PANKAJ MANI KULSHRESHTHA,JAIPUR V. ITO, WARD-3(5), JAIPUR

ITA 19/JPR/2025

AI Insights

This case involves an appeal by Sh. Pankaj Mani Kulshrestha against the order of the Commissioner of Income Tax (Appeals) [CIT(A)], which had dismissed his appeal for non-prosecution. The assessee had initially filed his income tax return for the assessment year 2017-18, which was subjected to scrutiny due to cash deposits. The AO made additions to the assessee's income, which were upheld by the CIT(A). The assessee contested the dismissal of his appeal by the CIT(A) and the additions made by the AO. The ITAT noted the procedural lapses and the need for a substantive hearing on the merits of the case, leading to the restoration of the matter to the AO.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 35420 (ITAT-JAIPUR)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Other Referred Cases: CIT vs. Premkumar Arjundas Luthra HUF, Collector, Land & Acquisition Vs. Mst. Katiji & Others, CIT vs. Kanpur Coal Syndicate, Jute Corporation of India Ltd. vs. CIT, CIT vs. Deep Awadh Hotels (P.) Ltd., KARANVIR SINGH GOSSAL vs. CIT, HV Metal ARC (P.) Ltd. v. ACIT, Nisarhusen Amdali Lakhani, Pawan Kumar Singhal v. ACIT, Ms. Swati Pawa v. DCIT, Sanju Chandrakant GaonkarVs ITO, CIT vs Shree Nirman Foundation Charitable Trust
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: GAUTAM SINGH CHOUDHARY
• Assessee Lawyers: VIKASH YADAV
• Keywords: Condonation of delay; Set aside; Business income; Opportunity of being heard; Reasonable cause; Unexplained investment; Onus to prove; Principle of natural justice; Deemed to accrue or arise in india; Charitable institution
• Section: 144; 143(3); 142(1); 250; 251; 208; 44AD; 13; 69A; 234B; 246A; 271B

Judgement Text

"vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”SMC” JAIPUR Mk0 ,l- lhrky{eh] U;kf;d lnL; ,oa Jh jkBkSM+ deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA. No. 19/JPR/2025 fu/kZkj.k o\"kZ@Assessment Years : 2017-18 Sh. Pankaj Mani Kulshrestha 41, Chitransh Bhawan, Nirankar Colony, Gokulpura, Jhotwara, Jaipur. cuke Vs. The ITO, Ward-3(5), Jaipur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AKHPK4494P vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri Vikash Yadav, Advocate jktLo dh vksj ls@ Revenue by : Sh. Gautam Singh Choudhary, Addl.CIT a lquokbZ dh rkjh[k@ Date of Hearing : 18/02/2025 mn?kks\"k.kk dh rkjh[k@Date of Pronouncement : 27 /03/2025 vkns'k@ ORDER PER: DR. S. SEETHALAKSHMI, J.M. This appeal has been filed by the assessee against order of the ld. CIT(A) dated 27-09-2024, National Faceless Appeal Centre, Delhi hereinafter referred to as (NFAC) ] for the assessment years 2017-18 raising therein following grounds of appeal. “1. The Ld. CIT(A) has erred on facts and in law in dismissing the appeal of the assessee for non-prosecution notwithstanding the fact that none of the notices of hearing were served on the assessee, as provided by law. 2. The Ld. CIT(A) has erred on facts and in law in dismissing the appeal of the assessee for non-prosecution, whereas in view of section 250(6) of the Act, the CIT(A) has no power to dismiss an appeal on account of non-prosecution, as ITA No. 19/JPR/2025 Sh. Panka Mani Khulshrestha vs. ITO 2 held by Hon’ble Bombay High Court in CIT vs. Premkumar Arjundas Luthra HUF, (2017) 291 CIT 614 (Bom). 3. The Ld. CIT(A) has erred on facts and in law in confirming the addition made by the AO, without deciding the case on merits and arbitrarily rejecting the appeal for non-prosecution. 4. The assessee craves his right to add, amend or alter any of the grounds on or before the hearing.” 2.1 At the outset of hearing, the Bench observed that there is delay of 40 days in filing of the appeal by the assessee for which the ld. AR of the assessee filed an affidavit for condonation of delay with following observation :- “I, Pankaj Mani Kulshrestha, R/o 41, Nirankar Colony, Jhotwara, Jaipur, hereby solemnly affirm and declare as under: 1. That I had filed my ITR for AY 2017-18, the assessment of which was completed u/s 143(3) by Income Tax Officer, Ward 5(3), Jaipur, making an addition of Rs.22,79,618/- 2. That an appeal was preferred to the Commissioner (Appeals) against this order of assessment, who dismissed the appeal, vide his order dated 27.09.2024. 3. That I did not receive the appellate order and so I had no knowledge about the appeal having been disposed off. 4. That I came to know about the same when a received a phone call in the last week of December, 2024, from Income tax office asking me to deposit the outstanding demand. 