son ailment. Due to illness of the assessee the bank FDs were encashed prematurely and kept in SB account. Later on, the amounts were withdrawn and kept in the bank locker. And during the demonetization period the amount kept in locker was deposited in bank. The bank and locker operations were made by taking help of his spouse Mrs Khanapure. The assessee also submitted fund flow statement showing inflow and outflow along with bank statement and pass book during e-assessment proceedings. The ITO verified the submissions and found the understatement of interest income as mention above. From the above it can be seen that the similar data has been generated against above two PANs in respect of deposits made in Bhagyalaxmi Cooperative Bank during demonetization period. The data in respect of one PAN has been verified by the ITO Ward 1as mentioned in the preceding para. Whereas the data against PAN AROPK0786G could not be verified by I TO Ward 3 of Nanded owing to non-filing of return of income and non submission of details. However, the fact remains that the assessee has submitted the records with details and and documents which substantiated the sources s of of deposits. deposits. Now Now it it is is submitted that the basis on which the case was selected for scrutiny was the cash deposits made by the assessee during demonetization period against both the PANS. Owing to the fact that the scrutiny assessment was in progress against the return filed with another PAN and the deposits having been substantiated the assessment was completed under section 143.3 on 29.11.2019. Due to this reason the compliance could not be made in the present assessment. However, the ITO was made aware of this fact of completion of assessment with another PAN. The ITO has preferred to complete the assessment ex-parte because the data generated against the PAN AROPK0786G has to be dealt with.”
Ld.CIT(A) in Paragraph 3 of his order noted that assessee failed to respond to the notices dated 07.01.2021, 23.05.2023 and 30.11.2024. Therefore, ld.CIT(A) dismissed the appeal of the assessee for non-prosecution following the decision of CIT Vs. Multiplan India Ltd., 38 ITD 320 (Del). The Hon’ble Rajasthan High Court in the case of Tribhuvan Kumar v. CIT [2007] 294 ITR 401, in which, the substantial question of law itself was to whether the decision of the Delhi Bench of the Tribunal in the case of Multiplan India (P) Ltd., (supra) could have been applied to the facts of that case was decided in favour of the assessee.
4.1 Thus, the decision relied by ld.CIT(A) is no more applicable.
Be it as it may be, Hon’ble Jurisdictional High Court in the case of Hon’ble Bombay High Court has held in the case of Pr.CIT(Central) Vs. Premkumar Arjundas Luthra (HUF) (Bombay)/[2017] 297 CTR 614 (Bombay) as under : Quote, “8.From the aforesaid provisions, it is very clear once an appeal is preferred before the CIT(A), then in disposing of the appeal, he is obliged to make such further inquiry that he thinks fit or direct the Assessing Officer to make further inquiry and report the result of the same to him as found in Section 250(4) of the Act.
Further Section 250(6) of the Act obliges the CIT(A) to dispose of an appeal in writing after stating the points for determination and then render a decision on each of the points which arise for consideration with reasons in support. Section 251(1)(a) and (b) of the Act provide that while disposing of appeal the CIT(A) would have the power to confirm, reduce, enhance or annul an assessment and/or penalty. Besides Explanation to sub-section (2) of Section 251 of the Act also makes it clear that while considering the appeal, the CIT(A) would be entitled to consider and decide any issue arising in the proceedings before him in appeal filed for its consideration, even if the issue is not raised by the appellant in its appeal before the CIT(A). Thus once an assessee files an appeal under Section 246A of the Act, it is not open to him as of right to withdraw or not press the appeal. In fact the CIT(A) is obliged to dispose of the appeal on merits. In fact with effect from 1st June, 2001 the power of the CIT(A) to set aside the order of the Assessing Officer and restore it to the Assessing Officer for passing a fresh order stands withdrawn.
Therefore, it would be noticed that the powers of the CIT(A) is coterminous with that of the Assessing Officer i.e. he can do all that Assessing Officer could do. Therefore just as it is not open to the Assessing Officer to not complete the assessment by allowing the assessee to withdraw its return of income, it is not open to the assessee in appeal to withdraw and/or the CIT(A) to dismiss the appeal on account of non-prosecution of the appeal by the assessee. This is amply clear from the Section 251(1)(a) and (b) and Explanation to Section 251(2) of the Act which requires the CIT(A) to apply his mind to all the issues which arise from the impugned order before him whether or not the same has been raised by the appellant before him. Accordingly, the law does not empower the CIT(A) to dismiss the appeal for non- prosecution as is evident from the provisions of the Act.” Unquote.
5.1 Thus, the Hon’ble Bombay High Court has categorically held that ld.CIT(A) has to decide the appeal on merit and ld.CIT(A) does not have any power to dismiss appeal for non-prosecution.
In this case, as noted from statement of facts reproduced by ld.CIT(A), that assessee had filed Return of Income for A.Y.2017- 18 under another PAN & Assessment Order was also passed for the said other PAN. These vital facts have not been verified by ld.CIT(A). Ld.CIT(A) could have verified it from Income Tax Records. Ld.CIT(A) shall verify whether same amount has been taxed twice, there should not be double taxation.
In view of the above, in the interest of justice, we set-aside the order of the ld.CIT(A) to ld.CIT(A) for denovo adjudication. Ld.CIT(A) shall provide opportunity to the assessee. Assessee shall file all the necessary documents before the ld.CIT(A). Accordingly, grounds of appeal raised by the assessee are allowed for statistical purpose.
In the result, appeal of the assessee is allowed for statistical purpose. Order pronounced in the open Court on 18 June, 2025.