KULATHUMKUZHIYIL MUHAMMED ASHRAF,KOTTAYAM vs. INCOME TAX OFFICER WARD 1 KOTTAYAM, KOTTAYAM

Brief facts of the case are that the appellant is an individual. No regular return of income under the provisions of section 139(1) of the Act was filed for AY 2018-19. Based on the information that the appellant received interest income from United India Insurance Company Ltd. or Rs. 29,03,429/- during the previous year relevant to assessment year under consideration, the AO formed an opinion that income escaped assessment to tax. Accordingly, a notice u/s. 148 of the Income Tax Act, 1961 (the Act) was issued on Kulathumkuzhiyil Muhammed Ashraf 31.03.2022. The appellant neither complied with the notice u/s. 148 nor u/s. 142(1) of the Act issued by the AO calling for certain information. In the circumstances, the AO was constrained to pass best judgement assessment by bringing to tax the interest income of Rs. 29,03,429/- as unexplained money of the appellant.

Being aggrieved, an appeal was filed before the CIT(A), contending that the interest income was received on account of compensation awarded to the appellant by the Motor Accident Claims Tribunal vide order dated 31.01.2017 following the death of his wife on road accident on 17.08.2022. It is submitted that the interest on compensation partake the character of compensation, which is not taxable placing reliance on the decision the Hon'ble Bombay High Court in the case of Rupesh Rashmikant Shah v. UOI [2019] 417 ITR 169. However, the CIT(A) merely dismissed the appeal exparte by taking into consideration the fact that the appellant failed to comply with the notice issued by the AO without entering into the merits of the addition made by the AO.

Being aggrieved, the appellant is in appeal before this Tribunal in the present appeal.

I heard the rival contentions and perused the material available on record. I find that the learned CIT(A) dismissed the appeal in limine for non prosecution. As contemplated u/s. 250(6) of the Act the CIT(A) is required to frame points of determination followed by a detailed discussion thereupon before passing the order. It is the settled Kulathumkuzhiyil Muhammed Ashraf position of law that the CIT(A), even while disposing of the appeal exparte, is duty bound to dispose of the appeal on merits. Reliance in this regard can be placed on the decision of the Hon'ble Bombay High Court in the case of PCIT vs. Premkumar Arjundas Luthra 279 CTR 614. Therefore, in the light of the above legal position I am of the considered view that the matter requires to be remanded to the file of the CIT(A) with the direction to dispose of the appeal de novo on merits after affording reasonable opportunity of hearing to the assessee.

In the result, the appeal filed by the assessee stands partly allowed for statistical purposes.