7. That immediately I requested my AR to file the appeal at the earliest, who assured me to undertake it within a week. 8. That the delay in filing the appeal was on account of non-communication of the appellate order and was unintentional and there was no malafide intention in non-filing of the same. 9. The delay may kindly be condoned.” ITA No. 19/JPR/2025 Sh. Panka Mani Khulshrestha vs. ITO 3 2.2 The ld. AR of the assessee appearing in this appeal submitted that the assessee is serious on the duties and the delay of 40 days so that I had no knowledge about the appeal having been disposed off resulted in delay. Considering the decision of the apex court in the case of Collector, Land & Acquisition Vs. Mst. Katiji& Others 167 ITR 471(SC) wherein it was directed the other courts to consider the liberal approach in deciding the petition for condonation as the assessee is not going to achieve any benefit for the delay in fact the assessee is at risk. 2.3. During the course of hearing, the ld. DR objected to assessee’s application for condonation of delay and prayed that Court may decide the issue as deem fit and proper in the interest of justice. 2.4 We have heard both the parties and perused the materials available on record. The Bench noted that the reasons as advanced by assessee for condonation of delay of 40 days are sufficient to condone the delay which has merit. Thus, we concur with the submission of the assessee and condone the delay of 40 days in filing the appeal by the assessee in view of the decision of Hon’ble Supreme Court in the case of Collector, land Acquisition vs. Mst. Katiji and Others, 167 ITR 471 (SC) as the assessee was prevented by sufficient cause. ITA No. 19/JPR/2025 Sh. Panka Mani Khulshrestha vs. ITO 4 3.1 Apropos Ground of appeal of the assessee, brief facts of the case are that the assessee is an individual who filed his return of income on 01-05-2017 declaring total income of Rs.2,96,820/-. The case of the assessee was selected for limited scrutiny under CASS for verification of cash deposits during the year. It is noted that the AO had sent notices to the assessee to file the reply but the same were not replied by the assessee. It is noted from the assessment order that the assessee had not produced his bank account statements, books of accounts, tax audit report etc. which shows the deliberate non-compliance of the statutory notice and not furnishing the evidence / explanation in support of his defence. Hence, the AO had no option except to complete the assessment ex-parte u/s 144 of the Act based on the materials available before him. Accordingly, the assessment was completed u/s 143(3) of the Act by making an addition of Rs. 15,98,818/- on account of estimation of net profit @ 8% on total deposits and addition of Rs. 6,80,800/- towards unexplained cash deposits. The relevant findings of the AO in para No. 2.3 relating to addition of Rs.15,98,818/- and para 4 to 4.1 relating to addition of Rs.6,80,800/- are reproduced as under:- ‘’2.3 During the course of assessment proceedings sufficient opportunities were provided to the assessee but he failed to furnish the requisite reply/ information as required thorough notices issued u/s 142(1) as well as show cause notices .This shows that the assessee had failed to furnish the ITA No. 19/JPR/2025 Sh. Panka Mani Khulshrestha vs. ITO 5 requisite reply, valid reply in respect to source of such cash deposited and getting credit entries in his bank accounts. On perusal of debit entries of bank account, it appears that the assessee is engaged in some business activity as reveals as per bank account statements that he is an agent of Remote banking service and money so deposited into bank account has been transferred through IMPS. As per ITS details it is also reveals that the assessee works under the name of firm M/s Pankaj Marketing and also deposited cash in his bank account before demonetization period also, however, assessee has failed to furnish the necessary evidences and to produce his books of accounts, therefore, in lack of evidences, a NP rate @8% on the total deposits in both bank accounts is to be applied in this case on total cash deposited in both the above mentioned accounts of Rs.1,99,85,230/-, which would give result of addition amounting to Rs.15,98,818/-on account of trading addition. This would results in an addition of Rs. 15,98,818/-.’’ 4. During the year under consideration, it was also noticed that the assessee had deposited an amount of Rs 6,80,800/- in cash in his bank account a/c No.250004477143 maintained with Indusind Bank, Kalwar Road, Jaipur during the period of demonetization. As mentioned above in the order sufficient opportunities were provided to the assessee to explain such cash deposits during the demonetization period but assessee has failed to do so in what so ever manner, reasons for the same are better known to the assessee. 