Facts of the Case

The assessee, an individual, filed his return of income for Assessment Year 2011-12 declaring total income of ₹4,63,420. The Assessing Officer completed the assessment under sections 147 read with 143(3) of the Income Tax Act, 1961, determining total income at ₹19,10,570 by making an addition of ₹14,47,148 on account of unexplained cash credit.

Aggrieved by the assessment order, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals). However, the learned CIT(A), vide order dated 17.02.2025, dismissed the appeal. The assessee thereafter approached the Income Tax Appellate Tribunal.

 Issues Involved

  1. Whether the appellate order passed by the CIT(A) without granting reasonable opportunity of hearing is sustainable in law.
  2. Whether dismissal of appeal without dealing with the grounds raised violates section 250(6) of the Income Tax Act.
  3. Whether the issue relating to addition on account of unexplained cash credit requires fresh adjudication.

 Petitioner’s Arguments

The assessee challenged the impugned appellate order on the ground that it was passed without providing reasonable opportunity of being heard. It was contended that the order was summary in nature and did not adjudicate the grounds of appeal in accordance with law, thereby violating statutory provisions and principles of natural justice.

 Respondent’s Arguments

The learned Departmental Representative relied upon the assessment order and the order passed by the learned CIT(A) and supported the action of the lower authorities.

 Court Order / Findings

The Tribunal, upon perusal of the material on record, observed that the learned CIT(A) had passed the impugned appellate order without providing reasonable opportunity to the assessee. It was further noted that the order was not a speaking order, as the various grounds of appeal were not dealt with in a reasoned manner.

The Tribunal held that such an order is in violation of the mandatory provisions of section 250(6) of the Income Tax Act, which requires the appellate authority to pass a reasoned and speaking order. Accordingly, the impugned appellate order was set aside.

The issue relating to the addition of ₹14,47,148 on account of unexplained cash credit was restored to the file of the CIT(A) with a direction to pass a de novo order in accordance with law after providing reasonable opportunity to the assessee.

 Important Clarification

The Tribunal clarified that compliance with section 250(6) is mandatory and not procedural. An appellate order must clearly state points for determination, decision thereon, and reasons for such decision. Failure to pass a speaking order and denial of reasonable opportunity vitiates the appellate proceedings, necessitating restoration for fresh adjudication.

 Link to download the order -  https://www.mytaxexpert.co.in/uploads/1770626643_MOHAMMADZAKIALLHABADVS.INCOMETAXOFFICERWARD13ALLAHABADALLAHABAD.pdf  

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