Case Law Details
Suryadeo Prasad Vs ITO (ITAT Kolkata)
In this respect, we note that Section 250(6) casts a duty on the Ld. CIT(A) to pass an order in appeal which should state the points for determination and the decision as well as the reason for arriving at such decision. In the present case before us, even though the assessee had made its submissions along relating to non-receipt of the notice from the Ld. AO, but no finding has been given whether the cash deposit was out of the sale proceeds or otherwise as proper compliance could not be made before him by the assessee for the reasons mentioned. We further note that in Ajji Basha Vs. CIT (2019) 111 taxmann.com 348 (Madras) it has been held that a speaking order on merits with reasons and findings is to be passed by Commissioner (Appeals) on basis of ground raised in assessee’s appeal; he cannot dispose assessee’s appeal merely by holding that Assessing Officer’s order is a self-speaking order which requires no interference.
FULL TEXT OF THE ORDER OF ITAT KOLKATA
This appeal filed by the assessee is against the order of the Ld. Commissioner of Income Tax (Appeals)-NFAC, Delhi [hereinafter referred to as “the Ld. CIT(A)”] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for AY 2017-18 dated 31.01.2023, which has been passed against the assessment order u/s 144 of the Act, dated 30.10.2019.
2. The assessee is in appeal before the Tribunal raising the following grounds of appeal:
“1 For that the ex parte order passed by the learned CIT (A) u/s 250 is bad in law and fact.
2. For that the learned CIT (A) is not justified in confirming the addition of Rs 2768200/- u/s 69A of the IT Act, being the cash deposit in the bank account.
3. For that the notices of hearing of appeal could not be looked into by the appellant, since he was not very conversant with the Faceless Appeal procedure and as such the necessary compliance could not be made.
4. For that the appellant is engaged in business and the cash deposit is the proceeds of sales and should not have been treated as unexplained money u/s 69A of the IT Act.
5. For that the application of section 115BBE has been incorrectly applied, since the source of deposit of cash is verifiable.
6. For that the cash deposit could have been, at the most, be considered as turnover of the business and net profit @ 8% as per provisions of section 44AD should have been applied an income should have been calculated accordingly.
7. For that the taxable income should have been calculated after allowing the exemption limit under Income Tax Act for the assessment year under consideration.
8. For that, other ground, if any, will be urged at the time of ”
3. The brief facts of the case of the assessee are that the appellant did not file his return of income (ROI) for the Y. 2017-18. The Ld. AO issued notice u/s 142(1) on 08.01.2018 to the appellant for filing of ROI on or before 31.03.2018 but the appellant neither filed the ROI nor responded to the said notice. The AO observed that during the demonetization period, the appellant had made cash deposits of Rs. 27,68,200/-in his bank account maintained with CBI, Basantpur, Siwan. The appellant was issued notice u/s 142(1) on 08.08.2019 and final opportunity was granted on 15.10.2019 for furnishing documents/evidences in respect of cash deposited during entire year. Since, the appellant did not respond to any notices issued by the AO, the AO treated the cash deposits of Rs. 27,68,200/- made during the demonetization period as unexplained income u/s 69A and passed the assessment order u/s 144 dated 30.10.2019.
4. We have heard the rival contentions and very perused the record and the submissions made were also examined. We find that the ld. CIT(A) has passed an ex-parte order.
5. We also note that while the Ld. CIT(A) has discussed non- compliance on the part of the assessee as the notices sent by e-mail were not complied with and order has been passed primarily on account of non-compliance by the assessee. The assessee submitted before the Ld. CIT(A) as per the statement of facts that he was carrying on the business of trading in sugar and other Kirana goods and the cash deposited in the bank account was the regular cash of the business arising out of the sale of sugar and other Kirana goods. He also mentioned before him that he had never received any notice in respect of the assessment proceedings. Since the assessee did not comply to various notices issued, therefore, relying upon the case of M. Esufali H.M. Abdulali (1973) 90 ITR 271 (SC) the Ld. CIT(A) accepted the decision of the Ld. AO as the appellant failed to present any facts to counter the decision of the Ld. AO.
5.1 Before us it is submitted that the notices of hearing of appeal could not be looked into by the appellant since he was not very conversant with the faceless appeal procedure and as such the necessary compliance could not be made. It is reiterated before us that the cash deposit was out of the proceeds of sales and should not have been treated as unexplained money under section 69A of the Ld. AR requested that the matter may be set aside to the file of Ld. CIT(A). In this respect, it is relevant to examine the provisions of section 250(6) which are reproduced as under:
“250(6) – The order of the Commissioner (Appeals) disposing of the appeal shall be in writing and shall state the points for determination, the decision thereon and the reason for the decision.”