4.1 Considering the above facts and material available on record, it is established that the assessee has not been able to prove the source of cash deposits in his bank accounts during demonetization of Rs.6,80,800/- The assessee has made cash deposit amounting to Rs.6,80,800/- in the bank account from 8.11.2016 to 30.12.2016 remained unexplained. The assessee has not responded to notice u/s 142(1) and show cause notices issued during e-assessment proceedings. The assessee failed to give any explanation about the nature and source of cash deposits, hence the cash deposits is treated as deemed unexplained money u/s 69A of the I.T. Act, 1961 and added to the total income of the assessee. This would results in an addition of Rs.6,80,800/-. ITA No. 19/JPR/2025 Sh. Panka Mani Khulshrestha vs. ITO 6 3.2. Being aggrieved by the order of the AO, the assessee filed an appeal before the ld. CIT(A). The Ld. CIT(A) observed that various notices were issued on 09.08.2018, 15.01.2019, 22.08.2019, 22.08.2019, & 13.09.2019 and requiring the assessee to file the details in support of grounds taken by the assessee. Since the assessee has not complied with the notices issued, therefore, the ld. CIT(A) dismissed the appeal of the assessee ex-parte by observing as under”:- “…….As the nature and source of the aforesaid cash deposits into the bank accounts made by the assessee has not been explained by the assessee, the cash deposits into the aforesaid bank accounts amounting to Rs. 6,80,800/- is treated as unexplained money in assessee's bank accounts and assessed as income of the assessee as per the provisions of section 69A of the Income Tax Act and taxed as per the provisions of section 115BBE of the Income Tax Act by the AO.. Nothing has been filed by the appellant to substantiate his ground of appeal and rebut the finding of the A.O. during the course of appellate proceedings also. It is seen that the appellant is habitual defaulter and did not reply to the appeal notice issued during the course of appeal proceedings. The onus being on the assessee to answer the charge of having failed to comply with the said notices. Reliance in this regard is, Placed on the decision of Hon'ble supreme court in case of Supreme Court of India, Commissioner of Income Tax, Salem vs K. Chinnathamban on 24 July, 2007, In Appeal (civil) 3230 of 2007 2. The short question which arises for determination in this group of civil appeals is: Whether in the facts and circumstances of the case the Tribunal was right in holding that income on the unexplained investments should be considered in the hands of the firm, M/s V.V. Enterprises. The Hon'ble court held as under, ING \"The onus of proving the source of deposit primarily rested on the persons in whose names the deposit appeared in various banks. In the circumstances, the Department was right in making individual assessments in the hands of respondent-assessee, K. Chinnathamban. Similarly, the Department was right in making the individual ITA No. 19/JPR/2025 Sh. Panka Mani Khulshrestha vs. ITO 7 assessments in the names of other respondent-assessees, who are parties to connected civil appeals herein. Accordingly. the above civil appeals filed by the Department are allowed with no order as to costs. Further the following decision in the case of Kale Khan Mohammad Hanif vs CIT reported in 50 ITR 1 The exposition of the Hon'ble Apex Court is as under :- \"It is well established that the onus of proving the source of a sum of money found to have been received by the assessee is on him. If he disputes liability for tax, it is for him to show either that the receipt was not income or that if it was, it was exempt from taxation under the provisions of the Income-tax Act. In the absence of such proof, the Income-tax Officer is entitled to treat it as taxable income\", CIT vs. Daulat Ram Rawatmull (1993): This case emphasized that the burden of proof is on the taxpayer to explain the source of the unexplained investment, and if the explanation is not satisfactory, the amount can be treated as income. Further relying of decision in case of Chuharmal Vs. Commissioner of Income Tax (1988) 3 SCC 588 as under; The onus of proving the source of deposit primarily rests on the person in whose name the deposit appears in various banks. In the circumstances, the department was right in making individual assessments in the hands of assessee in question. Similarly, the revenue was right in making the individual assessments in the names of other assessees. The primary onus of complying with the departmental notices is that of the assessee. Hence, it is crystal clear that the appellant has failed to discharge the onus to show the source of cash deposit in his bank account amounting to Rs 6,80,800/-remain unexplained. Therefore, in view of the elaborate discussion/analysis and conclusion of the A.O. in the Assessment order, and in absence of any response received from the appellant, considering the conduct of the assessee during the assessment proceedings and no reasons having been adduced during the appellate proceeding I find no reason to interfere in the finding of the A.O. I proceed to confirm the additions made by the assessing officer. Thus the addition of Rs. 6,80,800/- made u/s 69A of the Act is upheld and ground no 1 and 2 of the appeal on this issue are dismissed. Ground No. 3 The appellant was accorded various opportunities to explain the deposit in the above bank accounts however assessee failed to furnish the necessary evidences such as books of accounts, source of cash deposit etc. During the course of appeal proceeding the appellant has not furnished any evidence or document. The addition of Rs. 15,98,818/- therefore is sustained