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Facts
Based on seized documents from a search, the Assessing Officer concluded that the assessee had advanced cash loans of Rs. 1.5 crore and made additions of Rs. 75 lakhs (AY 2016-17) and Rs. 25 lakhs (AY 2019-20) under sections 69 and 115BBE. The assessee denied these transactions. The CIT(A) dismissed the assessee's appeals as non-maintainable due to the non-filing of the Statement of Facts with Form No. 35, thereby confirming the additions without addressing the merits.
Held
The tribunal held that the CIT(A)'s dismissal of the appeals solely for procedural irregularity (non-filing of Statement of Facts) was not sustainable in law, as the appeals were otherwise validly instituted and accompanied by grounds. The tribunal emphasized the statutory duty of the first appellate authority to adjudicate appeals on merits under section 250(6) of the Act. Consequently, the CIT(A)'s orders were set aside, and the matters were remanded for fresh adjudication on merits after providing due opportunity of hearing to the assessee.
Key Issues
Whether the CIT(A) was justified in dismissing the assessee's appeals as non-maintainable solely due to the non-filing of the Statement of Facts along with Form No. 35, without adjudicating the appeals on merits.
Sections Cited
142(1), 144B, 147, 148, 250(6), 251, 69, 69A, 115BBE
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Income Tax Appellate Tribunal, “A” BENCH, AHMEDABAD
Before: SHRI SIDDHARTHA NAUTIYAL & SHRI MAKARAND V.MAHADEOKAR
आदेश/O R D E R आदेश आदेश आदेश
PER SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER: These two appeals by the assessee are directed against the orders passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC),Delhi [hereinafter referred to as CIT(A)”] dated 13.02.2025, arising from assessments framed u/s 147 r.w.s. 144B of the Income Tax Act, 1961, for Assessment Years 2016-17 and 2019-20 respectively. Since the issues involved in both appeals are common, except variation in quantum, they are heard together and disposed of by this consolidated order for the sake of convenience.
and 485/Ahd/2025 2 2. Facts of the Case 2.1 The assessee had filed his return of income as detailed below: Assessment Year Date of Filing Returned Income (Rs.) 2016-17 13.10.2016 3,09,860/- 2019-20 31.08.2019 3,10,720/- 2.2 Subsequently, information was received from the Investigation Wing, Vadodara, in connection with search and seizure operations carried out in the case of the Darshanam Group. In the course of post- search investigations, various incriminating documents were seized, including ledger pages of M/s. Darshanam Lifespace Pvt. Ltd. (Annexure AD-57, page 22). On perusal of these documents, it was noticed that the name of the assessee appeared as one of the persons who had advanced loans to the said concern. The entries in the seized ledger were marked with the letter “C”, denoting cash transactions. Based on the seized material, the Assessing Officer concluded that the assessee had advanced cash loans aggregating to Rs.1,50,00,000/- over different years. Out of this, the Assessing Officer determined the advances relatable to the year under consideration at Rs.75,00,000/- in A.Y. 2016-17 and Rs.25,00,000/- in A.Y. 2019-20.
2.3 In response to notices issued under sections 148 and 142(1), the assessee denied having advanced any such cash to M/s. Darshanam Lifespace Pvt. Ltd. It was submitted that he had never engaged in such transactions and that the details furnished by the Investigation Wing were incorrect.
2.4 The Assessing Officer, however, did not accept the explanation of the assessee. He observed that the seized documents specifically recorded the assessee’s name, the entries were part of the ledger and 485/Ahd/2025 3 account seized from the searched party, and the advances were categorically noted as cash. He further noted that the assessee’s returned income of Rs.3,09,860/- in A.Y. 2016-17 and Rs.3,10,720/- in A.Y. 2019-20 was disproportionately low as compared to the alleged advances reflected in the seized documents. As the assessee failed to produce any evidence to rebut the seized material, the Assessing Officer treated the advances as unexplained.
2.5 Accordingly, in A.Y. 2016-17, the Assessing Officer made an addition of Rs.75,00,000/-, and in A.Y. 2019-20 an addition of Rs.25,00,000/-, by invoking the provisions of section 69 read with section 115BBE of the Act. The assessments were thus completed determining the total income at Rs. 78,09,860/- in A.Y. 2016-17 and Rs.28,10,720/- in A.Y. 2019-20.
2.6 The assessee carried the matter in appeal before the Learned CIT(A). Along with Form No. 35, the assessee did not file the Statement of Facts. NFAC issued a deficiency notice dated 04.02.2025, calling upon the assessee to cure the defect by 10.02.2025. As per record, the assessee did not cure the defect within the specified time. The Learned CIT(A), therefore, proceeded to hold that the appeal was defective and dismissed it as non-maintainable. Consequently, the additions stood confirmed.
