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Facts
The Assessing Officer initiated reassessment proceedings for AY 2015-16, adding Rs. 1,60,34,000/- as unexplained investment and cash credits related to the assessee's bank deposits and their purported source from unsecured loans. The assessee appealed the additions to the CIT(A). However, the CIT(A) dismissed the assessee's appeal due to non-prosecution and summarily confirmed the AO's additions without recording independent findings or addressing the specific grounds of appeal.
Held
The Tribunal admitted additional grounds regarding procedural validity and faceless assessment non-compliance. It held that the CIT(A) erred by not passing a speaking and reasoned order, merely confirming the AO's decision without addressing specific grounds. Citing judicial precedents, the Tribunal emphasized the CIT(A)'s obligation to decide appeals on merits, even in cases of non-prosecution, and remanded the case for fresh adjudication with a direction to afford the assessee a proper opportunity of being heard.
Key Issues
Whether the CIT(A) can dismiss an appeal for non-prosecution and confirm the AO's order without independent reasoning or addressing specific grounds of appeal; and the procedural validity of assessment proceedings, including compliance with faceless assessment rules and additions made under Sections 69 and unexplained cash credits.
Sections Cited
Section 147, Section 144, Section 144B, Section 148A(b), Section 148A(d), Section 148, Section 69, Section 250, Section 251, Section 246A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, VISAKHAPATNAM “DIVISION” BENCH, VISAKHAPATNAM
Before: SHRI RAVISH SOOD, HON’BLE & SHRI OMKARESHWAR CHIDARA, HON’BLE
आदेश /O R D E R
PER RAVISH SOOD, JM:
The present appeal filed by the assessee company is directed against the order passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal
I.T.A.No.755/VIZ/2025 River Bay City Capital Private Limited Centre, Delhi, dated 19.09.2025, which in turn arises from the order passed by the Assessing Officer (for short “A.O”) under section 147 r.w.s. 144 r.w.s 144B of the Income-Tax Act, 1961 (for short, “the Act”), dated 25.03.2025 for the Assessment Year 2015-16. The assessee company has assailed the impugned order on the following grounds of appeal before us:
“1. The order passed by Learned Commissioner of Income tax (Appeals), NAC, Delhi is against law, weight of evidence and probabilities of the case.
2. The Assessment order dated 25-03-2025 passed for the Asst.Year 2019-20 in the case of the appellant is bad in law for the reason that the notice u/s 148A(b) dated 10-02-2023 and order u/s.148A(d) and the notice u/s.148 dated 10-04-2023, issued by the jurisdictional Assessing Officer, Circle-1, Rajamahendravaram, and the consequent assessment made are not valid as per various judicial decisions. 3 Learned C.I.T(Appeals), NFAC, Delhi ought to have quashed the impugned assessment since assessment proceedings were initiated and the consequent assessment was made without complying with the faceless procedure, which is mandatory.
4. Without prejudice to ground Nos 2 and 3 above, learned C.I.T (A), NFAC, Delhi erred in confirming the addition of Rs.1,60,40,000.- made in the assessment and dismissing the appeal though the appellant furnished details and evidence in support of the sum of Rs. 1,60,34,000/- in response to the show cause notice issued by the Assessing Officer.
5. For the above grounds and such other grounds that may be urged at the time of hearing, the appellant prays that the appeal be allowed.
6. The appellant craves leave to add to, amend or modify the above grounds of appeal either before or at the time of hearing of the appeal, if it is considered necessary.”
Also, the assessee company has moved an application seeking admission of certain additional grounds of appeal before us, which reads as under: -
Page. No 2 I.T.A.No.755/VIZ/2025 River Bay City Capital Private Limited “1. The order passed by Learned Commissioner of Income tax (Appeals), NFAC, Delhi is against law, weight of evidence and probabilities of the case.
The Assessment order dated 25-03-2025 passed for the Asst.Year 2019-20 in the case of the appellant is bad in law for the reason that the notice u/s 148A(b) dated 10-02-2023 and order u/s.148A(d) and the notice u/s.148 dated 10-04-2023, issued by the jurisdictional Assessing Officer, Circle-1, Rajamahendravaram, and the consequent assessment made are not valid as per various judicial decisions.
3. Learned C.I.T(Appeals), NFAC, Delhi ought to have quashed the impugned assessment since assessment proceedings were initiated and the consequent assessment was made without complying with the faceless procedure, which is mandatory.”
As the assessee company by raising the aforesaid additional grounds of appeal, has sought our indulgence for adjudicating certain issues which would not require looking any further beyond the facts available on record, therefore, we have no hesitation in admitting the same. Our aforesaid view is supported by the judgment of the Hon’ble Supreme Court in the case of National Thermal Power Company Limited v. CIT (1998) 229 ITR 383 (SC).