ground no. 3 is dismissed. ITA No. 19/JPR/2025 Sh. Panka Mani Khulshrestha vs. ITO 8 Ground No. 4,5,6, and 7 are decided together as they are interlinked and emanate from the same issue. Ground No. 4 On the facts and circumstances of the case the Ld. A.O. grossly erred in initiating the penalty proceeding u/s 270A(9) of the IT Act. Ground No. 5. On the facts and circumstances of the case the Ld. A.O. grossly erred in initiating the penalty proceeding u/s 271AAC of the IT Act. Ground No. 6. On the facts and circumstances of the case the Ld. A.O. grossly erred in initiating the penalty proceeding u/s 272(1)(d) of the IT Act. Ground No. 7. On the facts and circumstances of the case the Ld. A.O. grossly erred in initiating the penalty proceeding u/s 271B of the IT Act. As far as initiation of penalty u/s 270A(9), 271AAC, 272(1)(d) and 271B are concerned penalty is a separate proceeding hence not adjudicated upon. Hence ground no 4,5,6, and 7 are dismissed. Ground No. 8. The Ld. A.O. also erred in charging interest u/s 234A, 234B and 234C of the Income-tax Act, 1961. In the above grounds the appellant raised the issue of charging of interest u/s 234A/B/C. Interest in clear terms imposes a mandate to collect interest at the rates stipulated therein. The change brought about by the Amending Act (Finance Act, 1987) is a clear indication of the fact that the intention of the legislature was to make the collection of statutory interest mandatory [CIT vs. ANJUM M.H. GHASWALA & ORS. (2001) 252 ITR 1 (SC)). The decision in the case of Anjum M.H. Ghaswala and Others, a five Judge Bench decision of Supreme Court, is binding and in the said judgment, the Supreme Court held in unequivocal terms that interest u/s 234B is mandatory in nature [KARANVIR SINGH GOSSAL vs. CIT (2012) 349 ITR 692 (SC)]. In CIT vs Deep Awadh Hotels (P.) Ltd. (2013) 350 ITR 185 (All), the High Court held, once interest is mandatory, the liability falls automatically on the assessee on default. Hence this ground no 8 is dismissed. Ground No. 9. The assessee craves rights to add, amend, alter any of the grounds of appeal.\" Despite granting various opportunities the appellant failed to furnish any details on the grounds as above. Hence the appeal is decided on the ground filed along with the form no 35. This ground therefore is dismissed. 8: NON-COMPLIANCE TO THE APPEAL NOTICES It is seen that the appellant has been offered sufficient opportunities before disposal of the appeal since the appeal was instituted as on 30/12/2019, but the appellant did not furnish any documentary evidences on the dates posted for ITA No. 19/JPR/2025 Sh. Panka Mani Khulshrestha vs. ITO 9 hearing in support of its claim the appellant failed to substantiate its grounds of appeal with evidences. There are no responses to the following notices/letters as under, 1. Hearing notice u/s 250 dated; 08/01/2021. 2. Hearing notice u/s 250 dated; 22/01/2021. 3. Hearing notice u/s 250 dated; 25/10/2023. 4. Hearing notice u/s 250 dated; 18/12/2023 The appellant has not submitted any written submission in response to the above notices. Since the appeal filed, the assessee remains unresponsive. The issue of non- compliance of appeal proceedings are squarely covered vide following decisions as under; As there is no response to appeal notices, the appeal is liable to be dismissed in terms of verdicts of the Hon'ble Apex Court and the various High Courts. The Hon'ble Apex Court, in the case of CIT v. B.N.Bhattacharjee and another (10 CTR 354) held that an appeal means an effective appeal ; \"Expression \"prefers an appeal would mean effectively prosecuting an Appeal\" Purposefully interpreted, preferring an appeal means more than formally filing it but effectively pursuing it. If a party retreats before the contest begins, it is as good as not having entered the fray. The Hon'ble MP High Court in Estate of Late Tukoji RaoHolkar v. CIT, 223 ITR 48(MP) has held that if a party, at whose instance the reference is made, fails to appear at the hearing, or fails in taking steps for preparation of paper books so as to enable hearing of the reference, the court is not bound to answer the reference. Similar view has also been taken in the case of CIT v. Multiplan (India) Pvt. Ltd., 38 1TD 320 (Del).Following the ratio of Multiplan (India) Ltd (supra), the Chennai Tribunal has also dismissed appeal for non- prosecution in the case of M/S Helios and Matheson Information Technology Ltd v ITO in ITA No. 134/Mds/2011 dated 5.7.2011 for A.Y.2006-07. It is pertinent to add here that the laws assist those who are vigilant and not those who sleep over their rights. This principle is embodied in the well-known maxim \"Vigilantibus non dormientibus jura subveniunt\". It means equity comes to the aid of the vigilant and not the slumbering. In all actions, suits and other proceedings at law and ITA No. 19/JPR/2025 Sh. Panka Mani Khulshrestha vs. ITO 10 in equity, the diligence and careful plaintiff is favoured to the prejudicial of him who is careless. In case of: Sanjay Chandrakant GaonkarVs ITO (ITAT