UBAIYATHULLA MARICAR SYED HAJI ALI MARICAR,NAGAPATTINAM vs. ITO, WARD-1,, NAGAPATTINAM

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ITA 3502/CHNY/2025Status: DisposedITAT Chennai12 February 2026AY 2017-18Bench: SHRI INTURI RAMA RAO (Accountant Member), SHRI S.S. VISWANETHRA RAVI (Judicial Member)1 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the CIT(A) erred by dismissing the appeal for non-prosecution without adjudicating the issues on merits. The Tribunal found this approach to be unreasonable and unjustified.

What were the facts?

The assessee, an individual, failed to file a return of income for AY 2017-18. Based on information about cash deposits, the AO initiated reassessment proceedings, treating the deposits as unexplained income and making an addition. The assessee's subsequent appeal to the CIT(A) was dismissed for non-prosecution.

What were the issues?

Whether the CIT(A) was justified in dismissing the appeal for non-prosecution without deciding the merits of the case? Whether the reassessment proceedings were validly initiated?

Which sections of the Income-tax Act were involved?

Section 139(1),Section 148,Section 148A,Section 142(1),Section 147,Section 144,Section 144B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘D’ BENCH, CHENNAI

Before: SHRI INTURI RAMA RAO & SHRI S.S. VISWANETHRA RAVI

Hearing: 20.01.2026Pronounced: 12.02.2026

आदेश/ O R D E R

PER INTURI RAMA RAO, ACCOUNTANT MEMBER:

1.

This is an appeal filed by the assessee directed against the order of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (in short ‘CIT(A)’) dated 04.09.2025 for the assessment year 2017-18.

2.

Briefly stated facts are that the appellant is an individual. No return of income under the provisions of section 139(1) of the Income Tax Act, 1961 (hereinafter the ‘Act’) was filed for the assessment year 2017-18. However, based on the information available in the Insight Portal of ITBA that appellant made cash deposits of Rs.93,45,100/-in City Union Bank, the AO formed opinion that income escaped assessment to tax. Accordingly, a notice u/s.148 of the Act was issued on 14.03.2024 after duly complying with the procedure laid down u/s.148A of the Act. In response to notice u/s.148 of the Act, the return of income was filed for the assessment year 2017-18 on 11.06.2024 declaring income of Rs.3,38,790/-. The Appellant could not comply with the notice issued u/s.142(1) of the Act, calling for information from the Appellant. In the circumstances, the AO passed the best judgment assessment vide order dated 24.01.2025 passed u/s.147 r.w.s.144 r.w.s.144B of the Act at a total income of Rs.96,83,890/-. While doing so, the AO treated the cash deposits in the bank account of Rs.93,45,100/- as unexplained money of the appellant and made addition.

3.

Being aggrieved by the above assessment order, an appeal was filed before the CIT(A), who vide impugned order dismissed

4.

At the outset, the appellant raised additional grounds of appeal challenging the very jurisdiction of AO to exercise the power of reassessment. It is further contended that the cash deposits were made out of appellant’s own funds which were previously withdrawn from the bank account.

5. On the other hand, the Ld.Senior DR opposed the above submissions, submits that the appellant had failed to respond to the hearing notices issued by the NFAC without valid reasons and therefore, the CIT(A) had disposed the appeal based on material available on record. Therefore, no interference in the impugned order is called for.

6. We heard rival submissions and perused the material on record. From perusal of the impugned order, it is clear that the NFAC while passing the ex-parte order had not adjudicated the issue raised in appeal on merits, instead the NFAC dismissed the appeal for want of prosecution of appeal. This approach of the NFAC is totally unreasonable and unjustified. The NFAC fell in :- 4 -: serious error by not adjudicating the issues in appeal on merits. The settled position of law mandates the NFAC to dispose of the appeal by adjudicating the issue raised in appeal on merits. In the present case, the NFAC had fell into serious error by not disposing of the appeal on merits. Therefore, we vacate this finding of the NFAC. In the circumstances, we remand the matter back to the file of the NFAC and direct to dispose of the appeal on merits in accordance with law after affording due opportunity of being heard to the appellant.

6.

In the result, the appeal filed by the assessee is partly-allowed for statistical purposes.

Order pronounced in the open court on 12th February, 2026 at Chennai.

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