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Facts
The assessee did not file an income tax return, but the Assessing Officer (AO) initiated scrutiny assessment under section 147 based on information about cash deposits. The assessee later filed a return declaring an income of Rs.1,47,390/-. The AO made an addition of Rs.10,14,245/- on account of unexplained cash deposits, assessing the total income at Rs.11,61,640/-.
Held
The Tribunal held that the CIT(A) erred by passing an ex-parte order without considering the grounds of appeal and violating principles of natural justice. Therefore, the impugned order was set aside, and the case was restored to the CIT(A) for a fresh adjudication.
Key Issues
Whether the CIT(A) was justified in dismissing the appeal ex-parte without adjudicating the grounds of appeal and whether the addition made by the AO was correct.
Sections Cited
147, 148
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, JABALPUR BENCH “DB”, JABALPUR
Before: SHRI KUL BHARAT & SHRI, NIKHIL CHOUDHARY
PER KUL BHARAT, VICE PRESIDENT.:
This appeal, by the assessee, is directed against the order of the Learned Addl. Commissioner of Income-tax (Appeals), Kanpur dated 22.11.2024 pertaining to the assessment year 2011-12. The assessee has raised the following grounds of appeal: -
1. The learned Commissioner of Income tax (Appeal) of NFAC New Delhi was not justified in dismissing the appeal on the ground of non submission of reply without appreciating that appellant was prevented with reasonable cause in not filing the reply and even otherwise appellant have sought time for filing the reply and order was passed without giving proper opportunity of hearing.
2. The learned Commissioner of Income tax (Appeal) of NFAC New Delhi was not justified in confirming the addition of Rs. 10,14,245 made by the AO without appreciating the fact that cash was deposited out of business receipt .
The learned Commissioner of Income tax (Appeal) of NFAC New Delhi was not justified in confirming the addition of Rs. 10,14,245 made by the AO without appreciating that order was passed mechanically as only Page 2 of 4 credit entry was taken into consideration whereas debit entries were ignored which is bad in law .
The learned Commissioner of Income tax (Appeal) of NFAC New Delhi was not justified in confirming the addition of Rs. 10,14,245 as AO erred in making addition on account of entire cash deposit whereas the net profit rate may be applied to unrecorded sales or receipts for the purpose of making any additions as held by Hon'ble Madhya Pradesh High Court in CIT v. Balchand Ajit Kumar 263 ITR 610 (MP), wherein it was held that the total sale could not be regarded as profit of the assessee and only net profit should be taxed.
5. The learned Commissioner of Income Tax (Appeal) of NFAC New Delhi was not justified in confirming the action of AO whereas assessment is liable to be quashed as assessment order was passed under wrong section and it is not curable defect and thus it is prayed that it may kindly be quashed.
6. The appellant craves for leave to amend, add to or omit any ground up to the time of hearing of the appeal.”
The facts giving rise in the present appeal are that in this case, the assessee has not filed any return of income. The Assessing Officer was having information regarding cash deposit in the bank account of the assessee. Therefore, the case was taken up for scrutiny assessment u/s 147 of the Income Tax Act, 1961 (“Act”, for short). Thereafter, the Assessing Officer had issued requisite notice u/s 148 of the Act. In response thereto, the assessee filed his return of income declaring total income at Rs.1,47,390/-. During the course of assessment proceedings, the assessee was called upon to explain the source of cash deposits. The Assessing Officer has noted that there was no compliance of the query. Therefore, he proceeded to make addition of Rs.10,14,245/- and assessed income at Rs.11,61,640/- as against the returned income of Rs.1,47,390/-. Aggrieved by this order, the assessee preferred appeal before the Ld. CIT(A) who dismissed the appeal ex-parte without adverting to the merits of the case. Thus, the assessee is in appeal before this Tribunal.
Page 3 of 4 3. Apropos to the grounds of appeal, the Ld. Counsel for the assessee strongly argued that the assessee did not receive any notices of hearing as issued by the Ld. CIT(A). The Ld. CIT(A) without adverting to the grounds raised by the assessee passed ex-parte order and confirmed the addition. Thereby, the Ld. CIT(A) has grossly violated the principles of natural justice. He prayed that the impugned addition may be deleted.
4. On the other hand, the Ld. Departmental Representative (DR) strongly opposed the submission and supported the orders of the lower authorities. He drew our attention to the observation made by the Ld. CIT(A). He also contended that the various notices has been issued to the assessee by the First Appellate Authority and in the absence of any supporting evidences the Ld. CIT(A) was justified in dismissing the appeal of the assessee. He contended that the onus lies on the assessee for explaining the source of investment.
We have heard the rival submissions and perused the material available on record. It is stated by the assessee that the Ld. CIT(A) failed to advert to the grounds taken by the assessee. It is well settled that the First Appellate Authority is required to adjudicate on the matter related to the impugned addition made by the Assessing Officer. Under these facts, we deem it fit and proper and to sub-serve the interest of substantive justice to set aside the impugned order and restore the grounds of the appeal to the Ld. CIT(A) for deciding the grounds afresh and by giving clear finding on the grounds raised by the assessee by way of speaking order. Needless to say that the assessee would provide all the information which is relevant and necessary for
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 30/06/2025.