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Facts
The assessee's appeal concerns the taxability of Rs.3,75,000/- cash deposited in his bank account, which was treated as unexplained income by the Assessing Officer under Section 69A r.w.s. 115BBE. The assessee failed to provide any explanation or compliance during assessment and appellate proceedings.
Held
The Tribunal held that the CIT(A) erred in dismissing the appeal ex-parte due to non-prosecution without adjudicating the case on merit. The CIT(A) is obliged to dispose of appeals on merit even in ex-parte orders, as per statutory provisions.
Key Issues
Whether the CIT(A) can dismiss an appeal ex-parte due to non-prosecution without deciding the case on merits. Whether the matter should be remanded for fresh adjudication on merits.
Sections Cited
69A, 115BBE, 143(3), 250(6), 251(1)(a), 251(1)(b), 251(2)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘A’: NEW DELHI
Before: SHRI VIJAY PAL RAO, HON’BLE & SHRI AVDHESH KUMAR MISHRA
Deepak Jain, Dy. Commissioner of Income I-50, Phase-1, Ashok Vihar Tax, Central Circle-26 New Delhi 110052 Vs. E-2, ARA Center, PAN: ABJPJ6716G Jhandewalan Extension, New Delhi (Appellant) (Respondent) Appellant by Sh. Akshit Goel, CA Respondent by Sh. Pramod Kumar, Sr. DR Date of Hearing 30/09/2025 Date of Pronouncement 30/09/2025 ORDER
PER AVDHESH KUMAR MISHRA, AM
The appeal for the Assessment Year (‘AY’) 2021-22 filed by the assessee is directed against the order dated 25.03.2025 of the Commissioner of Income Tax (Appeals)-29, New Delhi [‘CIT(A)’].
The sole issue raised in this appeal is the upholding of taxability of Rs.3,75,000/- under section 69A r.w.s. 115BBE of the Income Tax Act, 1961 (‘Act’) by the ld. CIT(A) by ex - parte order.
The relevant facts giving rise to this appeal are that the assessee filed its Income Tax Return (‘ITR’) declaring income of Rs.2,61,840/-. During the Deepak Jain course of assessment proceedings, the Ld. Assessing Officer (‘AO’) noticed that the assessee had deposited cash of Rs.3,75,000/- in his bank account; therefore, the assessee was show-caused to explain the source thereof. However, no compliance was made by the assessee. Therefore, the Ld. AO observing as under taxed the same of Rs.3,75,000/- under section 69A r.w.s. 115BBE of the Act as under: - “9. From the record, it is seen that in response to the notice dated 24.01.2023 no reply has been filed by the assessee on e-filing portal of the Department till date. In the instant case, the assessee is engaged in the business of trading in bullion. The assessee is a partner with ‘NC Jewellers, a partnership firm. The primary income of the assessee is remuneration income from the partnership firm. Further, the assessee also earned dividend income and interest income from the bank. However, on perusal of the Bank Statement of ICICI Bank of the assessee having A/c No. 000701614984 during the F.Y. 2020-21, the assessee has made cash deposit on the following dates: S. No. Date of cash deposit Amount in Rs. 1. 24.07.2020 5,000 2. 15.12.2020 10,000 3. 16.12.2020 90,000 4. 19.12.2020 1,00,000 5. 19.12.2020 50,000 6. 21.12.2020 1,00,000 7. 21.12.2020 10,000 8. 13.01.2021 10,000 Total 3,75,000 Deepak Jain 10. The assessee has not furnished any reply in respect of cash deposit in his bank account maintained with ICICI Bank having A/c No. 000701614984 during the F.Y. 2020-21. Attention is invited to the provision of section 69A of the Income-tax Act, 1961 which is reproduced as under: ‘69A Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the money and the value of the bullion, jewellery other valuable article may be deemed to be the income of the assessee for such financial year’. 10.1 In the absence of any reply from the assessee regarding source and nature of cash deposit in the ICICI bank account, it is held that the assessee has nothing to say in the matter. Also, the assessee has failed to furnish the source of cash deposit in his bank account. Therefore, an amount of Rs.3,75,000/- is added u/s 69A of IT Act,1961 to total income of assessee and tax is charged u/s 115BBE of IT Act,1961.”
4. Aggrieved, the assessee filed appeal before the Ld. CIT(A), who dismissed the appeal, ex-parte, as under:
“4. During the course of appellate proceedings, the appellant was issued following notices, as under: - S. No. Date of issue of Date of Compliance Remakrs notice 1. 05.02.2024 12.02.2024 No Submission filed No Submission 2. 24.05.2024 25.06.2024 filed No Submission 3. 25.09.2024 10.10.2024 filed
29.01.2025 06.02.2025 No Submission filed During the appellate proceedings, the appellant was provided numerous opportunities as tabulated above, by this office. But the appellant did not comply with the notices issued by this office. The Hon'ble Supreme Court in the case of Shri B. N. Bhattacharjee and another (118 ITR 461) has held that the appeal does not mean only filing of memo of appeal but also pursuing it effectively. In view of persistent non-compliance to the notices issued by the appellant I am left with no alternative but to proceed to adjudicate the appeal on the basis of material available, in a judicious manner.
Ground No. 10: is general in nature and is therefore not adjudicated upon.