Mumbai) Appeal Number: ITA No. 364/MUM/2022 Date of Judgement/Order: 17/07/2023 (ITAT Mumbai) Held as under, \"5. We find that the Ld. CIT(A) has issued as much as four notices and thereafter issues final opportunity but no effective compliance was made on the part of the assessee. Further on 28.02.2017 the Ld. Authorised Representative of the assessee filed reply, which was forwarded by the Ld. CIT(A) to the Assessing Officer calling for remand report. Consequently, the Assessing Officer called for the assessee for verification of the documents, but again no compliance was made on the part of the assessee and this fact was reported by the Assessing Officer to the Ld. CIT(A). Once again, the assessee filed part detail on 10.03.2017, which was forwarded to the Assessing Officer for verification but again no compliance was made by the assessee before the Assessing Officer, In view of the above facts and circumstance, it is evident the assessee has not cooperated before the lower authorities for verification of the its own documents and claims. Before us the Ld. Counsel of the assesses requested for restoring the matter back to the file of the Ld. CIT(A). In the interest of the substantial justice, we feel it appropriate to restore the issue back to the Ld. CIT(A), however looking to the non-compliant conduct of the assessee and total disregard of the proceedings before the Ld. CIT(A), impose cost of Rs. 20,000/-. The assessee is directed to deposit the same into Prime Minister Relief Fund within seven days of receipt of this order. Further, ITAT Mumbai in case of Jerry John Mendoncaln ITA No/1197/Mum/2023 order held under; \"Jerry John MendoncaVs ITO (ITAT Mumbai) Introduction: The Income Tax Appellate Tribunal (ITAT) Mumbai recently heard an appeal filed by Jerry John Mendonca against the order of the Ld. Commissioner of Income-tax (Appeals) for the assessment year 2011-12. The appeal raised grounds regarding non-compliance with income tax proceedings before lower authorities. Analysis: The ITAT considered the reasons cited by the assessee for the delay in filing the appeal and condoned the delay of 208 days. However, the ITAT observed that the assessee had failed to comply with income tax proceedings before the Assessing Officer (AO) and the Ld. CIT(A). Despite various notices and opportunities, the assessee did not respond or participate in the proceedings. The ITAT noted that the appeal had been dismissed by the Ld. CIT(A) due to the lack of compliance and non- participation by the assessee. However, the ITAT found it appropriate to impose a cost of Rs. 5,000 on the assessee for its non-compliant behaviour. The ITAT directed the assessee to deposit the cost into the Prime Minister Relief Fund within 30 days of the receipt of the order\". Further in landmark decision in the case of CIT Vs Shree Nirman Foundation Charitable Trust (Gujarat High Court) R/Tax Appeal No. 1335 of 2018 Date of ITA No. 19/JPR/2025 Sh. Panka Mani Khulshrestha vs. ITO 11 Judgement/Order: 30/07/2019 while deciding the issue under consideration if Assesseeremained absent on more than one occasions and appeal decided on merits then whether it will be called as Ex-parte order. The Hon'ble High Court states that if an order is passed by the CIT (A) on merits despite the fact that the assessee failed to appear before the CIT (A) at the time of the final hearing of the appeal, the order passed by the CIT(A) cannot be termed as ex- prate. An order having been passed by the CIT(A) after service of notices on the assessee, there is no question of failure of natural justice. It cannot be said that the assessee was not given an opportunity of hearing. The order of the CIT(A) is more than clear. On more than one occasion, the assessee remained absent before the CIT (A), and in such circumstances, the CIT had no option appeal on its own option but to look into the records and decide the appeal on its own merit. In view of the above the primary onus of the notices and furnishing the evidence/documentary evidence are with that of the appellant. In view of the above non-compliance the appeal is dismissed. 8.1 To sum up appeal is dismissed on all ground on merits as well as on non- compliance accordingly.” 3.3. Aggrieved from the order of the ld. CIT(A) the assessee has preferred this appeal before us on the grounds as reiterated in para 3 above. In support of the grounds of appeal the ld. AR of the assessee has relied upon the following written submission:- “The assessee is a distributor of Pathway Recharge. His business model is B2B. Pathway Recharge provides online facility to pay for Electricity bill, Water bill, Prepaid, Postpaid, DTH, DMT, Wallet, Fast Tag, Land Line, CableTV, Broad Band, Piped Gas, Education Fee, Insurance, Gas Cylinder, AEPS and other BBPS services. It provides 'Any Time Payment facility to its customers. It covers all major service providers. It also provides Money Transfer facility. On the transfer of these prepaid balances, the assessee gets discount, which constitutes his turnover. The assessee received cash