CIT(A) Must Issue Well-Reasoned Orders with Clear Determination, Decision & Reasoning: ITAT Pune

Suhas Maruti Dhankude Vs Jt. /ACIT Central Circle (ITAT Pune)

The Income Tax Appellate Tribunal (ITAT) Pune recently passed a significant order in the case of Suhas Maruti Dhankude Vs Jt. /ACIT Central Circle. The tribunal set aside the order of the Commissioner of Appeals (CIT(A)) and remanded the case for re-adjudication. The primary reason for this decision was the failure of the CIT(A) to address jurisdictional grounds raised by the appellant and the omission to state the point of determination as mandated under Section 250(6) of the Income Tax Act, 1961.

Background of the Case

The case revolves around a series of appeals filed by the assessee, Suhas Maruti Dhankude, under Section 253(1) of the Income Tax Act, 1961. These appeals were against the orders passed by the Commissioner of Appeals-12, Pune, which were based on assessments conducted under Section 144 read with Section 153C of the Act by the Joint Commissioner and Assistant Commissioner of Income Tax, Central Circle-2(4), Pune.

The assessee’s residential premises were covered under a search operation conducted on December 19, 2017, under Section 132 of the Act. Subsequently, the case was centralized and transferred to the DCIT, Central Circle-2(4), Pune. The assessments for the respective years were carried out, leading to the filing of returns by the assessee, which declared nominal incomes for the assessment years 2012-13 and 2013-14.

Issues Raised in the Appeal

The appeals were primarily focused on two critical issues:

1. Jurisdictional Grounds: The assessee challenged the very jurisdiction of the Assessing Officer (AO) in invoking proceedings under Section 153C of the Act. This section pertains to assessments made on persons other than those searched and requires specific satisfaction from the AO regarding the existence of undisclosed income.

2. Merits of the Case: The assessee also contested the assessments on the merits, particularly the additions made under Sections 69A and 69 of the Act, which related to unexplained investments, bank deposits, and other financial transactions.

CIT(A)’s Order and Grounds of Appeal

The CIT(A) dismissed the appeals of the assessee by a consolidated order under Section 250 of the Act. However, crucially, the CIT(A) did not adjudicate the legal grounds related to the jurisdiction of the AO, labeling them as “general in nature” and not requiring separate adjudication. This led to the assessee filing further appeals with the ITAT Pune, arguing that the CIT(A) failed to comply with the statutory requirement of Section 250(6) of the Act.

ITAT Pune’s Decision

The ITAT Pune, upon hearing both parties and reviewing the material on record, found that the CIT(A) had indeed erred in not addressing the jurisdictional grounds. The tribunal emphasized the importance of a well-reasoned order that includes a clear point of determination, decision, and the reasoning behind it, as required by Section 250(6) of the Act.

Citing the Supreme Court’s decision in Chandra Kishore Jha Vs Mahavir Prasad, the ITAT noted that any statutory requirement must be followed strictly. The tribunal concluded that the CIT(A)’s order was not in accordance with the law and deserved to be set aside.

Conclusion: The ITAT Pune’s decision underscores the importance of proper adjudication and adherence to statutory requirements by appellate authorities. The case of Suhas Maruti Dhankude Vs Jt. /ACIT Central Circle serves as a reminder that jurisdictional challenges cannot be dismissed lightly and must be addressed with due diligence. The tribunal’s order to remand the case for re-adjudication reinforces the principle that every appeal must be decided on its merits, with a well-reasoned and clear judgment.

FULL TEXT OF THE ORDER OF ITAT PUNE

This bunch of four appeals of the assessee instituted u/s 253(1) of the Income-tax Act, 1961 [‘the Act’ hereinafter] impugns the following orders of Ld. Commissioner of Appeals-12, Pune [‘Ld. CIT(A)’ hereinafter] passed u/s 250 of the Act, which in turn arisen out of respective orders of assessment passed by the Ld. Jt. Commissioner of Income Tax (OSD), Central Circle-2(4) and by the Ld. Asstt. Commissioner of Income Tax, Central Circle-2(4), Pune [‘Ld. AO’ hereinafter] for the respective assessment years [‘AY’ hereinafter]

2. Since the facts and threadbare issue involved in this bunch of appeals are common & identical, on the request from rival parties, for the sake of brevity & expediency these appeals are heard together for a common and consolidated order.

3. Briefly stated the common facts emanating from the records are that;

3.1 A search action on a ‘Baburao D Chandere’ and his family members [‘Searched Party / SP’ hereinafter] was carried out u/s 132 of the Act on 19/12/2017 wherein the residential premises of the assessee viz; B/1, 601, Aditya Smruti Apartment, Samson Bhoomi Road, Baner, Pune-41 1045 was covered. In connection therewith a statement of the assessee was recorded on even date u/s 132(4) of the Act, who was identified as the non-filer who did file no income tax returns for the years under consideration.

3.2 The case of the assessee by an order dt. 25/10/2018 u/s 127(2) was first centralised and subsequently transferred to Ld. DCIT, Central Circle-2(4), Pune by an order dt. 26/08/20 19 passed u/s 127(1) of the Act.

