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Judgment
ORDER
PER RAMIT KOCHAR, AM:
This appeal in ITA No. 460/Del/2026 for assessment year: 2020-21 has arisen form the learned CIT(A)’s appellate order u/s 250 of the Income-tax Act, 1961(in Short “Act”) dated 21.11.2025 in DIN & Order No: ITBA/NFAC/S/250/2025-26/ 1082896659(1), which in turn has arisen from the assessment order dated 03.03.2025 passed by the AO u/s 147 r.w.s 144 r.w.s. 144B of the 1961 Act.
Brief facts of the case are that as per information received in RMS Module of Insight Portal of the Income Tax Department during the year under consideration, the assessee, has carried out following transactions during the year under consideration , as under:
The AO , however, observed that the assessee has not originally filed income-tax return u/s 139 of the 1961 Act, for the year under consideration. The case of the assessee was reopened by the AO by invoking provisions of section 147 of the 1961 Act, after due compliance of proceedings u/s 148A of the 1961 Act. The AO issued notice u/s 148, dated 19.01.2024 , to the assessee. The assessee participated in the assessment proceedings , and submitted part replies. The assessee filed return of income in response to notice u/s 148 of the 1961 Act , on 20.05.2024 beyond the time specified in the notice, and the said return of income was treated as invalid by the AO. Notices u/s 142(1) and SCN’s were issued by the AO to the assessee , during the course of assessment proceedings. The assessee claimed itself to be engaged in the business of advertising agency deriving income from advertising in Media and Non-media and commission from advertisement. The assessee claimed that it is currently inactive and not generating any income. The assessee claimed that the assessee earned bank interest from past balance in its bank account. It was also submitted that Time Deposit (FDR) was purchased out of Bank balance in bank account with Citi Bank. The AO was not satisfied wrt sources of Balance in FDR to the tune of Rs. 95,32,459/- which was sought to be explained by the assessee to be out of balance with banks in current account. Further, the AO was not satisfied with the explanation of the assessee that out of interest on FDR of Rs. 15,27,615/- , an amount of Rs.11,02,356/- was not for the relevant year under consideration. Thus, the AO made the additions to the income of the assessee to the tune of Rs. 1,06,34,815/- u/s 69 of the 1961 Act by observing that the assessee failed to discharge onus that the aforesaid transactions are genuine. The AO observed that wrt time deposits, the assessee failed to upload substantive evidences regarding the source of Rs. 1,10,60,074/- for the said deposit. Further, the AO made addition of Rs.1,26,203/- to the income of the assessee being income as per computation statement filed in response to notice u/s 142(1) of the Act.
Aggrieved, the assessee filed first appeal with Ld. CIT(A). During appellate proceedings, the ld. CIT(A) issued as many as six notices including SCN, but there was no compliance by the assessee as no submissions/replies were filed , and rather the assessee sought adjournment on as many as four time. However, there was no response to last two notices (including SCN) dated 16.09.2025 and 07.10.2025 issued by ld. CIT(A) to the assessee. The details of the notices issued by ld. CIT(A) are mentioned at page 2 & 3.of the order passed by Ld. CIT(A). The Ld. CIT(A) dismissed the appeal of the assessee on account of non-prosecution, and the order of the AO was upheld by Ld. CIT(A). The ld. CIT(A) while dismissing the appeal of the assessee observed that the assessee failed to produce evidences to substantiate its assertions and rebut the findings of the AO, rather a bald unsubstantiated assertions have been made by the assessee without evidentiary supporting.
Still aggrieved, the assessee has filed second appeal with the Tribunal. It is contended that the Ld. CIT(A) has passed an ex-parte appellate order without discussing the issues in hands on merits. It is stated vide ground no. 1 that non compliance to the notices issued by ld. CIT(A) was due to the reasons that the notices were not sent on the primary email id of the assessee reflected in Form No. 35 namely [email protected] It is prayed that if one more opportunity is provided by setting aside the appellate order passed by ld. CIT(A) back to the file of ld. CIT(A) for denovo adjudication of the appeal of the assessee, then, the assessee will comply with the notices issued by ld. CIT(A), and submit all the necessary replies/response before ld. CIT(A). Ld. Sr. DR fairly submitted that matter can go back to the file of the Ld. CIT(A) for denovo adjudication of the appeal of the assessee.