and digital payments from the retailers which were credited to his bank account. On the other hand. the corresponding amounts got transferred to the Company through IMPS. The assessee earned a very miniscule margin, which was 0.9% from 01.04.2016 to 31.08.2016 and 3.3% from 01.09.2016 to 31.3.2017. Submission on the grounds of appeal 1. The Ld CIT(A) has erred on facts and in law in dismissing the appeal of the assessee for non-prosecution notwithstanding the fact that none of the notices of hearing were served on the assessee, as provided by law - Initially, the appeal was ITA No. 19/JPR/2025 Sh. Panka Mani Khulshrestha vs. ITO 12 filed with CIT(A)-3, Jaipur. The first notice of hearing was sent by CIT(A)-3, Jaipur, through post, and due compliance of the notice was made Thereafter, the appeal migrated to NFAC. The notices were sent on the portal but the assessee not being tech- savvy, could not know about them. He was under the impression that notices would come through post. However, he came to know about the order of the CIT(A) in the last week of December, 2024, after he received a call from the Income tax office asking him to deposit the demand. Thus, there existed a reasonable cause for not making compliance to the notices sent on the portal by NFAC. 2. The Ld CIT(A) has erred on facts and in law in dismissing the appeal of the assessee for non-prosecution, whereas in view of Section 250(6) of the Act, the CIT(A) has no power to dismiss an appeal on account of non-prosecution, as held by Hon'ble Bombay High Court in CIT vs. Premkumar Arjun das Luthra HUF, (2017) 291 CTR 614 (Bom.)- An appeal having been filed, the CIT(A) was not legally correct in dismissing the same for non-appearance. An appeal is filed with the CIT(A) from appealable orders listed in Section 246A of the Act. The procedure in appeal before the CIT(A) and the powers of the CIT(A) are governed by Sections 250 and 251 of the Act respectively. The relevant provisions for consideration are as under: Procedure in appeal Section 250 (1)....... (2)…………. (3)..... (4) The Commissioner (Appeals) may, before disposing of any appeal, make such further inquiry as he thinks fit, or may direct the Assessing Officer to make further inquiry and report the result of the same to the Commissioner (Appeals).\" (5)……….. (6) The order of the Commissioner (Appeals) disposing of the appeal shall be in writing and shall state the points for determination, the decision thereon and the reason for the decision. (6A)……………. (7)……………. Powers of the Commissioner (Appeals) Section 251(1) In disposing of an appeal, the Commissioner (Appeals) shall have the following powers - ITA No. 19/JPR/2025 Sh. Panka Mani Khulshrestha vs. ITO 13 (a) in an appeal against an order of assessment, he may confirm, reduce. enhance or annul the assessment. (aa)……………. (b) in an appeal against an order imposing a penalty, he may confirm or cancel such order or vary it so as either to enhance or to reduce the penalty\" (c)... (2) The Commissioner (Appeals) shall not enhance an assessment or a penalty or reduce the amount of refund unless the appellant has had a reasonable opportunity of showing cause against such enhancement or reduction. Explanation. In disposing of an appeal, the Commissioner (Appeals) may consider and decide any matter arising out of the proceedings in which the order appealed against was passed, notwithstanding that such matter was not raised before the Commissioner (Appeals) by the appellant. 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 coterminus 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 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 ITA No. 19/JPR/2025 Sh. Panka Mani Khulshrestha vs. ITO 14 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. This view is also taken by the Hon'ble Bombay High Court in case of CIT vs. Premkumar Arjundas Luthra HUF (2017) 297 CTR 614 (Bom.). A bare glace of the order of the CIT(A) shows that CIT(A) has not addressed itself on the various points placed for its determination at all and dismissed the appeal of assessee for default in non-appearance. Needless to say, the CIT(A) plays role of both adjudicating authority as well as appellate authority. Thus, the CIT(A) could not have shunned the appeal for non-compliance without addressing the issue on merits. Again in the case of Pawan Kumar Singhal v. ACIT [2019] 108 taxmann.com 548 (Delhi Trib), the Delhi ITAT held that Commissioner (Appeals) cannot dismiss assessee's appeal in limine for non-prosecution without deciding same on merits through an order in writing, stating points of determination in appeal, decision thereon and reason for decision. 