2. Succinctly stated, the A.O., based on the information flagged in the Insight portal, observed that though the assessee-company during the subject year had executed Time deposits of Rs. 2,80,00,000/-, and was further in receipt of interest income of Rs. 77,039/-, but had not filed its return of income for the said year. Accordingly, the AO issued notice under section 148A(b) of the Act, dated 13.02.2023, wherein the assessee- company was called upon to explain as to why a notice under section 148 of the Act may not be issued. However, as the assessee-company failed to respond to the aforesaid notice, therefore, the AO passed an order under section 148A(d) of the Act, dated
Page. No 3
I.T.A.No.755/VIZ/2025 River Bay City Capital Private Limited 10.04.2023, with the prior approval of the PCIT-1, Visakhapatnam. Notice under section 148 of the Act, dated 10.04.2023, was thereafter issued to the assessee.
During the course of the assessment proceedings, the AO observed that the assessee-company had in the subject year made bank deposits of Rs. 1,40,00,000/- vide BG No. 1631419BG0000062 issued by State Bank of India for the period 02.03.2019 to 01.09.2020 for the purpose of providing a bank guarantee to Andhra Pradesh Capital Region Development Authority (APCRDA). On being queried, it was claimed by the assessee-company that the subject investments were sourced from the unsecured loans of Rs. 1,60,34,000/- that it had received on 31.03.2020 from its directors and related party companies viz., (i). Shri B. Sarath Gopal (Received on 03.2019): Rs. 46,00,000/- ; (ii). M/s. Skill Promoters Private Limited: Rs. 50,000/- (Share capital) and Rs. 39,50,000/- (Unsecured Loan); and (iii). M/s. KEI Rajhamahendri Resorts: Rs. 50,000/- (Share Capital) and Rs. 74,84,000/- (Unsecured Loan).
Apropos the interest income on the aforementioned fixed deposits, it was stated by the assessee-company that a sum amounting to Rs. 77,039/- pertaining to the year under consideration was not credited to its bank account but had accrued on the aforementioned deposits.
As is discernible from the record, the AO did not find favor with the explanation advanced by the assessee company and made an addition of Rs. 1,60,34,000/- to its returned income viz., (i). addition of the investment made by the assessee-company in time deposits by treating it as an unexplained investment under section 69 of the Act:
Page. No 4
I.T.A.No.755/VIZ/2025 River Bay City Capital Private Limited Rs. 1,40,00,000/-; and (ii). addition of unexplained cash credits: Rs. 20,34,000/-. Accordingly, the AO vide his order passed under section 147 r.w.s. 144 r.w.s 144B of the Act, dated 25.03.2025, determined the income of the assessee-company at Rs.1,60,34,000/-.
Aggrieved, the assessee company assailed the impugned assessment order before the CIT(A). As the assessee company had failed to prosecute the appeal in the course of the proceedings before the first appellate authority, therefore, the latter, on the said count itself, dismissed the appeal and concurred with the additions made by the A.O.
The assessee company, being aggrieved with the order of the CIT(A), has carried the matter in appeal before us.
We have heard the Learned Authorized Representatives of both parties, perused the orders of the authorities below, and considered the material available on record.
Shri V. Siva Kumar, Advocate, Learned Authorized Representative (for short, “Ld. AR”) for the assessee-company, at the threshold of hearing of the appeal, submitted that as per instructions, he seeks not to press the additional grounds of appeal. Accordingly, the additional grounds of appeal raised by the assessee company are dismissed as not pressed.
The Ld. AR further submitted that the CIT(A) had grossly erred in law and the facts of the case in dismissing the appeal based on a non-speaking order. The Ld. AR, to buttress his contention, had drawn our attention to the order passed by the CIT(A).
Page. No 5
I.T.A.No.755/VIZ/2025 River Bay City Capital Private Limited The Ld. AR submitted that as the CIT(A) had, without arriving at any independent findings, summarily concurred with the view taken by the AO, therefore, the order so passed by him cannot be sustained and is liable to be set aside.
Per contra, Shri. K. Prasad, Learned Senior Department Representative (for short “Ld. DR”), relied upon the orders of the authorities below.
We have heard the Learned Authorized Representatives of both parties, perused the orders of the authorities below, and the material available on record, and given thoughtful consideration to the contentions advanced by the Learned Authorized Representatives of both parties.
Admittedly, it is a matter of fact discernible from the record that the assessee- company, despite having been put to notice about the fixing of the hearing of the appeal on five occasions, had failed to respond and participate in the same. Although we are principally in agreement with the CIT(A) that in a case the assessee/appellant fails to participate in the appellate proceedings, then the proceeding cannot be stalled and have to be proceeded with, but at the same time are unable to concur with the manner in which the present appeal had been disposed of by him. We say so, for the reason that a bare glance over the order of the CIT(A) reveals that he had primarily dismissed the appeal filed by the assessee for the reason that, despite having been afforded several opportunities, it had failed to participate in the proceedings and prosecute the matter before him. Although the CIT(A) had concurred with the view taken by the AO but we find that he had not arrived at any independent finding, much less any reasoning for Page. No 6
I.T.A.No.755/VIZ/2025 River Bay City Capital Private Limited endorsing the said view. In fact, we find that the CIT(A) had summarily approved the order of the A.O by stating that he has passed a reasoned and speaking order and had nowhere dealt with the specific “grounds of appeal” based on which the assessee/appellant had assailed the impugned addition of Rs.1,60,40,000/- made by the A.O based on the multi-facet grounds that were raised before him viz., (i). that the A.O had erred in not considering the material filed by the assessee company, which revealed that the respective creditors had remitted the moneys through banking channels; (ii). that the A.O had failed to afford adequate opportunity to the assessee to adduce evidence in support of the loans received by it; and (iii). that the AO had lost sight of the fact that the assessee had duly responded to the notices which were served upon it.
