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Facts
The assessee preferred an appeal against the order of the National Faceless Appeal Centre (NFAC), Delhi. The NFAC order arose from an order passed by the Income Tax Officer based on assessment year 2017-18. The assessee claimed that a cash deposit cannot be considered an investment.
Held
The Tribunal noted that the assessee had failed to appear before the First Appellate Authority (FAA) to rectify objections regarding Form No. 35, leading to the dismissal of the appeal. However, the Tribunal found that no defect notice was issued by the FAA, and the appeal was dismissed for defects without adjudicating on merits.
Key Issues
Whether the appeal was rightly dismissed on defects without adjudicating on merits, especially when no defect notice was issued by the appellate authority.
Sections Cited
143(3)
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Income Tax Appellate Tribunal, “B” BENCH, DELHI
Before: SHRI ANUBHAV SHARMA & SHRI MANISH AGARWAL
Date of Hearing 21.01.2026 Date of Pronouncement 23.01.2026 O R D E R PER ANUBHAV SHARMA, JM:
This appeal is preferred by the assessee against the order dated 20.05.2025 of the National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred as Ld. First Appellate Authority or in short Ld. ‘FAA’)
P a g e | Pradeep Kumar (AY 2017-18) in DIN & Order No: ITBA/NFAC/S/250/2025-26/1076318979(1) arising out of the order dated 18.12.2019 u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) passed by the Income Tax Officer Ward- 2(2)(1), Ghaziabad, for AY: 2017-18.
At the time of hearing, Ld. Counsel has stressed on the fact that assessee has raised grounds on merits as per the law including a ground ‘the cash deposit cannot be considered to be an investment’ and therefore the addition made is not sustainable in law.
However, we find that assessee had failed to appear before the Ld. First Appellate Authority to remove the objections which were observed by the Ld. CIT(A) in Form No.35, and the appeal was dismissed on the basis of defective Form No.35,. Ld. Counsel has stated that no defect notice was issued.
We find substance in this contention as in the impugned order there is mention of the notice being issued for hearing and assessee’s response which were received on merits, however, as regard to merits there is no adjudication and the appeal has been dismissed on defects.
P a g e | Pradeep Kumar (AY 2017-18) 5. As a quasi judicial authority Ld. First Appellate Authority should have issued defect notices or otherwise given assessee an opportunity to explain the discrepancy or deficiency in Form No.35.
In the light of the aforesaid, we are inclined to allow the appeal of the assessee for statistical purposes. The issues are restored back to the files of Ld. CIT(A) to give the fresh opportunity of hearing, in the light of the aforesaid observations of this Bench and decide the appeal afresh.
Order pronounced in the open court on 23.01.2026