ITAT Raps CIT(A) for Skipping Merits, Restores Trader’s Appeal for Fresh Hearing [Read Order]
The Bench remarked that “reason is the life of law” and its absence “mummifies the core spirit of the order” . It held that no litigant should be condemned unheard and that the matter required reconsideration.
The Agra Bench of the Income Tax Appellate Tribunal (ITAT) set aside an ex parte order of the Commissioner of Income Tax (Appeals) and directed a fresh hearing, criticising the appellate authority for failing to examine the merits of the case.Virendra Kumar Jain, who carried on business under the name M/s Shri Vidhya Sagar Traders, had filed his return of income for the assessment year 2018-19 declaring Rs. 13.28 lakh. Based on information regarding cash deposits, withdrawals and TDS/TCS data, the Assessing Officer reopened the case under section 147. While the explanations offered by the assessee on certain issues were accepted, the Assessing Officer alleged that the assessee had shown bogus sales of Rs. 1.18 crore to M/s Mahaveer Prasad Suresh Kumar, New Delhi. The department relied on investigation wing reports that the said concern was a non-genuine entity engaged in providing accommodation entries.
In response to notices, the assessee submitted documents such as purchase orders, invoices, delivery challans, mandi gate passes, lorry receipts and ledger extracts. The Assessing Officer, however, pointed out discrepancies in invoice dates, lorry numbers and ledger entries, and concluded that the sales were bogus. An addition of Rs. 1.18 crore was made under section 69A read with section 115BBE.
The assessee carried the matter in appeal, but the CIT(A) dismissed it ex parte on 31 March 2025, citing non-compliance with notices. Aggrieved, the assessee approached the Tribunal, arguing that the appellate authority had failed to discharge its duty under section 250(6) to decide the appeal on merits.
The Tribunal observed that while the assessee had not responded to notices issued on multiple occasions, the CIT(A) had passed the order without any substantial discussion on the merits of the additions. The Bench remarked that “reason is the life of law” and its absence “mummifies the core spirit of the order” . It held that no litigant should be condemned unheard and that the matter required reconsideration.
The Bench comprising Balaganesh, Accountant Member, and Sunil Kumar Singh, Judicial Member, remitted the matter back to the CIT(A) for fresh adjudication on merits after affording opportunity of hearing to the assessee. The assessee was directed to cooperate in the proceedings, and the CIT(A) was instructed to pass a speaking and reasoned order.
The appeal was allowed for statistical purposes, with the Tribunal clarifying that it had not expressed any view on the merits of the additions.
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