DNYANKALA SANVARDHINI SANSTHA,PUNE V. ITO EXEMPTION WARD 1(2), PUNE, PUNE

ITA 794/PUN/2025

AI Insights

The case involves Manju Rameshchandra Mutha, the appellant, contesting additions made to her income by the Assessing Officer (AO) under Section 69A of the Income Tax Act, 1961, for the Assessment Year 2017-18. The additions were based on discrepancies in reported sales and unaccounted cash and stock. The CIT(A) had dismissed the appeal without merit consideration, leading to the current appeal before the Income Tax Appellate Tribunal. The Tribunal found that the CIT(A) had not adjudicated the grounds on merit and emphasized the obligation of the CIT(A) to decide appeals based on the merits rather than dismissing them for non-prosecution.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 316030 (ITAT-PUNE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2016-2017
• Other Referred Cases: Pr.CIT(Central) Vs. Premkumar Arjundas Luthra (HUF)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MADHAN THIRMANPALLI
• Assessee Lawyers: PRATEEK JHA
• Keywords: Set aside; Business income; Opportunity of being heard
• Section: 44AD

Judgement Text

" आयकर अपीलीय अिधकरण ”एस एम सी” Ɋायपीठ पुणेमŐ। IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES “SMC” :: PUNE BEFORE MS.ASTHA CHANDRA, JUDICIAL MEMBER AND DR.DIPAK P. RIPOTE, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No.791/PUN/2025 िनधाᭅरण वषᭅ / Assessment Year: 2017-18 Manju Rameshchandra Mutha, Om Shanti Complex, Nehru Road, Dist-Jalna – 431203. Maharashtra. V s The Income Tax Office, Ward-1, Jalna. PAN: AZTPM9323L Appellant/ Assessee Respondent / Revenue Assessee by Shri Prateek Jha – AR Revenue by Shri Madhan Thirmanpalli – Addl.CIT(DR) Date of hearing 14/05/2025 Date of pronouncement 15/05/2025 आदेश/ ORDER PER DR. DIPAK P. RIPOTE, AM: This appeal filed by the assessee is against the order of ld.Commissioner of Income Tax(Appeals)[NFAC], passed under section 250 of the Income Tax Act, 1961; dated 10.02.2025 for Assessment Year 2017-18. The assessee has raised the following grounds of appeal : “1. On the facts and circumstances prevaling in the case, the Hon'ble Commissioner of Appeal (NFAC) has erred in confirming the addition ITA No.791/PUN/2025 [A] 2 of Rs. 13,60,053/- u/s 69A made by the Id. AO without justifying the rejection of the total sales of Rs. 28,15,000/- even though there were supporting purchase vouchers and sale bills of the items traded in regard to Rajasthani Masala and boutique items. The addition made of Rs. 13,60,053/- may kindly be deleted. 2. On the facts and circumstances prevaling in the case, the Hon'ble Commissioner of Appeal (NFAC) has erred in confirming the addition of Rs. 7,09,929/- and Rs. 6,50,124/-u/s 69A made by the ld. AO rejecting the profit shown at 18.04% declared u/s 44AD, presumtive income, which deserved to be deleted. The claim of the revenue that the opening and closing balances are not tallied with the earlier years return of income, as a matter of facts the appellant did not maintain the books of account and return is filed on presumtive basis the difference located of Rs. 7,09,929/- and Rs. 6,50,124/- (Total Rs. 13,60,053/-) is not legally sustainable. Here, it is worth to submit that according to special provisions of Section 44AD there is exemption from maintenance of books of account has been provided. The base of tentative Balance Sheet attached in the return cannot be treated as confirmed figures to be used for assessment purpose. It is requested to kindly delete the addition.” 2. The ld.Authorised Representative(ld.AR) for the Assessee submitted that assessee’s appeal was dismissed by the ld.CIT(A) without discussing each and every ground and merits of the case and merely dismissed for non-compliance. Hence, ld.AR requested for one more opportunity of being heard to the assessee. Submission of ld.Departmental Representative(ld.DR) : 3. The ld.DR for the Revenue relied on the order of Assessing Officer(AO) and ld.CIT(A)[NFAC]. ITA No.791/PUN/2025 [A] 3 Findings & Analysis : 4. We have heard both the parties and perused the records. It was observed that as per Form No.35, Assessee has raised the following grounds of appeal before the ld.CIT(A) : “On the facts and in the prevailing circumstances of the case and in law, LD A.O. has erred in making the addition of Rs.650000/- + 709929/- = Rs.1360053/- on being not satisfied as there are no such opening stock of cash and stocks were available to the assessee. The A.O.'s, view is not correct and justifiable for the reason that the appellant is exempted from the maintenance of books of account as per the special provisions of Sec. 44 AD of the I.T. Act and therefore, the addition made by the A.0. cannot sustained. Further, at the best the addition could have been made at Rs.60344/- which is 08% of the sales affected from such opening cash balance and opening stock. In view of the above it is requested that the addition made by the A.O. may kindly be deleted on the basis of the submission, being made during the course appellate proceedings obliged.” 