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2024 (7) TMI 584 - AT - Income TaxDismissal of appeal by CIT(Appeals) for non-prosecution - Unexplained cash credit u/s. 68 - recharacterizing the cash gift as cash credit - HELD THAT - CIT(Appeals) had disposed off the appeal for non-prosecution and had failed to apply his mind to the issue which did arise from the impugned order and was assailed by the assessee before him. In my considered view, once an appeal is preferred before the CIT(Appeals), it becomes obligatory on his part to dispose off the same on merit and it is not open for him to summarily dismiss the appeal on account of non-prosecution of the same by the assessee. In fact, a perusal of Sec.251(1)(a) and (b), as well as the Explanation to Sec.251(2) of the Act reveals that the CIT(Appeals) remains under a statutory obligation to apply his mind to all the issues which arises from the impugned order before him. As per mandate of law the CIT(Appeals) is not vested with any power to summarily dismiss the appeal for non-prosecution. Thus unable to subscribe to the dismissal of the appeal by the CIT(Appeals) for non-prosecution, therefore, set-aside his order with a direction to dispose off the same on merits - Appeal filed by the assessee is allowed for statistical purposes.
Issues:
1. Recharacterization of cash gift as unexplained cash credit under section 68 of the Income Tax Act, 1961. 2. Dismissal of appeal by CIT(Appeals) for non-prosecution. Analysis: Issue 1: Recharacterization of cash gift The case involved the recharacterization of a cash gift of Rs. 5,00,000 as an unexplained cash credit under section 68 of the Income Tax Act. The Assessing Officer (A.O) raised concerns regarding the genuineness of the gift transaction due to lack of documentary evidence supporting the claim made by the assessee. The A.O specifically highlighted the absence of documents such as copies of return of income and bank statements to establish the identity and creditworthiness of the donor. Despite the confirmation of the gift by the donor, the A.O deemed the evidence insufficient, leading to the recharacterization of the cash gift. The CIT(Appeals) upheld this decision due to the non-participation of the assessee in the proceedings, resulting in dismissal for want of prosecution. Issue 2: Dismissal of appeal for non-prosecution The CIT(Appeals) dismissed the appeal based on non-prosecution by the assessee, despite multiple opportunities provided for participation in the proceedings. The CIT(Appeals) cited the failure of the appellant to submit written submissions or additional evidence supporting the genuineness of the transaction. The dismissal was in line with the principles of natural justice and adherence to procedural requirements. However, the Judicial Member (JM) of the Appellate Tribunal disagreed with the summary dismissal of the appeal. The JM emphasized that once an appeal is preferred before the CIT(Appeals), it is mandatory for the authority to consider and decide on all issues arising from the impugned order, irrespective of non-prosecution by the appellant. The JM referred to legal precedents emphasizing the obligation of the CIT(Appeals) to dispose of appeals on merits and not to dismiss them summarily for non-prosecution. In conclusion, the JM set aside the order of the CIT(Appeals) and directed a reevaluation of the appeal on its merits, emphasizing the importance of affording the appellant a reasonable opportunity to substantiate claims with documentary evidence. The grounds of appeal related to the recharacterization of the cash gift were allowed for statistical purposes, while the general ground of appeal not pressed was dismissed. The appeal by the assessee was allowed for statistical purposes, highlighting the need for a thorough consideration of all issues in tax assessment proceedings.
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