2.7 Aggrieved by the order of CIT(A), the assessee has raised common grounds of appeal for both the years, which in substance challenge the action of the Learned CIT(A) in dismissing the appeals as non-maintainable for want of filing of the Statement of Facts along with Form No. 35, and further confirming the additions made by the Assessing Officer u/s 69A r.w.s. 115BBE of the Act. The grounds for the A.Y. 2016-17 are reproduced hereunder for the sake of clarity:
The Learned Commissioner of Income Tax (Appeals) erred in holding that since the statement of facts has not been filed with Form No.35 he proceeded to hold that the matter shall be decided in accordance with the law.
The Learned Commissioner of Income Tax (Appeals) erred in holding that since the appellant had not submitted statement of facts alongwith Form No.35 there was a deficiency in appeal and further erred in holding that the appeal was not maintainable.
The Learned Commissioner of Income Tax (Appeals) erred in holding that the appeal was not maintainable and dismissed as non-maintainable perse.
The Learned Commissioner of Income Tax (Appeals) erred in confirming the addition of Rs.75,00,000/- u/s 69A rws 115BBE of the Act.
5. The Learned Commissioner of Income Tax (Appeals) erred in not setting aside the assessment u/s 251 of the Act despite the fact that the order was passed u/s 147 rws 144B of the Act.
6. The Learned Commissioner of income Tax (Appeals) erred in disregarding the Grounds of Appeal filed by the appellant.
The appellant craves the right to add to or alter, amend, substitute, delete or modify all or any of the above grounds of appeal. (In Case of A.Y. 201920 the amount of addition us 69A r.w.s. 115BBE of the Act is Rs. 25,00,000/-)
3. During the course of hearing, the Learned Authorised Representative (AR) submitted that the Learned CIT(A) has grossly erred in law and on facts in dismissing the appeal as non- maintainable only on the ground that the Statement of Facts was not filed along with Form No. 35. and 485/Ahd/2025 5 4. On the other hand, the Learned Departmental Representative (DR) fairly accepted the legal position that the Learned CIT(A) ought to have decided the appeals on merits and not dismissed the same merely for non-filing of the Statement of Facts. The DR did not seriously object to the plea of the assessee and fairly suggested that the matters may be restored back to the file of the Learned CIT(A) with a direction to decide the appeals on merits in accordance with law, after granting due opportunity of hearing to the assessee.
We have considered the rival submissions and perused the material on record. The limited issue before us is whether the Learned CIT(A) was justified in dismissing the appeals as non-maintainable on the ground that the assessee had not filed the Statement of Facts along with Form No. 35.
5.1 At the outset, it is noted that the appeals were filed within time in the prescribed form and were accompanied by grounds of appeal. The absence of a Statement of Facts, though required to be furnished, is only a procedural irregularity and does not go to the root of the maintainability of the appeal. The statutory mandate under section 250(6) of the Act obliges the CIT(A) to dispose of an appeal in writing, stating the points for determination, the decision thereon and the reasons for the decision. Dismissal of appeal without adjudication on merits is contrary to the said mandate.
5.1 The scheme of the Act makes it clear that the first appellate authority is vested with wide powers, extending to a complete re- examination of the assessment order. Once an appeal is validly instituted, the appellate authority is under a statutory duty to adjudicate the issues raised and render a decision on merits. An appeal cannot be rejected at the threshold for mere technical or and 485/Ahd/2025 6 procedural deficiencies such as non-filing of a Statement of Facts, particularly when the grounds of appeal are already on record.
5.2 In the present case, the CIT(A) has dismissed the appeals as non-maintainable solely on the ground that the Statement of Facts was not filed along with Form No. 35. Such an approach, in our considered view, is not sustainable in law. Both the Learned AR as well as the Learned DR fairly agreed that the appropriate course in these circumstances would be to restore the matters to the file of the CIT(A) for adjudication on merits.
5.3 In view of the foregoing discussion, we hold that the action of the Learned CIT(A) in dismissing the appeals at the threshold is not sustainable. The impugned orders are accordingly set aside and both matters are restored to the file of the Learned CIT(A) with a direction to adjudicate the appeals afresh on merits, in accordance with law, after granting due opportunity of hearing to the assessee.
5.4 We clarify that no opinion is expressed on the merits of the additions made by the Assessing Officer and all issues are left open for consideration.
In the result, both appeals filed by the assessee are allowed for statistical purposes.
Order pronounced in the Court on 10th October, 2025 at Ahmedabad.