KULATHUMKUZHIYIL MUHAMMED ASHRAF,KOTTAYAM V. INCOME TAX OFFICER WARD 1 KOTTAYAM, KOTTAYAM

ITA 622/COCH/2025

AI Insights

The case involves Kulathumkuzhiyil Muhammed Ashraf, the appellant, who did not file a regular return of income for the Assessment Year 2018-19. The Income Tax Officer (ITO) issued a notice under section 148 of the Income Tax Act, 1961, upon discovering that the appellant had received an interest income of Rs. 29,03,429 from United India Insurance Company Ltd., which was not reported. The appellant contended that this income was from a compensation awarded by the Motor Accident Claims Tribunal, which should not be taxable. The CIT(A) dismissed the appeal ex parte due to non-compliance with notices, without considering the merits of the case. The Tribunal found this dismissal procedurally incorrect and remanded the case for a thorough examination on merits.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 784495 (ITAT-COCHIN)
• Duration Of Justice: 2 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-11-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2018-2019
• Appeal Filed On: 31-08-2025
• Other Referred Cases: Rupesh Rashmikant Shah v. UOI [2019] 417 ITR 169, PCIT vs. Premkumar Arjundas Luthra 279 CTR 614
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: LEENA LAL
• Assessee Lawyers: PRASHANTH SRINIVAS
• Section: 148; 142(1)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH BEFORE SHRI INTURI RAMA RAO, AM ITA No. 622/Coch/2025 Assessment Years: 2018-19 Kulathumkuzhiyil Muhammed Ashraf .......... Appellant Kulathumkuzhiyil, Velloor, Kottayam 686501 [PAN: BZVPA6849J] vs. The Income Tax Officer, WD-2, Kottayam .......... Respondent Assessee by: Shri Prashanth Srinivas, CA Revenue by: Smt. Leena Lal, Sr. D.R. Date of Hearing: 28.10.2025 Date of Pronouncement: 14.11.2025 O R D E R This appeal filed by the assessee is directed against the order of the National Faceless Appeal Centre, Delhi [CIT(A)] dated 23.06.2025 for Assessment Year (AY) 2018-19. 2. Brief facts of the case are that the appellant is an individual. No regular return of income under the provisions of section 139(1) of the Act was filed for AY 2018-19. Based on the information that the appellant received interest income from United India Insurance Company Ltd. or Rs. 29,03,429/- during the previous year relevant to assessment year under consideration, the AO formed an opinion that income escaped assessment to tax. Accordingly, a notice u/s. 148 of the Income Tax Act, 1961 (the Act) was issued on Printed from counselvise.com 2 ITA No. 622/Coch/2025 Kulathumkuzhiyil Muhammed Ashraf 31.03.2022. The appellant neither complied with the notice u/s. 148 nor u/s. 142(1) of the Act issued by the AO calling for certain information. In the circumstances, the AO was constrained to pass best judgement assessment by bringing to tax the interest income of Rs. 29,03,429/- as unexplained money of the appellant. 3. Being aggrieved, an appeal was filed before the CIT(A), contending that the interest income was received on account of compensation awarded to the appellant by the Motor Accident Claims Tribunal vide order dated 31.01.2017 following the death of his wife on road accident on 17.08.2022. It is submitted that the interest on compensation partake the character of compensation, which is not taxable placing reliance on the decision the Hon'ble Bombay High Court in the case of Rupesh Rashmikant Shah v. UOI [2019] 417 ITR 169. However, the CIT(A) merely dismissed the appeal exparte by taking into consideration the fact that the appellant failed to comply with the notice issued by the AO without entering into the merits of the addition made by the AO. 4. Being aggrieved, the appellant is in appeal before this Tribunal in the present appeal. 5. I heard the rival contentions and perused the material available on record. I find that the learned CIT(A) dismissed the appeal in limine for non prosecution. As contemplated u/s. 250(6) of the Act the CIT(A) is required to frame points of determination followed by a detailed discussion thereupon before passing the order. It is the settled Printed from counselvise.com 3 ITA No. 622/Coch/2025 Kulathumkuzhiyil Muhammed Ashraf position of law that the CIT(A), even while disposing of the appeal exparte, is duty bound to dispose of the appeal on merits. Reliance in this regard can be placed on the decision of the Hon'ble Bombay High Court in the case of PCIT vs. Premkumar Arjundas Luthra 279 CTR 614. Therefore, in the light of the above legal position I am of the considered view that the matter requires to be remanded to the file of the CIT(A) with the direction to dispose of the appeal de novo on merits after affording reasonable opportunity of hearing to the assessee. 6. In the result, the appeal filed by the assessee stands partly allowed for statistical purposes. Order pronounced in the open court on 14th November, 2025. Sd/- (INTURI RAMA RAO) ACCOUNTANT MEMBER Cochin, Dated: 14th November, 2025 n.p. Copy to: 1. The Appellant 2. The Respondent 3. The Pr. CIT concerned 4. The Sr. DR, ITAT, Cochin 5. Guard File Assistant Registrar ITAT, Cochin Printed from counselvise.com "