2024 (6) TMI 928 - AT - Income Tax

Order of CIT(Appeals) u/s 250 - Unexplained cash credit u/s 68 and u/s 41(1) on account of outstanding balances of creditors - HELD THAT - It was the allegation of the AR and rightly so that, though the CIT(A) has mentioned the case is being decided on merits, but the order of CIT(A) was more of reproduction of the order of AO, nothing transpires from the impugned order that he had decided the issues with independent application of mind. The appeal of the assessee was not decided on merits by the CIT(A) and in such cases, we are consistently taking a view that such cases should be restored back to the files of CIT(A), therefore, we, in absence of any distinguishable features in the present case, without going into the merits of the case are of the opinion to restore the issues raised in the present appeal back to the files of CIT(A) for adjudicating the same afresh, with affording reasonable opportunity of being heard to the assessee, which the assessee shall comply in most diligent manner without any fail. The assessee will be at liberty to submit necessary explanations and submission in the set aside proceedings. As in absence of deliberation on the issues on its merits before the CIT(A) based on material available on record, in the interest of justice, we find it appropriate to restore the present appeal back to the files of Ld. CIT(A) for fresh adjudication. Appeal of the assessee is partly allowed for statistical purposes.

Summary

Issues involved:
The appeal filed by the assessee against the order of Commissioner of Income Tax (Appeals) u/s 250 of the Income Tax Act, 1961 for the assessment year 2015-16, challenging additions made u/s 68 and u/s 41(1) by the Income Tax Officer.

Issue 1 - Addition u/s 68:
The assessee contested the addition of Rs. 10,26,911 made by the AO as unexplained cash credit u/s 68. The CIT(A) confirmed this addition, leading to the appeal before the ITAT. The assessee's explanations were deemed insufficient by the AO, resulting in the addition.

Issue 2 - Addition u/s 41(1):
The AO invoked sec. 41(1) to add Rs. 52,86,164 on account of outstanding balances of creditors. The CIT(A) upheld this addition, which the assessee challenged before the ITAT. The assessee argued that this addition was arbitrary, baseless, and unjustified.

Summary of Judgement:
The ITAT, after considering the contentions of both parties, found that the CIT(A) did not decide the appeal on its merits but merely reproduced the AO's order. Citing the principle of law from a Bombay High Court case, the ITAT emphasized that the CIT(A) is obligated to make further inquiries and decide appeals on their merits. Therefore, in the interest of justice, the ITAT decided to remit the issues back to the CIT(A) for fresh adjudication, affording the assessee a reasonable opportunity to be heard. The ITAT partially allowed the appeal for statistical purposes, highlighting the need for a thorough examination of the issues raised by the assessee.