2024 (12) TMI 428 - AT - Income Tax

Ex-parte dismissal of appeal by the CIT(A) - addition of cash deposited during the demonetization period - CIT(A) has upheld the assessment order by holding that he does not want to interfere with the assessment order - HELD THAT - There is no independent application of mind by ld. CIT(A) and the appellate order passed is not a speaking and reasoned order. Both the parties before the Bench agreed that the matter can be restored back to the file of ld. CIT(Appeals) for deciding the appeal on merits afresh on merits in accordance with law. CIT(A) has not even dealt with the contentions of the assessee that cash deposited in the bank account in SBN during demonetized period were from earnings, gifts during marriage and from advance from land. There is no enquiry conducted by ld. CIT(A), and even assessment records were not called by ld. CIT(A) to verify the contentions/evidences submitted by the assessee during the course of assessment proceedings. CIT(A) simply dismissed the appeal of the assessee by upholding the assessment order passed by the AO by holding that he do not want to interfere with the assessment order passed by the AO. The appellate order passed by ld. CIT(A) is subject to further appeal with ITAT u/s 253. The appellate order passed by ITAT is subject to further appeal before Hon ble High Court u/s 260A. The judgment and order passed by Hon ble High Court is also subject to challenge before Hon ble Supreme Court. Thus, the appellate order passed by ld. CIT(A) is not a final order, as it is subject to challenge before higher appellate authority. Thus, Reasons which weighed in the minds of the adjudicating authority while adjudicating appeal on merits of the issues are cardinal as the higher appellate authority can then adjudicate appeal on the issues arising in appeal before them, based on decision and reasoning of ld. CIT(A) in deciding the issues. If the ld. CIT(A) simply dismiss the appeal merely because the assessee did not comply with the notices issued by ld. CIT(A), in limine without adjudicating issues arising in the appeal on merits, such order is not sustainable in the eyes of law keeping in view provisions of Section 250(6), and also higher appellate authorities will be deprived to see what weighed in the mind of the ld. CIT(A) while adjudicating appeal as it will be an order passed without reasoning on the issues on merits. The appellate order of the CIT(A) is clearly in violation of section 250(6) of the Act and liable to be set aside. Merely stating the assessment order passed by AO is upheld and that do not want to interfere with the assessment order is not sufficient, and that the assessee has not submitted details/documents is not sufficient. The ld. CIT(A) has to make independent enquiries, which were not done, not even assessment records were called for by the ld. CIT(A). Appeal of the assessee is allowed for statistical purposes.

Summary

Issues Involved:

1. Addition of Rs. 20,44,000/- in respect of cash deposited during the demonetization period.
2. Invocation of Section 115BBE by the Assessing Officer.
3. Initiation of penalty proceedings under Section 271AAC.
4. Condonation of delay in filing the appeal.
5. Ex-parte dismissal of appeal by the CIT(A) without deciding on merits.

Issue-wise Detailed Analysis:

1. Addition of Rs. 20,44,000/-:
The primary issue concerns the addition of Rs. 20,44,000/- made by the Assessing Officer (AO) regarding cash deposited in the bank during the demonetization period. The AO treated this amount as unexplained money under Section 69A of the Income-tax Act, 1961, and added it to the income of the assessee. The assessee argued that the cash was sourced from personal earnings, marriage gifts, and an advance for land purchase. However, the AO found the evidence provided insufficient, as the assessee failed to attach supporting documents to substantiate these claims. The AO allowed a relief of Rs. 1,00,000/- considering marriage gifts and past earnings, but the remaining Rs. 19,44,000/- was added to the income.

2. Invocation of Section 115BBE:
The AO invoked Section 115BBE to tax the unexplained money at a higher rate. The assessee contended that this invocation was unreasonable and excessive, lacking sufficient material on record. The Tribunal noted that the CIT(A) did not independently assess the merits of the AO's decision to invoke this section, as the appeal was dismissed ex-parte without a reasoned order.

3. Initiation of Penalty Proceedings under Section 271AAC:
The AO initiated penalty proceedings under Section 271AAC, which the assessee challenged. However, the Tribunal did not delve into this issue in detail, as the appeal was primarily focused on the addition of the cash deposit and the procedural aspects of the appeal process.

4. Condonation of Delay in Filing the Appeal:
The appeal was filed 438 days late due to the chronic illness of the assessee's counsel, which was substantiated by medical certificates. The Tribunal considered the reasons for the delay and the lack of objection from the Revenue, ultimately deciding to condone the delay. The Tribunal emphasized the principle that substantial justice should prevail over technicalities, finding no mala fide intent on the part of the assessee.

5. Ex-parte Dismissal by CIT(A):
The CIT(A) dismissed the appeal ex-parte without addressing the merits of the case, merely upholding the AO's assessment order. The Tribunal found this approach contrary to the requirements of Section 250(6), which mandates a reasoned and speaking order. The Tribunal criticized the CIT(A) for not independently evaluating the evidence or conducting inquiries, and for failing to call for assessment records. Consequently, the Tribunal set aside the CIT(A)'s order and remanded the matter for fresh adjudication, instructing the CIT(A) to decide the appeal on merits after providing both parties an opportunity to present their case.

Conclusion:
The Tribunal allowed the appeal for statistical purposes, emphasizing the need for a substantive examination of the issues on merits by the CIT(A). The Tribunal's decision underscores the importance of procedural fairness and the necessity for appellate authorities to provide reasoned judgments that address the substantive issues raised in appeals.