Ground Nos. 1 to 8: The brief facts of this case are that a search and seizure operation was conducted in the case of Sh. Rupesh Kumar Batra, Sh. Aditya Kumar Jha & others on 10.10.2021. Accordingly, notice u/s 143[2] of the Act was issued on 28.06.2022 and assessment was completed u/s 143(3) on 09.02.2023 at an assessed income of Rs. 6,36,840/-. The present appeal emanates against this assessment order. 6.1 During the assessment proceedings, it was noted by the AO that appellant had deposited cash at Rs. 3,75,000/- in his ICICI Bank account during the F.Y. under reference. No source of this cash deposit was furnished before AO. Hence the cash deposited was treated as unexplained u/s 69A of the Act. 6.2 During the appellate proceedings, inspite of numerous opportunities, no justifications/evidences have been filed by the appellant to controvert the findings and additions made by the AO. It is seen that the AO has given detailed findings in the assessment order which have not been disputed by the appellant by way of any submissions in support of the grounds of appeal. It is a settled position in law that when there are cash deposits, the onus is upon the appellant to explain the source thereof. In view of the same, I do not find any reasons to interfere with the assessment order passed by the AO. Accordingly, the addition made by the AO is hereby confirmed. Accordingly, these grounds of appeal are dismissed.”
Deepak Jain 5. The Ld. Authorised Representative (‘AR) submitted that the Ld. CIT(A) erred in dismissing the appeal, ex-parte, without adjudicating the appeal on merit. Before us, the Ld. AR of assessee prayed for remanding the matter back to the Ld. AO as none of the authorities below had decided the issue in dispute on merit.
6. The Ld. Sr. DR defended orders of the Authorities below. The Ld. Sr. DR, drawing our attention to various Para Nos. of assessment order and impugned order, submitted that reasonable opportunities of being heard were provided to the appellant assessee by the Ld. AO and the Ld. CIT(A). However, the appellant assessee tactfully ensured non-compliance to avoid proper investigations. Hence, he prayed for dismissing the appeal.
We have heard both parties and have perused the material available on the record. We take note of the fact that the Ld. CIT(A) has dismissed the appeal ex parte due to non-prosecution and has not adjudicated the case on merit. Further, the Ld. AO has also completed the assessment ex parte. However, the assessment was completed under section 143(3) of the Act. Moreover, the Ld. CIT(A) has not decided each ground of appeal after discussing the issue in detail and his reasons for agreeing with the assessment order. As per provisions of section 250(6) of the Act, the Ld. CIT(A) is obliged to dispose of the appeal in writing after stating the points for determination and to then pass an order on each of the points which has arisen for his consideration. The Ld. CIT(A) is further obliged to state the Deepak Jain reason for his/her decision on each such point of determination. The Ld. CIT(A) is duty-bound to dispose of the appeal through a speaking order on merit on all the points for determination including each ground of appeal. It is evident from the perusal of section 251(1)(a), 251(1)(b) and Explanation of section 251(2) of the Act that the Ld. CIT(A) is required to apply his/her mind to all the issues arisen from the order before him/her, whether or not the issue has been raised by the assessee before him/her.
8. Section 251(1)(a) of the Act provides that while disposing of an appeal against assessment order, the Ld. CIT(A) shall have the power to confirm, reduce, enhance or annul the assessment. Similarly, the section 251(1)(b) of the Act provides that in disposing of an appeal against an order imposing a penalty, the Ld. CIT(A) may confirm or cancel such orders or vary it so as to either to enhance or to reduce the penalty. On cumulative consideration of the provisions of section 250(6) of the Act read with sections 250(4), 250(5), 251(1)(a), 251(1)(b) of the Act and Explanation of section 251(2) of the Act, it is concluded that the Ld. CIT is not empowered to dismiss the appeal for non-prosecution of appeal and is obliged to dispose of the appeal on merit. In this regard, the finding of the Delhi Bench in the case of MARC Laboratories Ltd. in 2732, 2733, 2730, 2734 & 2735/DEL/ 2022 is worth mentioning here, wherein it has been held as under:
“5. We straightway refer to Section 250(6) of the Act which enjoins that the CIT(A) shall state the points for determination before it and the decision shall be rendered on such points along with reasons for the decision. Thus, Deepak Jain it is incumbent upon the CIT(A) to deal with the grounds on merits even in ex parte order. In view of Section 250(6) of the Act, the CIT(A) has no power to dismiss an appeal on account of non-prosecution. This view is also taken by the Hon'ble Bombay High Court in case of CIT vs. Premkumar Arjundas Luthra HUF, (2017) 291 CTR 614 (Bom.). A bare glance of the order of the CIT(A) shows that CIT(A) has not addressed itself on various points placed for its determination at all and dismissed the appeal of assessee for default in non-appearance. Needless to say, the CIT(A) plays role of both adjudicating authority as well as appellate authority. Thus, the CIT(A) could not have shunned the appeal for non- compliance without addressing the issue on merits.
6. In the totality of the circumstances, we consider it just and expedient to restore the matter back to the CIT(A) in the larger interest of justice with a view to enable the assessee to avail proper opportunity for disposal of appeal by the CIT(A) on various points. The assessee is cautioned to extend full co-operation to the CIT(A) without any demur, failing which, the CIT(A) shall be at liberty to conclude the appellate proceedings in accordance with law. Hence, the order of the CIT(A) appealed against, is set aside and all the issues raised in the impugned appeal are restored back to the file of the CIT(A) for fresh adjudication in accordance with law after giving reasonable opportunity of hearing to the assessee.”
In view the above facts, discussions, observations and in the interest of justice, we find it fit that this case requires to be decided afresh by the Ld. AO. Therefore, without offering any comment on merit of the case, we deem it fit to set aside the impugned order and remit the matter back to the file of the Ld. AO for de-novo consideration and passing the assessment order afresh after providing adequate opportunity of being heard to the appellant assessee. The appellant assessee, no doubt, shall ensure compliance and cooperate in remanded assessment proceedings. Accordingly, we ordered so.