CIT(A) Must Pass Reasoned Order, Cannot Merely Uphold AO's View: ITAT Restores Rs. 1.86 Cr Addition for Fresh Adjudication [Read Order]

The Kolkata Bench of the Income Tax Appellate Tribunal (ITAT) set aside the orders of both the Commissioner of Income Tax (Appeals) [CIT(A)] and the Assessing Officer (AO) and remitted the matter for fresh reassessment, observing that the CIT(A) failed to pass a reasoned order on the merits of the case as required by Section 250(6) of the Income-tax Act, 1961.

Shri Nityanand Pandey (assessee) did not originally file a return of income for AY 2013-14. Based on information that the assessee made a cash deposit of Rs. 1,86,25,000 in a bank account, the AO initiated reassessment proceedings by issuing a notice under Section 148 of the Income tax act.

Despite numerous notices, the assessee failed to comply or explain the source of the cash deposits. Therefore, the AO held the entire amount of Rs. 1,86,25,000 to be unexplained income.

Aggrieved by the AO’s order, the assessee appealed to the CIT(A). The CIT(A) issued four notices for hearing, but as the assessee did not respond or produce any evidence, the CIT(A) confirmed the assessment order. The CIT(A) stated that the AO's additions were based on available records after giving adequate opportunity.

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Aggrieved by the CIT(A)’s order, the assessee filed an appeal before the ITAT. The assessee's counsel submitted that the assessee could not appear before the AO or the CIT(A) due to family problems and requested that the matter be remanded to the AO for fresh adjudication as there was adequate evidence to support their claim.

The two-member bench, comprising Sonjoy Sarma (Judicial Member) and Rakesh Mishra (Accountant Member), observed that the CIT(A) had not adjudicated the appeal of the assessee on its merits.

The tribunal observed that the CIT(A) merely upheld the AO's view without passing a reasoned order for the decision, which is mandatory under Section 250(6) of the Act.

The Tribunal observed that a speaking order on merits with reasons and findings is required to be passed by the CIT(A) on the grounds raised and cannot dismiss an appeal by merely holding that the AO’s order was a self-speaking order.

The tribunal also highlighted that the law does not empower the CIT(A) to dismiss the appeal for non-prosecution. The Tribunal deemed it appropriate to set aside the orders of the CIT(A) and the AO and remit the matter back to the AO for making a fresh assessment.

The Tribunal directed that the assessee must be given a reasonable opportunity of being heard and should not seek unnecessary adjournments. The appeal filed by the assessee was partly allowed for statistical purposes.

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