Srinivas Arra Vs ITO (ITAT Hyderabad)
CIT(A) Cannot Dismiss in Limine for non-prosecution without deciding the issue on merits
Assessee, an individual, filed his return of income for AY 2017-18 on 30.03.2018 declaring total income of ₹4,80,730/-. The case was reopened & reassessment was completed u/s 147 r.w.s. 144B on 27.09.2021. During the demonetisation period, Assessee had deposited ₹25,03,554/- in cash in his bank account. As Assessee failed to explain the source of the cash deposits with supporting evidence, AO treated the entire amount as unexplained money & assessed total income at ₹29,84,284/-.
Aggrieved, Assessee filed appeal before CIT(A)/NFAC. However, CIT(A) dismissed the appeal in limine for non-prosecution without deciding the issue on merits.
Assessee approached Tribunal. There was a delay of 169 days in filing the appeal. Assessee filed an affidavit explaining that he was unaware of CIT(A)’s order & came to know only when checking the portal on 14.07.2025, after which he immediately filed the appeal. As the Revenue could not disprove the explanation, Tribunal held that sufficient cause existed & condoned the delay.
On merits, Tribunal observed that CIT(A) had simply dismissed the appeal for non-appearance. Tribunal emphasised that as per section 250(6), CIT(A) is duty bound to frame points for determination & pass a reasoned order on merits, even in ex-parte situations. Tribunal relied on the judgment of the Hon’ble Bombay High Court in PCIT v. Premkumar Arjundas Luthra (279 CTR 614) wherein it was held that CIT(A) cannot dismiss an appeal for non-prosecution without adjudicating the matter on merits. Applying this settled legal position, Tribunal held that CIT(A)’s order was legally unsustainable. In the interest of justice, Tribunal set aside the order of CIT(A) & remanded the matter back to his file with direction to dispose of the appeal de novo on merits after giving reasonable opportunity of hearing to Assessee.
