ITAT Remands Rs 6 Crore Section 68 Addition After Finding CIT(A)’s Ex-Parte Order Non-Speaking 

ITAT Delhi held that the Commissioner (Appeals) cannot dismiss an appeal merely because the assessee failed to appear. The Tribunal set aside the ex parte appellate order confirming a Rs 6 crore addition under Section 68, observing that the CIT(A) is statutorily required to pass a reasoned and speaking order in compliance with Section 250(6) of the Income-tax Act.

The assessee, Foresight Vantaje Private Limited (formerly Victory Infraedge Private Limited), had not filed its original return of income for AY 2018-19. During reassessment proceedings initiated under Sections 147/148, based on information relating to TDS on interest income and the sale consideration of immovable property, the assessee filed its return declaring an income of Rs 4.72 lakh. After conducting enquiries, the Assessing Officer treated Rs 6 crore credited in the books as unexplained cash credits under Section 68 read with Section 115BBE.

The assessee challenged the addition before the CIT(A). However, despite the issuance of five notices, it did not participate in the appellate proceedings. The CIT(A) proceeded ex parte and upheld the addition, observing that no supporting material had been filed to substantiate the assessee’s claim.

Before the Tribunal, the assessee contended that the CIT(A) had simply affirmed the assessment order without independently examining the issue or recording reasons as mandated by Section 250(6). It requested that one more opportunity be granted to present the relevant documents.

The Tribunal observed that although the assessee had failed to respond to repeated notices, the CIT(A) was nevertheless obligated to adjudicate the appeal on merits by passing a reasoned order. It noted that the appellate authority neither called for the assessment records nor conducted any independent examination before affirming the addition. Merely stating that the assessment order required no interference was held to be insufficient compliance with the statutory mandate of Section 250(6).

The Bench further emphasised that appellate proceedings before the CIT(A) are an extension of the assessment proceedings and that the Commissioner possesses co-terminus powers with the Assessing Officer, including the power to make further enquiries and even enhance the assessment where warranted. Since appellate orders are subject to further judicial scrutiny, they must disclose the points for determination, the decision on each issue, and the reasons supporting those conclusions.

While acknowledging that the assessee itself contributed to the situation by failing to participate before the CIT(A), the Tribunal accepted the undertaking given by the assessee’s counsel that all necessary documents would be furnished if another opportunity was granted.

Therefore, the ITAT set aside the appellate order and restored the matter to the file of the CIT(A) for fresh adjudication after providing adequate opportunity to both parties. The Tribunal clarified that it had not expressed any opinion on the merits of the addition and directed the assessee to fully cooperate in the remand proceedings, failing which the CIT(A) would be at liberty to decide the appeal ex parte in accordance with law.

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