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Facts
The assessee, a lottery ticket agent, failed to file a return under Section 139(1). The AO initiated reassessment under Section 148 due to undisclosed cash deposits and commission/brokerage, completing the assessment under Section 147 read with Section 144B with additions. The CIT(A) dismissed the assessee's subsequent appeal for non-prosecution.
Held
The Tribunal found the CIT(A)'s dismissal for non-prosecution arbitrary and in violation of natural justice, emphasizing that the CIT(A) is obligated under Section 250(6) to dispose of appeals on merits. The matter was remanded to the CIT(A) for a de novo disposal on merits, with directions to provide the assessee a reasonable opportunity of hearing.
Key Issues
Whether the CIT(A) was justified in dismissing the appeal for non-prosecution without considering its merits, and whether this approach violated principles of natural justice and the requirements of Section 250(6) of the Act.
Sections Cited
139(1), 148, 147, 144B, 250(6)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI GEORGE GEORGE K., VP & SHRI INTURI RAMA RAO, AM
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 21.01.2025 for Assessment Year (AY) 2017-18.
Brief facts of the case are that the appellant is an individual engaged in the business of selling lottery tickets of Kerala State Government. The appellant is a registered wholesale agent of lottery tickets. No regular return of income under the provisions of section 139(1) of the Income Tax Act, 1961 (the Act) was filed by the Bindhumol Chandran Pillai appellant. However, the Income Tax Officer, Ward 1, Alappuzha (hereinafter called "the AO") formed an opinion that income escaped assessment to tax based on the information that the appellant made huge cash deposit to the tune of Rs. 4,00,500/- and was in receipt of commission/brokerage of Rs. 41,03,180/-. Accordingly, a notice u/s. 148 of the Act was issued on 24.03.2021. In response to notice u/s. 148, the appellant filed the return of income on 29.09.2021 disclosing income of Rs. 14,20,435/-. Against the said return of income, the assessment was completed by the AO vide order dated 22.03.2022 passed u/s. 147 r.w.s. 144B of the Act at a total income of Rs. 68,58,794/-. While doing so, the AO estimated the income from business at 8% of the gross receipt shown in the Profit & Loss A/c. at Rs. 8,07,34,112/-, as a result addition of Rs. 50,38,249/- was made by the AO. The AO also made addition of Rs. 4,00,500/- on account of cash deposit in bank account as unexplained money of the appellant.
Being aggrieved, an appeal was filed before the CIT(A), contending that estimation of book profit at 8% is arbitrary and excessive as the turnover of Rs. 8,07,34,112/- includes brokerage of Rs. 41,03,180/-. The CIT(A) had dismissed the appeal for non- prosecution.
Being aggrieved, the appellant is in appeal before us in the present appeal.
Bindhumol Chandran Pillai 5. The learned counsel for the assessee submitted that the CIT(A) ought not have upheld the addition of 8% of the turnover without rejecting the books of account and he ought not have dismissed the appeal.
On the other hand, the ld. Sr. DR submits that the order passed by the CIT(A) is a reasoned one and requires no interference by the Tribunal.
We have heard rival contentions and perused the material available on record. We find that the CIT(A), without dealing with the grounds of appeal raised before him, merely after extracting the assessment order confirmed the action of the AO for non prosecution. The approach adopted by the CIT(A) is arbitrary and in violation of principles of natural justice. 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 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.
Order pronounced in the open court on 16th May, 2025.