4. ITA No 1055 & 1056/PUN/2024;

4.1 Placing on record the satisfaction from the assessing officer of searched party and the assessee, the assessment proceedings u/s 153C of the Act against the assessee were initiated and by notice dt. 21/10/2020 was called upon to file return of income. The assessee filed return of income declaring total income of ₹1,80,000/- & ₹2,00,000/-for the AY 2012-13 & 2013-14. The said returns were then subjected for scrutiny by service of notice u/s 143(2) of the Act, were initiated and by notice dt. 21/10/2020 was called upon to file return of income. The assessee filed return of income declaring total income of ₹1,80,000/- & ₹2,00,000/-for the AY 2012-13 & 2013-14. The said returns were then subjected for scrutiny by service of notice u/s 143(2) of the Act.

4.2 In the event of failure on the part of assessee to comply with the subsequent notices issued u/s 142(1) of the Act and tender evidential material in support of return of income filed in pursuance of notice issued the Ld. AO preceded ex-parte and completed the assessment u/s 144 r.w.s. 153C of the Act by making various additions u/s 69A of the Act towards unexplained (a) cheque return, bank deposit etc. (b) purchase of jewellery; u/s 69 towards explained investment in land and unaccounted rent, agricultural income etc.

4.3 Aggrieved assessee filed separate appeals which came dismissed by the Ld. CIT(A) by a consolidated order passed u/s 250 of the Act wherein the legal grounds (Ground No 1 & 3) challenging the invocation of 153C jurisdiction and additions made ex-parte in violation of principle of natural justice were left unadjudicated holding them as ‘general in nature & do not require separate adjudication’.

5. ITA No 1060 & 1061/PUN/2024;

5.2 Against these assessments too the assessee filed separate appeals which also came dismissed by the Ld. CIT(A) by an order passed u/s 250 of the Act wherein the legal grounds (Ground No 1 & 3) challenging the invocation of 153C jurisdiction and additions made ex-parte in violation of principle of natural justice were left unadjudicated holding them as ‘general in nature & do not require separate adjudication’.

6. Aggrieved assessee came before us in separate appeals challenging the adjudications of first appellate authority on various grounds which are argumentative in nature and inconsonance with rule 8 of ITAT-Rules, 1963 hence reproduction thereof deem unfit for the purpose of adjudications. However it shall suffice to state that, these grounds collective are directed against; (a) non-adjudication of legal ground raised challenging the very jurisdiction of Ld. AO in invoking proceedings u/s 1 53C of the Act and (b) challenging the assessment/re-assessment on merits of the case/s etc.

7. At the outset of physical hearing, the rival parties sought our attention to the impugned consolidated order and commonly submitted that the legal ground raised before first appeal challenging the very jurisdiction of assessing the income of the assessee u/s 144 r.w.s. 153C of the Act was dismissed by the Ld. CIT(A) without Therefore, the impugned consolidate order is suffered from the provisions of section 25 0(6) of the Act. For the reasons, the assessee without touching the merits of the case sought to remand these matters back to the file of Ld. CIT(A) with a bullet direction to deal with twofold legal issues and pass a speaking order in terms of section 250(6) of the Act. The Ld. DR candidly solidified the fact but could hardly pull apart the request of the assessee for remanding the matter for re‑ adjudication.

8. Heard rival parties on former limited issue and subject to rule 18 of ITAT‑ Rules 1963 perused material placed on record and considered the fact & circumstances of these cases in the light of settled legal position and case laws relied upon by rival parties. From Pg 6/40 para 3, Page 11/40 para 9, Pg 34/40 para 34, and para 41 of Pg 38/40 of the impugned consolidated order we observed that, the legal grounds assailed challenging the jurisdiction to assess/re-assess income u/s 153C of the Act before Ld. CIT(A) was dismissed as general without adjudicating it in terms of s/s (6) of section 250 of the Act. Besides above we also note that, while adjudicating the grounds on merits, the Ld. CIT(A) did perfunctorily disposed-off the appeals of the appellant assessee without recording his independent findings.

9. Dispensing reproduction of provision in verbatim, we note here that, a plain reading of section 250 of the Act reveals that, in first appellate proceedings it is incumbent upon the Ld. CIT(A); (i) to make necessary enquiries (ii) to deal with each issue under challenge on merits and (iii) to decide the grievance under appeal by a well speaking order by stating therein (a) point of his determination, (b) decision arrived thereon and (c) clear reasons therefore. A conjoint reading of s/s (4) r.w.s/s (6) of section 250 of the Act further unveils that the Ld. CIT(A) while exercising his jurisdiction u/s 251(1)(a) of the Act is in no case empowered to dismiss any ground without dealing with it in former terms.

10. It is a trite law as laid down by Hon’ble Supreme Court in case ‘Chandra Kishore Jha Vs Mahavir Prasad’ reported in 8 SCC 266 (SC), that ‘if a statute provides for a thing to be done in a particular manner, then it has to be done in that manner and in no other manner’. In view hereof, any adjudication by the first appellate authority sidestepping the dictate is not in consonance with the provision of sub-section (6) of section 250 of the Act. Hence deserves to be set-aside.

11. In the instance cases, the impugned consolidated order since suffered from the provisions of s/s (6) of section 250 of the Act on account of (a) non-adjudication of legal ground/s raised by assessee and (b) failure to state point of determination, decision thereon and reasoning in arriving such decision, we therefore deem it proper to set-aside the impugned consolidated order and remand these matters back to the file first appellate authority in faceless regime with a direction to adjudicate them de‑ novo in accordance with law and pass assessment year-wise separate speaking orders in terms of section 250(6) of the Act separately in each case. We ordered accordingly.

12. In result these four appeals of the assessee are ALLOWED FOR STATISTICAL PURPOSES in above terms.

In terms of rule 34 of ITAT Rules, the order pronounced in the open court on this Thursday, 01st August, 2024.