Tribunal remands cash deposit case to CIT(A) for fresh adjudication barring limitation objection

Issue

Whether the CIT(A) was justified in dismissing the appeal ex-parte on grounds of delay and non-compliance regarding an addition of Rs. 31.85 Lacs for cash deposits.

Facts

• Assessment Details: The appeal pertains to Assessment Year 2011-12. The assessment was framed by the AO u/s 143(3) r.w.s. 263 of the Act on 29-03-2022.

• The Addition: The AO made an addition of Rs. 31.85 Lacs on account of unexplained cash deposits after rejecting the Assessee’s submissions.

• CIT(A) Order: The Ld. CIT(A) dismissed the appeal on 31-05-2024. The dismissal was based on two grounds:

  1. The appeal was not admitted due to delay.

  2. The assessment was confirmed on merits as the Assessee failed to comply with hearing notices.

• Prayer: The Assessee requested one more opportunity to be heard, while the Department (Sr. DR) opposed this request.

Decision

• Natural Justice: The Tribunal invoked the principles of natural justice and accepted the Assessee’s prayer for an opportunity to be heard.

• Remand: The impugned order was set aside, and the appeal was restored to the file of the Ld. CIT(A) for de novo (fresh) adjudication.

• Direction on Delay: The Tribunal explicitly directed that the issue of delay in filing the appeal before the CIT(A) shall not be raised again.

• Result: The appeal is Allowed for Statistical Purposes.

Key Takeaways

1. Substantial Justice: The Tribunal prioritized the right to a fair hearing over procedural non-compliance, granting the assessee a second chance to explain the source of cash deposits.

2. Binding Direction on Limitation: When the ITAT restores a matter with a specific direction that “the issue of delay would not be raised,” the CIT(A) is legally bound to proceed directly to the merits of the case, effectively condoning the initial delay.

3. De Novo Adjudication: The case begins afresh at the CIT(A) stage, and the Assessee must now proactively plead and prove the source of the Rs. 31.85 Lacs deposits to avoid confirmation of the addition.