5.2 In this respect, we note that Section 250(6) casts a duty on the Ld. CIT(A) to pass an order in appeal which should state the points for determination and the decision as well as the reason for arriving at such decision. In the present case before us, even though the assessee had made its submissions along relating to non-receipt of the notice from the Ld. AO, but no finding has been given whether the cash deposit was out of the sale proceeds or otherwise as proper compliance could not be made before him by the assessee for the reasons mentioned. We further note that in Ajji Basha CIT (2019) 111 taxmann.com 348 (Madras) it has been held that a speaking order on merits with reasons and findings is to be passed by Commissioner (Appeals) on basis of ground raised in assessee’s appeal; he cannot dispose assessee’s appeal merely by holding that Assessing Officer’s order is a self-speaking order which requires no interference. The relevant extract from the order is as under:
“6. … The first respondent is the appellate authority. Needless to state that the Appellate Authority is also a fact finding authority and therefore, he has to consider the order of assessment on the grounds raised in the appeal and thereafter, pass a speaking order on merits and in accordance with law by giving his own reasons and findings as to whether the order of assessment can be sustained or not. In other words, the order passed by the Appellate Authority should explicitly exhibit his application of mind to the facts and circumstances and the objections raised in the grounds of appeal, also by expressing his reasons and findings in support of his conclusion.
7. In this case, the Appellate Authority, after extracting the order of the Assessing Officer in full, has not given any other reason or finding to dismiss the appeal except by stating that he is of the considered view that the Assessing Officer’s order is a self speaking order and does not call for any interference. In my considered view, such single line finding of the Appellate Authority, cannot be sustained as a proper exercise of the Appellate Authority, while disposing the Therefore, it is apparent that the order impugned in this writ petition is an outcome of total non-application of mind. Consequently, the impugned order cannot be sustained. It is further contended that before passing the order, the petitioner was not heard.”
5.2 It has also been held in the case of Commissioner of Income-tax (Central) Nagpur Premkumar Arjundas Luthra (HUF) [2016] 69 taxmann.com 407 (Bombay) that the law does not empower the CIT(A) to dismiss the appeal for non-prosecution as is evident from the provisions of the Act. The relevant extract is as under:
“7. An appeal is filed with the CIT(A) from appealable orders listed in Section 246A of the Act. We find that the procedure in appeal before the CIT(A) and the powers of the CIT(A) are governed by Sections 250 and 251 of the Act respectively. The relevant provisions for consideration are as under:—
‘Procedure in appeal
250 (1) . . . . . . . . . . . . .
(2) . . . . . . . . . . . . . . . . .
(3) . . . . . . . . . . . . . . . . . .
(4) The Commissioner (Appeals) may, before disposing of any appeal, make such further inquiry as he thinks fit, or may direct the Assessing Officer to make further inquiry and report the result of the same to the Commissioner (Appeals).
(5) . . . . . . . . . . . . . . . . . .
(6) The order of the Commissioner (Appeals) disposing of the appeal shall be in writing and shall state the points for determination, the decision thereon and the reason for the decision.
(6A) . . . . . . . . . . . . . . . . . .
(7) . . . . . . . . . . . . . . . . . .
Powers of the Commissioner (Appeals)
“Section 251(1) In disposing of an appeal, the Commissioner (Appeals) shall have the following powers —
(a) in an appeal against an order of assessment, he may confirm, reduce, enhance or annul the assessment.
(aa) . . . . . . . . . . . . . . . . . .
(b) in an appeal against an order imposing a penalty, he may confirm or cancel such order or vary it so as either to enhance or to reduce the “
(c) . . . . . . . . . . . . . . . . . .
(2) The Commissioner (Appeals) shall not enhance an assessment or a penalty or reduce the amount of refund unless the appellant has had a reasonable opportunity of showing cause against such enhancement or reduction.
Explanation. – In disposing of an appeal, the Commissioner (Appeals) may consider and decide any matter arising out of the proceedings in which the order appealed against was passed, notwithstanding that such matter was not raised before the Commissioner (Appeals) by the appellant.’
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 Assessing Officer to make further inquiry and report the result of the same to him as found in Section 250(4) of the Act. Further Section 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. Section 251(1)(a) and (b) 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-section (2) of Section 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 Section 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 with effect from 1st June, 2001 the power of the CIT(A) to set aside the order of the Assessing Officer and restore it to the Assessing Officer for passing a fresh order stands withdrawn. Therefore, it would be noticed that the powers of the CIT(A) is co-terminus with that of the Assessing Officer i.e. he can do all that Assessing Officer could do. Therefore just as it is not open to the Assessing Officer 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 Section 251(1)(a) and (b) and Explanation to Section 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.”
6. Accordingly, considering the principles of natural justice which require that the appellant should be heard, we deem it appropriate in the interest of justice and fair play to set-aside the order of the Ld. CIT(A) and remit the matter back to him for disposal of the appeal afresh on the grounds taken by the assessee on merits, after hearing the assessee and thereafter by passing a speaking Needless to say, the assessee shall be given a reasonable opportunity of being heard to make any further submission and furnish evidence he wants to submit in support of the grounds of appeal and shall not seek unnecessary adjournments.
7. In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 7th January, 2025.
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