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Facts
The appellant, a co-operative society running an educational institution, failed to file an income tax return for AY 2015-16. The AO, based on information of significant cash deposits, initiated assessment proceedings. The AO made additions for unexplained cash and fixed deposits and applied tax under section 153BBE.
Held
The CIT(A) dismissed the assessee's appeal for non-prosecution without delving into the merits of the additions. The tribunal held that the CIT(A) is obligated to decide appeals on merits, even if ex-parte, and that the CIT(A)'s order did not follow the procedure outlined in Section 250(6) of the Act.
Key Issues
Whether the CIT(A) correctly dismissed the appeal for non-prosecution without considering the merits of the case, and whether the matter should be remanded for fresh adjudication.
Sections Cited
148, 142(1), 144, 153BBE, 250(6)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI INTURI RAMA RAO, AM & SHRI ANIKESH BANERJEE, JM
O R D E R Per: Inturi Rama Rao, AM This appeal filed by the assessee is directed against the order of the National Faceless Appeal Centre, Delhi (NFAC) dated 17.07.2025 for Assessment Year (AY) 2015-16.
Brief facts of the case are that the appellant is a co-operative society incorporated with the object of running educational institution. The appellant society had not filed the return of income for AY 2015-16. However, the AO, based on the information available with the department that the appellant society made cash Trichur Taluk Co-op. College Educational Society Ltd. deposit aggregating to Rs. 4,53,50,500/- in bank account, formed an opinion that income escaped assessment to tax. Accordingly, notice u/s. 148 of the Income Tax Act, 1961 (the Act) was issued to the appellant society on 31.03.2021. The appellant neither complied with the notice u/s. 148 nor complied with the notices issued u/s. 142(1) of the Act. In the circumstances, the AO was constrained to pass best judgement assessment u/s. 144 after making addition of cash deposit of Rs. 4,53,50,500/- as unexplained money of the appellant and also made addition of Rs. 50,34,028/- being fixed deposit made with the banking company as unexplained income of the assessee and applied the tax rate u/s. 153BBE of the Act.
Being aggrieved, an appeal was filed before the CIT(A), who vide the impugned order dismissed the appeal for non-prosecution.
Being aggrieved, the appellant is in appeal before this Tribunal in the present appeal.
At the outset, we find that the CIT(A) dismissed the appeal of the appellant for non prosecution without entering into the merits of the addition. It is contended that the cash deposits are made out of collection of fees from students. The CIT(A) without dealing with the contentions of the appellant merely 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 Trichur Taluk Co-op. College Educational Society Ltd. 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 we are 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.
Order pronounced in the open court on 29th October, 2025.