10. In the case of Ms. Swati Pawa v. DCIT [2019] 103 taxmann.com 300 (Delhi - Trib.), the Delhi ITAT held that in terms of Section 250, Commissioner (Appeals) is not empowered to dismiss appeal for non-prosecution and is obliged to dispose of appeal on merits by passing a speaking order. In the case of HV Metal ARC (P.) Ltd. v. ACIT [2018] 100 taxmann.com 4 (Delhi - Trib.), the Delhi ITAT held that where Commissioner (Appeals) dismissed assessee's appeal on ground that assessee did not wish to pursue appeal, since revenue failed to bring any evidence to prove actual service of notice of hearing on assessee, requirements of procedure as mentioned in Section 250(1) and (2) could not be said to have been fulfilled and, thus, impugned order was to be set aside. In the case of Nisarhusen Amdali Lakhani (ITA 532/Ahd/2018), ITAT Ahmedabad observed as under: \"We straightway refer to Section 250(6) of the Act which enjoins that the CIT(A) shall state the points for determination before it and the decision shall be rendered on such points along with reasons for the decision. Thus, it is incumbent upon the CIT(A) to deal with the grounds on merits even in ex pane order. In view of Section 250(6) of the Act, the CIT(A) has no power to dismiss an appeal on account of non-prosecution. 3. The Ld CIT(A) has erred on facts and in law in confirming the addition made by the AO, without deciding the case on merits and arbitrarily rejecting the appeal for non- prosecution - The Ld.AO completed assessment u/s 144. It is no doubt true that the facts of the case justified an ex-parte best judgement assessment u/s 144 because of the defaults committed by the assessee, but in making a \"best judgement assessment', the AO can not act dishonestly or vindictively or capriciously because he must exercise ITA No. 19/JPR/2025 Sh. Panka Mani Khulshrestha vs. ITO 15 the jurisdiction in the matter. In making a best judgement assessment, the assessing officer does not possess absolute arbitrary authority to assess any figure he likes and that although he is not bound by strict judicial principles, he should be guided by rules of justice, equity and good conscience. The limits of the power of the Assessing officer are implicit in the expression 'best of his judgement Though there is an element of guess work in a \"best judgement assessment it should not be a wild one but shall have reasonable nexus to the available maternal and the circumstances of each case. The power to levy assessment on the basis of best judgement is not an arbitrary power, it is an assessment on the basis of best judgement. In other words, that assessment must be based on some relevant material It is not a power that can be exercised under sweet will and pleasure of the concerned authorities. The scope of that power has been explained over and over again by the Supreme Court. In the case of the assessee, the AO had access to the ITRs filed by the assessee The P&L account in the ITR for AY 2017-18 clearly showed Sale of services to the tune of Rs.5,24,800/- He had with him the bank statements, which he had obtained u/s 133(6). In the order, the AO has himself held - On perusal of debit entries of books of accounts, it appears that the assessee is engaged in some business activities, as revealed from bank statements that he is an agent of Remote banking service and money so deposited into bank A/c has been transferred through IMPS. The AO, ought to have worked out the difference between the credit entries and the IMPS entries. which would have revealed the value of services rendered by the assessee and assessed the actual and true income of the assessee. Instead, he went on to apply a net profit rate of 8% to the amount credited in the bank drawing support from section 44AD, which was contrary to his own findings. On one hand the AO believes the business of the assessee to be Agency business and on the other hand works out the income as per section 44AD. Section 44AD(6) specifically excludes agency business. Even the aggregate of the credits worked out by him was incorrect. Further. he blindly added the cash deposited during demonetization period u/s 69A, in a computerized manner. Has he gone through the bank statement carefully, he would have noticed that there were cash deposits almost every week, right from the first day of the financial year. The AO on one hand is himself stated that the assessee seems to be an agent of remote banking service, and on the other hand has added the cash deposited during demonetization period without noticing any unusual hike in the quantum of deposits. Another blunder committed by him is that on one hand he has applied a profit rate on the entire amount credited in the bank account of the assessee (cash as well as transfer entries) and on the other hand has separately added the cash deposits of Rs.6,80,800/- made during demonetization period, which means that against a deposit of Rs.6,80,800/-, an income of Rs.7.35.264/- (680800+8% of 680800) has suffered tax. The Ld. CIT(A) overlooked all these vital aspects and blindly endorsed the addition made by the AO, by observing -To sum up appeal is dismissed on all ground on merits as well as on non-compliance accordingly. ITA No. 19/JPR/2025 Sh. Panka Mani Khulshrestha vs. ITO 16 He did not even bother to see that from AY 2017-18, in case of payments having been received through digital mode, deemed business income u/s 44AD was to be calculated @ 6%. The AO had clearly given the