We have considered rival contentions and perused the material on record. The facts in brief as well contentions of both the parties are enumerated by us in the preceding para’s of this order , and are not repeated. We have observed that the assessee has claimed that the non compliance to the notices issued by ld. CIT(A) was due to the reason that the same were not sent on the primary email ID specified in the Form No. 35, and the assessee was not aware of the said notices. The ld. CIT(A) simply dismissed the appeal of the assessee ex-parte by affirming the assessment order passed by the AO , without deciding the issues arising in the appeal on merits, mainly on account of non compliance by the assessee to the last two notices issued by ld. CIT(A). The ld. CIT(A) is required and obligated to pass appellate order in compliance with the provisions of section 250(6) of the 1961 Act ( Now Section 359(4) of the Income-tax Act, 2025) , as ld. CIT(A) is required to pass reasoned and speaking order on merits in accordance with law. Reference is drawn to provisions of Section 250(6) of the 1961 Act(Now Section 359(4) of the Income-tax Act, 2025) , wherein ld. CIT(A) has to state point for determination, his decision and reasons thereof. The ld. CIT(A) even did not made any enquiry as is contemplated u/s 250(4) (Now Section 359(3)(b) of the 2025 Act), and not even assessment records were called for by ld. CIT(A). The appellate order passed by ld. CIT(A) is subject to further appeal with ITAT u/s 253(Now Section 362 of the 2025 Act). The appellate order passed by ITAT is subject to further appeal before Hon’ble High Court u/s 260A (Now Section 365 of the 2025 Act). 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) 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) (Now Section 359(4) of the 2025 Act) , 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 1961 Act (Now Section 359(4) of the 2025 Act) , and liable to be set aside. Merely stating the assessment order passed by AO is upheld, and that the assessee has not submitted details/documents/evidences before ld. CIT(A) is not sufficient. The ld. CIT(A) is not toothless as his powers are co-terminus with the powers of the AO, which even includes power of enhancement. It is equally true that the assessee also did not complied with the notices issued by ld. CIT(A) and did not file the requisite details/documents to support its contentions. The assessee simply sought adjournment on four occasions, while on last two occasions , the assessee did not complied with the notices and now claim is made that the said notices were not sent to the primary email Id specified in the Form No. 35. Thus, the assessee is equally responsible for its woes as the assessee did not comply with the notices issued by the ld. CIT(A), as throughout appellate proceedings no response/reply was submitted on merits of the issue arisen in the appeal. The assessee has prayed that if one more opportunity is provided to the assessee, the assessee will come forward and submit all the details. Keeping in view the entire factual matrix as culled out above in the preceding para’s of this order, it will be fair to both the parties as well in the interest of justice, that the appellate order of ld. CIT(Appeals) be set aside and the matter be remanded back to the file of ld. CIT(Appeals) for fresh adjudication after giving proper opportunity of being heard to both the parties w.r.t. the issues arising in the appeal .The assessee is directed to comply with the notice issued by ld. CIT(Appeals) during the appellate proceedings in set aside remand proceedings, otherwise ld. CIT(A) shall be free to decide the appeal ex-parte on merits in accordance with law, after complying with provisions of Section 250(6) (Now Section 359(4) of the 2025 Act) . We clarify that we have not commented on merits of the issues, and the ld. CIT(A) shall pass an order uninfluenced by any of the observations in this order. Thus, the appellate order passed by ld. CIT(A) is set aside and matter is restored back to the file of ld. CIT(A) for fresh adjudication. The appeal of the assessee is allowed for statistical purposes. We order accordingly.
In the result, the appeal filed by the assessee is allowed for statistical purposes.