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Facts
The assessee, an agriculturist with other sources of income, was assessed on a total income of Rs. 9,02,640/- including an addition of Rs. 7,43,000/- as a non-filer. The CIT(A) dismissed the assessee's first appeal for non-prosecution without deciding on merits.
Held
The Tribunal held that the Assessing Officer (AO) should have conducted proper inquiries and verification regarding loan transactions based on affidavits, examining identity, genuineness, and creditworthiness of donors. The CIT(A) also failed to do this. Therefore, the impugned order was set aside.
Key Issues
Whether the CIT(A) was justified in dismissing the appeal ex-parte without deciding on merits and whether the AO's addition was confirmed without proper inquiry into loan transactions.
Sections Cited
253, 250, 143(3), 147, 246A
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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
second appeal .The Assessee is aggrieved by the order bearing No:-ITBA/APL/S/250/2024-25/1073725721(1) dated 26.02.2025 passed by the Ld. CIT(A) u/s 250 of the Act, which is hereinafter referred to as the “Impugned order”. The Relevant Assessment year is 2011-12 and the Page 1 of 8 corresponding previous year period is from 01.04.2010 to 31.03.2011
Factual Matrix 2.1 That as and by way of an Assessment order made u/s 143(3)/147 of the Act, the total income of the Assessee was computed & assessed at Rs. 9,02,640/-. The assessee was a non-filer. The Income was taken at Rs. 1,59,640/- as per ITR filed and addition was made at Rs. 7,43,000/-. The assessee was found to be an agriculturist having Income from other sources too. The assessee had participated in the Assessment proceedings. That the aforesaid order bears DIN No: - 1099 & that the same is dated 21.12.2018 which is hereinafter referred to as the “Impugned Assessment Order”.
2.2 That the Assessee being aggrieved by the aforesaid “Impugned Assessment Order” prefers the first appeal u/s 246A of the Act before the Ld. CIT (A) who by the “Impugned Order” has dismissed the first appeal of the Assessee on the Page 2 of 8 grounds & reasons stated therein. The core grounds & reasons for the dismissal of the first appeal were as under:-
“6.2.9. In view of the facts and legal position discussed above, it is presumed that appellant is not interested in pursuing the appeal and not producing any documents, explanation and evidence in support of grounds of appeal raised and thus has not discharged the onus to substantiate the grounds. It is seen that no written submission filed till date despite multiple opportunities. In view of the lack of prosecution by the appellant, I proceed to decide the appeal in view of the discussion made above. 6.3. The appellant has failed to furnish any material evidences documents or even the written submission either with its appeal or during the appellate proceedings to substantiate the grounds of appeal. In view of the discussions in the preceding paras, the clear position of law and respectfully relying upon the judgments of Hon'bie High Courts as above I do not find merit in the grounds of appeal. Therefore, the appeal is dismissed on this count.
6.4. In the result, appeal of the appellant is dismissed. 2.3 The Assessee being Aggrieved by the “Impugned Order” has preferred the instant second appeal before this Tribunal and has raised the following grounds of appeal in the form No. 36 against the “Impugned Order” which are as under:-
“1.The Id CIT(A) was not justified in ex-parte dismissing the appeal of the appellant, without deciding the appeal on merits, and that a fair and meaningful opportunity was not available to the appellant to present his case. 2.The ld CIT(A) was not justified in confirming the addition of Rs. 7,43,000/- without considering the facts and circumstances of the case. 3.The appellant carves leave to add, amend OR modify any of the grounds of appeal.”
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Record of Hearing 3.1 The hearing in the matter took place before this Tribunal on 26.03.2026 when the Ld. AR for & on behalf of the Assessee appeared before us & interalia contented that the “Impugned Order” is bad in law, illegal & not Proper. It is passed in the violation of the principles of natural justice. It therefore deserves to be set aside. It was next contended that the registry has pointed out the delay of 62 days in filing the instant appeal. It was submitted that the Impugned Order is dated 26.02.2025 and the instant appeal was filed on 01.08.2025 resulting in a delay of 62 days. A condonation of delay along with an affidavit in support is placed on record of this tribunal. With regard to delay it was submitted that assessee is a farmer and is not educated. He is unaware of the provisions of law due to illiteracy. The assessee earlier counsel too did not check the portal and nor informed the assessee. When new counsel was approached in July 2025 for filing the return of Assessment Year 2025-26 the portal was accessed and it was then discovered that the Impugned Order is already passed. Thereafter assessee proceeded to file
Page 4 of 8 the instant appeal. Hence delay. Therefore delay was unintentional with no fault on the part of the assesse. An affidavit dated 18.02.2026 in support is filed. The Ld. DR has left the issue of delay to be decided by this tribunal basis its wisdom. After hearing and upon perusing condonation of delay application and affidavit we are of the considered opinion that delay is bonafidely occurred and sufficient cause is shown. Hence we condone the delay.
Appeal is admitted and taken up for hearing.
3.2 In so far as the Impugned Order is concerned it was submitted that the Impugned Order is ex-parte and assessee ought to get a chance basis merits of the cases before Ld. AO.
Three affidavits were filed and Ld. AO did not made any inquires. Prayer was made to remand the matter back to Ld.
AO. Per contra Ld. DR submitted that Dept. of Income Tax has no objection if the matter is remanded back to the file of Ld. AO as inquiries on affidavits and amount given to assessee by those persons must be made. Hearing was concluded.
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Observations Findings & conclusions 4.1 We have to decide the legality, validity and proprietary of the “impugned order” basis records of the case & the rival submission canvassed before us.
4.2 We have carefully perused the records of the case and have heard the submissions.
4.3 We basis records of the case & after hearing & upon examining the rival contentions of the Ld. AR & the Ld. DR canvassed before us, are of the considered opinion that in the “Impugned Assessment Order” Ld. AO ought to have made due inquires and verification on the three affidavit of person which was given by the assessee in support of loan transaction.
The Ld. AO ought to have examined the identity, genuineness of the transaction and credit worthiness of the donor’s in a manner known to law by following due process. A bare perusal of the affidavits so filed does not mean that due inquiry and verification is conducted by Ld. AO. The assessee during the course of the proceedings before us has made a grievance about it and we concur with the submissions of the Ld. AR in this regard. The Page 6 of 8 “Impugned Order” is ex-parte and not on merits of the case. The Ld. AR therefore is correct that there should be proper and correct computation of Income on real time basis by following due process of law i.e. by conducting the inquiry and due verification on the persons named in the affidavits that had advanced loans to the assessee herein. The Three fold Test on identity, genuineness of the transactions and credit worthiness of the donor’s are condition precedents which exercises was not done so by the Ld. AO. Before the CIT (A) the Impugned Order is ex-parte and even at first appellate stage this exercise was not done so.
Under these facts and circumstances we deem it fit to set aside the Impugned Order and remand the case back to the file of Ld.
AO on De novo basis.
4.4 In the premises drawn up by us, we set aside the “impugned order” as and by way of remand back to the file of Ld.
AO with a direction to pass a fresh order on merits of the case after conducting due verification/inquiry in light of our observations (Supra).
Page 7 of 8 5 Order 5.1 In the result the “Impugned order” is set aside as and by way of remand back to the file of the Ld. AO on De novo basis.
5.2. The appeal of the assessee is allowed for statistical purpose.
Pronounced in open court on 10.04.2026.
Sd/- Sd/- (BHAGIRATH MAL BIYANI) (PARESH M JOSHI) ACCOUNTANT MEMBER JUDICIAL MEMBER
Indore Dated : 10/04/2026 Patel/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Senior Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore
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