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Facts
The assessee, an individual, failed to file a regular return for AY 2018-19. After receiving a notice under Section 148, the assessee filed a return. The AO completed the assessment under Section 147 read with Section 144B, making a substantial addition under Section 40A(3) for cash withdrawals. The CIT(A) subsequently dismissed the assessee's appeal for non-prosecution.
Held
The ITAT held that the CIT(A) is obligated under Section 250(6) to decide appeals on merits, even if heard ex parte, and cannot dismiss them solely for non-prosecution. Citing a High Court decision, the ITAT remanded the case to the CIT(A) for a fresh disposal on merits after providing the assessee a reasonable opportunity of hearing.
Key Issues
Whether the CIT(A) can dismiss an appeal for non-prosecution without deciding it on merits as per Section 250(6) of the Income Tax Act, and if such an appeal should be remanded for fresh adjudication.
Sections Cited
148, 147, 144B, 40A(3), 250(6)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI INTURI RAMA RAO, AM & SHRI PRAKASH CHAND YADAV, 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 [CIT(A)], dated 24.06.2024 for Assessment Year (AY) 2018-19.
Brief facts of the case are that the appellant is an individual. No regular return of income for AY 2018-19 was filed by the appellant. The AO issued a notice u/s. 148 of the Income Tax Act, 1961 (the Act) on 30.03.2022. In response to the notice u/s. 148, the appellant filed the return of income on 29.04.2022 declaring total Parayanikkal Vargeese Antony income of Rs. 2,25,880/-. Against the said return of income, the assessment was completed by the Income Tax Officer, Ward-3, Kannur (hereinafter called "the AO") vide order dated 24.03.2023 passed u/s. 147 r.w.s. 144B of the Act at a total income of Rs. 2,58,02,910/-. While doing so, the AO made addition of Rs. 2,55,77,030/- being the cash withdrawn from the South Indian Bank by drawing inference that the appellant had incurred cash expenditure in excess of the limit prescribed u/s. 40A(3) of the Act.
Being aggrieved, an appeal was filed before the CIT(A), who dismissed the appeal for non prosecution.
Being aggrieved, the appellant is in appeal before us in the present appeal.
When the appeal was called on, nobody appeared on behalf of the assessee despite due service of notice of hearing. Therefore, we proceeded to dispose of the appeal after hearing the learned Sr. DR.
We 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 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 Parayanikkal Vargeese Antony 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, appeal filed by the assessee stands partly allowed.
Order pronounced in the open court on 22nd May, 2025.