15. In our view, though the CIT(A) might concur with the view taken by the AO but the least that was expected on his part was the recording of an independent finding for accepting the view taken by the AO after considering the specific grounds based on which the impugned order of assessment was assailed before him.
16. Be that as it may, we are of the firm conviction that as the CIT(A) had grossly erred in law and the facts of the case in not disposing of the appeal based on a speaking and reasoned order, therefore, the same cannot be sustained and is liable to be restored to his file with a direction to re-adjudicate the same afresh. Our aforesaid view that the CIT(A) is obligated to dispose of the appeal based on a speaking order is fortified by the judgment of the Hon'ble High Court of Bombay in the case of CIT Vs. Premkumar Arjundas Luthra (HUF) (2017) 297 CTR 614 (Bom). In the aforementioned case, the Hon’ble High Court had observed as under:
Page. No 7
I.T.A.No.755/VIZ/2025 River Bay City Capital Private Limited "8. From the aforesaid provisions, it is very clear once an appeal is preferred before the CIT(A), then in disposing of the appeal, he is obliged to make such further inquiry that he thinks fit or direct the AO to make further inquiry and report the result of the same to him as found in Sec. 250 of the Act. Further, Sec. 250(6) of the Act obliges the CIT(A) to dispose of an appeal in writing after stating the points for determination and then render a decision on each of the points which arise for consideration with reasons in support. Sec. 251(1)(a) and (h) of the Act provide that while disposing of appeal the CIT(A) would have the power to confirm, reduce, enhance or annul an assessment and/or penalty. Besides Explanation to sub-s. (2) of s. 251 of the Act also makes it clear that while considering the appeal, the CIT(A) would be entitled to consider and decide any issue arising in the proceedings before him in appeal filed for its consideration, even if the issue is not raised by the appellant in its appeal before the CIT(A). Thus once an assessee files an appeal under s. 246A of the Act, it is not open to him as of right to withdraw or not press the appeal. In fact the CIT(A) is obliged to dispose of the appeal on merits. In fact w.e.f. 1st June, 2001 the power of the CIT(A) to set aside the order of the AO and restore it to the AO for passing a fresh order stands withdrawn. Therefore, it would be noticed that the powers of the CIT(A) are co- terminus with that of the AO i.e. he can do all that A.O could do. Therefore, just as it is not open to the AO to not complete the assessment by allowing the assessee to withdraw its return of income, it is not open to the assessee in appeal to withdraw and/or the CIT(A) to dismiss the appeal on account of non-prosecution of the appeal by the assessee. This is amply clear from the s. 251(1)(a) and (b) and Explanation to Sec. 251(2) of the Act which requires the CIT(A) to apply his mind to all the issues which arise from the impugned order before him whether or not the same has been raised by the appellant before him. Accordingly, the law does not empower the CIT(A) to dismiss the appeal for non-prosecution as is evident from the provisions of the Act.”
We thus, in terms of our aforesaid deliberations, restore the matter to the file of CIT(A) for fresh adjudication. Needless to say, the CIT(A) shall, in the course of the Page. No 8
I.T.A.No.755/VIZ/2025 River Bay City Capital Private Limited set-aside proceedings, afford a reasonable opportunity of being heard to the assessee company.
Resultantly, the appeal filed by the assessee company is allowed for statistical purposes in terms of our aforesaid observations.
Order pronounced in the open court on 18th February, 2026.
Sd/- Sd/- (ओंकारेश्वर धिदारा) (रिीश सूद) (RAVISH SOOD) (OMKARESHWAR CHIDARA) न्याधयक सदस्य/JUDICIAL MEMBER लेखा सदस्य /ACCOUNTANT MEMBER Dated:18.02.2026 *Giridhar, Sr.PS आदेश की प्रनतनलनप अग्रेनर्त/ Copy of the order forwarded to:- 1. निर्धाररती/ The Assessee : River Bay City Capital Private Limited D.No. 5-1-36 to 43, Riverbay Road Gowthama Ghat, East Godavari Rajahmundry – 533101 Andhra Pradesh 2. रधजस्व/ The Revenue : ACIT/DCIT, Circle – 1 Aayakar Bhavan Veerabhadrapuram Rajahmundry – 533105 3. The Principal Commissioner of Income Tax नवभधगीयप्रनतनिनर्, आयकरअपीलीयअनर्करण, नवशधखधपटणम /DR,ITAT, Visakhapatnam 4.