4.1 It is observed from the order of the ld.CIT(A)[NFAC] that the ld.CIT(A)[NFAC] did not decide the grounds of appeal on merit, but merely dismissed the appeal of the assessee. The ld.CIT(A) has not adjudicated grounds raised by the assessee on merits. ITA No.791/PUN/2025 [A] 4 4.2 The Hon’ble Bombay High Court has held in the case of Pr.CIT(Central) Vs. Premkumar Arjundas Luthra (HUF)(Bombay)/[2017] 297 CTR 614 (Bombay) as under : Quote, “8.From the aforesaid provisions, it is very clear once an appeal is preferred before the CIT(A), then in disposing of the appeal, he is obliged to make such further inquiry that he thinks fit or direct the Assessing Officer to make further inquiry and report the result of the same to him as found in Section 250(4) of the Act. Further Section 250(6) of the Act obliges the CIT(A) to dispose of an appeal in writing after stating the points for determination and then render a decision on each of the points which arise for consideration with reasons in support. Section 251(1)(a) and (b) of the Act provide that while disposing of appeal the CIT(A) would have the power to confirm, reduce, enhance or annul an assessment and/or penalty. Besides Explanation to sub-section (2) of Section 251 of the Act also makes it clear that while considering the appeal, the CIT(A) would be entitled to consider and decide any issue arising in the proceedings before him in appeal filed for its consideration, even if the issue is not raised by the appellant in its appeal before the CIT(A). Thus once an assessee files an appeal under Section 246A of the Act, it is not open to him as of right to withdraw or not press the appeal. In fact the CIT(A) is obliged to dispose of the appeal on merits. In fact with effect from 1st June, 2001 the power of the CIT(A) to set aside the order of the Assessing Officer and restore it to the Assessing Officer for passing a fresh order stands withdrawn. Therefore, it would be noticed that the powers of the CIT(A) is coterminous with that of the Assessing Officer i.e. he can do all that Assessing Officer could do. Therefore just as it is not open to the Assessing Officer to not complete the assessment by allowing the assessee to withdraw its return of income, it is not open to the assessee in appeal to withdraw and/or the CIT(A) to dismiss the appeal on account of non-prosecution of the appeal by the assessee. This is amply clear from the Section 251(1)(a) and (b) and Explanation to Section ITA No.791/PUN/2025 [A] 5 251(2) of the Act which requires the CIT(A) to apply his mind to all the issues which arise from the impugned order before him whether or not the same has been raised by the appellant before him. Accordingly, the law does not empower the CIT(A) to dismiss the appeal for non- prosecution as is evident from the provisions of the Act.” Unquote. 5. Thus, the Hon’ble Bombay High Court has categorically held that ld.CIT(A) has to decide the appeal on merit and ld.CIT(A) does not have any power to dismiss appeal for non-prosecution. 6. In view of the above, in the interest of justice, we set-aside the order of the ld.CIT(A) to ld.CIT(A) for denovo adjudication. Ld.CIT(A) shall provide opportunity to the assessee. Assessee shall file all the necessary documents before the ld.CIT(A). Accordingly, grounds of appeal raised by the assessee are allowed for statistical purpose. 7. In the result, appeal of the assessee is allowed for statistical purpose. Order pronounced in the open Court on 15 May, 2025. Sd/- Sd/- (ASTHA CHANDRA) (DIPAK P.RIPOTE) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; ᳰदनांक / Dated : 15 May, 2025/ SGR ITA No.791/PUN/2025 [A] 6 आदेशकᳱᮧितिलिपअᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The CIT(A), concerned. 4. The Pr. CIT, concerned. 5. िवभागीयᮧितिनिध, आयकर अपीलीय अिधकरण, “एस एम सी” बᱶच, पुणे / DR, ITAT, “SMC” Bench, Pune. 6. गाडᭅफ़ाइल / Guard File. आदेशानुसार / BY ORDER, // TRUE COPY // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे/ITAT, Pune. "