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Facts
For A.Y. 2017-18, the assessee filed a return declaring a loss, but the assessment was completed with additions of Rs. 59,38,446 for unaccounted money (loss in share trading) and Rs. 12,00,000 for household expenses. The CIT(A) upheld these additions and dismissed the assessee's appeal in limine without addressing its merits.
Held
The Tribunal found that the CIT(A) erroneously dismissed the appeal without considering the merits. To ensure natural justice, the Tribunal set aside the CIT(A)'s order and restored the matter to the CIT(A) for a fresh decision on merits after providing the assessee an adequate opportunity of being heard.
Key Issues
1. Whether the CIT(A) erred in summarily dismissing the appeal in limine without considering its merits. 2. Justification of additions for loss in share trading and household expenses.
Sections Cited
Section 44AD, Sections 28 to 43C
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Income Tax Appellate Tribunal, DELHI BENCH “SMC”: NEW DELHI
Before: SHRI KUL BHARAT
O R D E R
PER KUL BHARAT, JM:
This appeal, by the assessee, is directed against the order of the learned CIT(Appeals), National Faceless Appeal Centre (NFAC), Delhi, dated 10.08.2023, pertaining to the assessment year 2017-18. The assessee has raised following grounds of appeal:
“1.1. BECAUSE the learned CIT(A) has erred in law and on facts in summarily dismissing the appeal by holding that the appellant remained non compliant despite service of several notices and is not interested in prosecuting the appeal. 1.2. BECAUSE various notices as issued by the learned CIT(A) could not complied on account of the fact that the appellant's previous counsel who Income tax matters as also was in possession of login id and password of the Income Tax Portal, did not inform the appellant about issue of such notices and as such, there was no mala fide on part of the appellant, 1.3. BECAUSE the non compliance, if any, was due to the reasons beyond control of the appellant and therefore, the same ought not to have been adversely viewed by the CIT(A). 2.1. BECAUSE the learned CIT(A) has erred in law and on facts in sustaining the addition of Rs. 59,38,446.00 on account of loss suffered in trading of shares. 2.2. BECAUSE complete details with regard to the share business were maintained which were audited as well and hence the disallowance of Rs. 59,38,446.00 made by the Assessing Officer on the premise that the appellant failed to explain the source of meeting out the loss suffered in the share business is not at all tenable. 2.3. BECAUSE complete details with regard to source of Investment for meeting the loss in share Business was duly furnished during the course of assessment proceedings and the Assessing Officer disbelieved the same on the grounds which are wholly extraneous and irrelevant. 3.1 BECAUSE the learned CIT(A) has erred in law and on facts in making addition of Rs. 12,00,000.00 on account of household expenses. 3.2. BECAUSE the household expenses were incurred from the business of engineering goods, the income of which was declared under section 44AD of the Income Tax Act 1961 (hereinafter referred to as the Act) and hence there Was justification to make the addition of Rs 12,00,000.00 on this score. 3.3 BECAUSE no addition can be made for unexplained household expenses as provisions of sections 28 to 43C of the Act are not applicable once the income is declared under section 44AD of the Act 3.4 BECAUSE in any case the addition against household expenses is highly excessive 4 BECAUSE the order appealed against is contrary to the facts law and the principles of natural justice to the extent above.” income declaring loss of Rs. 29,24,642/-. The case was selected for scrutiny assessment under CASS. The assessment was completed at a total income of Rs.
42,13,804/- by adding Rs. 59,38,446/- on account of unaccounted money; and Rs.12,00,000/- under house hold expenses. Aggrieved against it the assessee preferred appeal to the learned CIT(Appeals), who also upheld the action of AO by dismissing the assessee’s appeal. Against it now the assessee is in appeal before this Tribunal.
At the outset learned counsel for the assessee submitted that learned CIT(Appeals) has dismissed assessee’s appeal in limine, ex parte to the assessee, and without going into the merits of the case. He prayed that order of learned CIT(Appeals) may be set aside and matter may be restored to his file for fresh decision after affording reasonable opportunity of being heard to the assessee.
On the other hand learned DR supported the orders of authorities below.
I have heard rival submissions and perused the material available on record.
A perusal of order passed by learned CIT(Appeals) would reveal that he has dismissed assessee’s appeal, inter alia, by observing as under:
“5.5 Based on the above it appears that the assessee is not keen on pursuing the appeal. Accordingly given that this office has not received any information or document so as to make a judgment based on merits this office is left with no option but to dismiss this appeal. Accordingly the appeal of the assessee stands dismissed” in limine, without going into the merits of the case, to sub serve the interests of natural justice I hereby set aside the order of learned CIT(Appeals) and restore the matter back to the file of learned CIT(Appeals) to decide appeal on merit after affording adequate opportunity of being heard to the assessee. Grounds are allowed for statistical purposes.
Assessee’s appeal is allowed for statistical purposes. pronounced in open court on 22nd August, 2024.