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Income Tax Appellate Tribunal, DELHI BENCH “SMC”, DELHI
ORDER
PER VIKAS AWASTHY, JM:
This appeal by the assessee is directed against the order of Additional/Joint Commissioner of Income Tax (Appeals)-2, Vododara [in short ‘the CIT(A)’] dated 04.07.2024, for Assessment Year 2017-18.
Shri Saurabh Sharma, appearing on behalf of the assessee submits that the assessee filed her return of income for the assessment year under consideration declaring total income of Rs. 8,03,000/- comprising of income from house property and interest income. The case was selected for limited scrutiny under CASS to examine large cash deposits during demonetization period vis-à-vis the returned income. Statutory notices u/s. 143(2) and 142(1) of the Income Tax (AY 2017-18) Act,1961(hereinafter referred to as ‘the Act’) were issued to the assessee through electronic mode i.e. ITBA Portal. The Assessing Officer (AO) observed that the assessee had deposited cash aggregating to Rs.29,26,000/- in her bank accounts during the demonetization period from 09.11.2016 to 30.12.2016, as under:
Axis Bank A/c No. 914020052655513 : Rs. 24,37,500/- Axis Bank A/c No. 909010044999673 : Rs. 2,38,500/- HDFC Bank A/c No. 12021000036371 : Rs. 2,50,000/- Total: Rs. 29,26,000/- 2.1. In response to the show cause notice, the assessee explained that the cash deposit of Rs. 24,37,500/- represented her past savings accumulated out of her late husband’s salary over a period of several years and that the remaining cash deposits represented gifts received from her mother-in-law and father-in-law. However, the AO was not satisfied with the explanation furnished by the assessee and treated the entire cash deposit of Rs. 29,26,000/- as unexplained money under section 69A of the Act. Aggrieved, the assessee filed an appeal before the CIT(A). The CIT(A), without adjudicating the issues on merits, dismissed the appeal for want of prosecution.
2.2. The ld. Counsel for the assessee submitted that the CIT(A) erred in dismissing the appeal for non-prosecution. He submitted that under section 250 of the Act, the CIT(A) was duty-bound to decide the appeal on merits by passing a reasoned order and cannot dismiss appeal in limine for want of prosecution.
Shri Manoj Kumar, representing the department vehemently supporting the orders of the lower authorities submitted that the assessee did no furnish any documentary evidences beforethe AO and failed to respond to any of the notices.
(AY 2017-18) 5. Both sides heard. I have considered the rival submissions and perused the material available on record. It is an admitted position that the CIT(A) has dismissed the appeal solely for want of prosecution and has not adjudicated the grounds of appeal on merits. The impugned order clearly records that merits of the case have not been examined. It is a well settled law that the CIT(A) has no power to dismiss appeal for non-prosecution. The First Appellate Authority is statutorily required to adjudicate the appeal on merits by passing a speaking order dealing with each ground of appeal raised by the assessee. This obligation on CIT(A) to dispose of appeal on merits flow from the provisions of section 250(6) of the Act. In view of the above legal position, the impugned order passed by the CIT(A) is unsustainable. Accordingly, the same is set aside and the matter is restored to the file of the CIT(A) with a direction to decide the appeal afresh on merits, in accordance with law, after providing reasonable opportunity of hearing to the assessee.
6. The assessee shall respond to the notices served by the CIT(A), without fail.
In the result, impugned order is set aside and appeal of the assessee is allowed for statistical purpose.
Order pronounced in the open court on Monday the 15th day of December, 2025.