BLACK AND WHITE PAINTS,KUTTIADY vs. ITO WARD 2(2), KOZHIKODE, KOZHIKODE

Brief facts of the case are that the appellant is a partnership firm engaged in the business of dealing in paints. The return of income for AY 2017-18 was not filed under the provisions of section 139(1) of the Income Tax Act, 1961 (the Act). However, the Income Tax Officer, Ward – (2)(2), Kozhikode (hereinafter called "the AO"), based on the information that the appellant made cash Black and White Paints deposit of Rs. 10,00,000/- or more in the current account, formed an opinion that income escaped assessment to tax. Accordingly, notice u/s. 148 of the Act was issued on 28.03.2021. The appellant had not filed the return of income in response to the notice u/s. 148 of the Act. However, the appellant had filed information in compliance to the notice issued u/s. 142 of the Act. Accordingly, the AO completed the assessment u/s. 147 r.w.s. 144 of the Act at a total income of Rs. 8,61,880/-. While doing so the AO brought to tax the business income of Rs. 2,97,880/-, cash deposit in specified bank notes in Punjab National Bank of Rs. 4,56,000/- and cash deposit of Rs. 1,08,000/- as the same was not accounted in the books of account.

Being aggrieved, an appeal was filed before the CIT(A), who vide the impugned order confirmed the action of the AO for non prosecution.

Being aggrieved, the appellant is in appeal before us in the present appeal.

When the appeal was called nobody appeared on behalf of the assessee despite due service of notice of hearing. Therefore, I proceeded to dispose of the appeal after hearing the learned Sr. DR.

I find that the appellant raised three grounds of appeal before he CIT(A) challenging addition of unexplained cash deposits. The main contention of the appellant is that the deposits were made out Black and White Paints of the available cash. However, the CIT(A), without adverting to the grounds of appeal and statement of facts merely dismissed the appeal exparte without even entering into the merits of the case. 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 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.