Shakil Ahmad vs Income Tax Officer

PER RAMIT KOCHAR, ACCOUNTANT MEMBER: This appeal in ITA No. 463/Del/2026 for Assessment Year: 2011-12 has arisen form the learned Addl./ JCIT CIT(A)’s appellate order u/s 250 of the Income-tax Act, 1961(in Short “1961 Act”) dated 25.11.2025 in DIN & Order No: ITBA/APL/S/250/2025-26/1082984676(1), which in turn has arisen from the assessment order dated 29.12.2018 passed by the AO u/s 143(3) read with Section 147 of the 1961 Act (Letter No. ITBA/AST/F/17/2018-19/1014651506(1)).

Brief facts of the case are that from the Internal Intelligent Exchange Mechanism of the Department, It was known that the assessee have cash credits of Rs. 6,15,75,870/-in his bank account. Proceedings u/s 147 of the 1961 Act were initiated against the assessee by the AO by issuing of notice dated 26.03.2018 u/s 148 of the 1961 Act. The assessee is an individual , and is deriving income from sale of buffalo carcasses. The assessee had filed its return of income u/s 139 for the impugned assessment year, on 30.09.2011 showing income of Rs.2,41,915/-. Statutory notices u/s 142(1) of the 1961 Act along with questionnaire were issued to the assessee to explain the source of sundry credits aggregating to Rs.6,15,75,870/- in ICICI Bank Account. The assessee in response thereof submitted before the AO during reassessment proceedings that during the year under consideration, he had maintained the following bank accounts:

The assessee further submitted before the AO that the amount credited in the aforesaid bank accounts were on account of sales turnover of Rs. 15,42,93,282/- which are reflected in bank statements , and credits in the bank accounts have direct nexus with the sale proceeds. The assessee submitted details of credit summation in bank accounts as under:-

The AO observed that as per information available with the Revenue, credit balance in the aforesaid bank accounts are to the tune of Rs. 18,59,12,052/- , as under:

The assessee submitted before the AO that the excess credits in the bank account in comparison to declared sale is on account of inter-bank transfer from his bank account with ‘Bank of India’ to his bank account with ‘ICICI Bank’. The AO rejected the contentions of the assessee in the absence of complete party wise statement as well details of inter-bank transfer , which were not produced by the assessee before the AO, and difference amount of Rs.3,16,18,770/- was added to the income of the assessee by the AO. The AO also asked various details from the assessee as are recorded in page 3 of the assessment order vide notice dated 21.12.2018 issued by the AO u/s 142(1), but there was no compliance by the assessee.The AO rejected books of accounts u/s 145(3) of the 1961 Act, and applied GP rate of 1% as against 0.68% declared by the assessee, thereby making additions to the tune of Rs. 4,92,775/- in the hands of the assessee. Further, the AO made additions of Rs. 90,57,087/- which was the amount shown as liability towards animal suppliers. The AO had asked assessee to give complete list of sundry creditors along with complete postal address and email address, but the assessee did not supplied the same, and hence as per the AO said amount remained unexplained, and consequently stood added to the income of the assessee by the AO . Thus, the total income of the assessee was assessed at Rs.4,14,10,547/- by the AO vide reassessment order dated 29.12.2018 passed by the AOu/s 143(3) r.w.s 147 of the 1961 Act, as against returned income of Rs.2,41,915/-.

Aggrieved, the assessee filed first appeal with Ld. CIT(A) . During appellate proceedings, the ld. Addl./JCIT(A) issues as many as 12 notices to the assessee, but there was no compliance by the assessee. The details of the notices issued are mentioned at page 3 & 4 of the appellate order passed by Ld. Addl/JCIT(A). The Ld. Addl./JCIT(A) dismissed the appeal of the assessee on account of non-prosecution of its appeal by the assessee, and the appellate order passed by the AO was upheld by the Ld. Addl./JCIT(A).

Still aggrieved, the assessee filed second appeal with the Tribunal.It is claimed by the assessee , inter-alia, in its grounds of appeal that the Ld. Addl./JCIT(A) has passed an ex-parte appellate order without discussing the issues in hands on merits, which is in violation of Section 250(6) of the 1961 Act. It is claimed that the reassessment has been framed without issuing notice u/s 143(2) of the 1961 Act . It is prayed that if one more opportunity is provided, the assessee will comply with the notices and submit necessary replies/response.

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. We have briefly stated the facts and contentions of both the parties in the preceding para’s of this order, and the same are not repeated. We have observed that the ld. Addl./JCIT(A) dismissed the appeal of the assessee ex-parte in limine without deciding the issues arising in the appeal on merits. The ld. Addl./JCIT(A) issued as many twelve notices as stated in appellate order , but there was no compliance by the assessee. The ld. Addl./JCIT(A) simply dismissed the appeal of the assessee ex-parte by affirming the reassessment 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 notices issued by ld.Addl./JCIT(A). We have observed that the ld. Addl./JCIT(A) has not specified whether the said notices were served on the assessee and the mode of service. The appellate order passed by ld. Addl./JCIT(A) is a non speaking order passed ex-parte in limine without deciding the issue arising in the appeal on merits. The ld. Addl./JCIT(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. Addl./JCIT(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. Addl./JCIT(A) has to state point for determination, his decision and reasons thereof. The ld. Addl./JCIT(A) even did not made any enquiry, and not even assessment records were called for by ld. Addl/JCIT(A). The appellate order passed by ld. Addl/JCIT(A) is subject to further appeal with ITAT u/s 253 of the 1961 Act (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) 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) (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 Addl/JCIT(A) is clearly in violation of section 250(6) of the 1961 Act(Now Section 359(4) of the 1961 Act), and liable to be set aside. Merely stating the reassessment order passed by AO is upheld, and that the assessee has not submitted details/documents/evidences before ld. Addl/JCIT(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. Addl/JCIT(A) , and did not file the requisite details/documents to support his contentions. Thus, the assessee is equally responsible for its woes as the assessee did not comply with the notices issued by the AO as well ld. Addl/JCIT(A). The ld. Counsel for the assessee has made prayers before the Bench that if one more opportunity is provided, 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) of the 1961 Act (Now Section 359(4) of the 2025 Act). We clarify that we have not commented on merits of the issues. Thus, the appellate order passed by ld. Addl/JCIT(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.