ROYAL DRINKS PTV. LTD.,NAGPUR vs. INCOME TAX OFFICER, WARD 4(3), NAGPUR

Briefly stated facts of the case are that; 2.1 the assessee is a company engaged in the activity of manufacturing and trading of country liquor. The return of income filed by it declaring total ITAT-Nagpur Page 1 of 4 income of ₹17,55,000/- was processed summarily u/s 143(1) of the Act without variation in the first place. Subsequently the case of the assessee was selected for scrutiny and the assessment u/s143(3) of the Act was completed by making addition of ₹1,16,94,203/-on account of unexplained cash deposits u/s 69A of the Act.

We have heard rival contentions, perused the material placed on record in light of rule 18 of ITAT-Rules 1963. We note that, appellant’s failure to ITAT-Nagpur Page 2 of 4 furnish required details & effectively explain nature and source of cash deposits to the satisfaction of the Ld. AO has resulted into impugned addition u/s 69A of the Act. Whereas, in an appeal, the Ld. NFAC confirmed the addition ex-parte for non-prosecution of appeal by the appellant assessee.

Without going into the merits of the case, at the outset we note that, in absence of cogent evidential material, submission and non-compliance by the appellant, in the evince of restriction placed by 251(1)(a) of the Act, the Ld. NFAC had to culminate the proceedings ex-parte for non-prosecution.

We are heedful to the restriction placed by clause (a) of sub-section (1) of section 251 of the Act which obligates the Ld. CIT(A) to adjudicate the issue either by confirming or annulling the addition or reducing or enhancing the addition made by the assessing officer without the right to remand the matter back. However, while exercising the jurisdiction u/s 251(1)(a) of the Act, the Ld. CIT(A) was required to state point of determination, its decision thereon and clear reasons therefore in terms of section 250(6) of the Act.

A plain reading of section 250 of the Act reveals that, it is incumbent upon the Ld. CIT(A) to make necessary enquiries before passing an order and while doing so it demands it to decide each of the points arising out of the appeal i.e. grounds on merits even in an ex-parte order. In view of Section 250(4) r.w.s. 250(6) of the Act, Ld. CIT(A) has no power to dismiss ITAT-Nagpur Page 3 of 4 an appeal for non-prosecution, without discussing the merits of the case, and this proposition finds supported in the decision of ‘CIT Vs Premkumar Arjunda’ [(2016) 240 TAXMAN 0133 (Bom)].

Per contra in the instant case, we find that the Ld. NFAC in the event of non-prosecution, confirmed the addition in line with the assessment without adjudicating it in terms of sub-section (6) of section 250 of the Act, thus the rights & liabilities of the rival parties remain undetermined effectively. This adjudication in our considered view is not in consonance with the provision of sub-section (6) of section 250 of the Act. For the reasons, without commenting on merits of the case, we deem it proper to set-aside the impugned order and remit the matter back to the file of Ld. CIT(A) for de- nova adjudication in accordance with law with a direction to accord not more than three effective opportunities and pass a speaking order in terms of section 250(6) of the Act. Thus, ordered accordingly.

In the result, the appeal of the assessee is allowed for statistical purposes. In terms of rule 34 of ITAT Rules, the order pronounced in the open court on this Thursday, 21st day of March, 2024.