bifurcation of the amount deposited and being an Appellate authority, at least, he ought to have provided relief to that extent. Baldly stating that the appeal has been dismissed on all grounds on merits is a mere alibi to cover up the dismissal of appeal for non-compliance. In CIT vs. Kanpur Coal Syndicate (1964) 53 ITR 225 the Supreme Court held that the Appellate Assistant Commissioner has plenary powers in disposing of an appeal. The scope of his powers is co-terminus with that of the Income tax officer. He can do what the Income tax officer can do and also directly to do what he is failed to do. This view was reiterated by Supreme Court in Jute Corporation of India Ltd. vs. CIT (1991) 187 ITR 688 From the above discussion it is clear that the cash deposited in the bank was from disclosed sources and the income comprised therein had been truly and correctly disclosed by the assessee. The AO has arbitrarily worked out the income and the CIT(A) has followed suit in confirming the addition made. It is prayed that in order to render substantial justice to the assessee, the case may be restored to the file of the AO.” To support his contention, the ld. AR of the assessee has filed followng e paper book having pages 1 to 110 of the paper. S. No. Particulars Page No. 1. Copy of form of Income Tax Return filed for AY 2017-18 1-44 2. Copy of Tax invoice received from “pathway Recharge” with Commission or discount @ .90%, (for sample.) 45-49 3. Copy of Tax invoice received from “pathway Recharge” with Commission or discount @ 3.30%, (for sample.) 50-54 4. An affidavit for delay of condone 55-55 5. Copy of current bank account statement from 01.04.2016 to 31.03.2017 56-110 ITA No. 19/JPR/2025 Sh. Panka Mani Khulshrestha vs. ITO 17 3.4 During the course of hearing, the ld. AR for the assessee prayed that the Ld. CIT(A) and the AO passed the ex-parte orders and the assessee was not provided adequate opportunity of being heard. Thus, the assessee may be provided one more opportunity to advance his arguments/submissions before the ld. AO in the interest of equity and justice. 3.5. Per contra, Ld. DR objected to the prayer of the assessee and submitted that the assessee did not participate in the proceedings made before the lower authorities and remained non-cooperative and thus the ld. DR conclusively supported the orders of the lower authorities. 3.6. We have heard both the parties and perused the materials available on record. It is noted that the AO made two additions in the hands of the assessee amounting to Rs.15,98,818/- as trading addition and Rs.6,80,800/- as unexplained cash deposit treating it as deemed income u/s 69A of the Act. However, in first appeal, the ld. CIT(A) has dismissed the appeal of the assessee confirming the action of the AO as no controverting material was supplied by the assessee in spite of providing various opportunities. It is also noted from the submissions of the ld. AR of the assessee wherein he prayed that in order to render substantial justice to the assessee, the case may be restored to the file of the AO. The ITA No. 19/JPR/2025 Sh. Panka Mani Khulshrestha vs. ITO 18 Bench noted that it is an admitted fact that the assessee is ex-parte before the AO and also before the ld. CIT(A). Therefore, he could not put forth his defence. It was the bounded duty of the assessee to appear before the statutory authorities as and when called for. It is noticed that various opportunities were provided to the assessee for settling the issue but the assessee remained lethargic and unserious in pursuing his case. However, we are of the view that lis between the parties has to be decided on merits so that nobody’s rights could be scuttled down without providing opportunity of being heard to the assessee. Hence, the matter is restored to the file of the AO to decide it afresh by providing one more opportunity of hearing, however, the assessee will not seek any adjournment on frivolous ground and remain cooperative during the course of proceedings. Thus the appeal of the assessee is allowed for statistical purposes. 3.7 Before parting, we may make it clear that our decision to restore the matter back to the file of the AO shall in no way be construed as having any reflection or expression on the merits of the dispute, which shall be adjudicated by AO independently in accordance with law. ITA No. 19/JPR/2025 Sh. Panka Mani Khulshrestha vs. ITO 19 4.0 In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on 27 /03/2025. Sd/- Sd/- ¼ jkBkSM+ deys'k t;UrHkkbZ ½ ¼MkWa-,l-lhrky{eh½ (RATHOD KAMLESH JAYANTBHAI) (Dr. S. Seethalakshmi) ys[kk lnL; @Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 27 /03/2025 *Mishra vkns'k dh izfrfyfi vxzsf’kr@Copy of the order forwarded to: 1. vihykFkhZ@The Appellant- Sh. Pankaj Mani Kulshrestha, Jaipur. 2. izR;FkhZ@ The Respondent- ITO, Ward-3(5), Jaipur. 3. vk;dj vk;qDr@ CIT 4. vk;dj vk;qDr@ CIT(A) 5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur. 6. xkMZ QkbZy@ Guard File { ITA No. 19/JPR/2025} vkns'kkuqlkj@ By order lgk;d iathdkj@Asst. Registrar "