ITAT Pune Holds CIT(A) Must Pass Reasoned Order Even in Ex-parte Appeals

Background and Context

The Pune Bench of the Income Tax Appellate Tribunal in the case of Anant Bhalchandra Hendre Vs ITO examined whether the CIT(A)/NFAC can merely dismiss an appeal for “non-prosecution” without dealing with the issues on merits and without complying with the statutory mandate of Section 250(6) of the Income Tax Act 1961.

The dispute related to AY 2017-18, where the assessee, an individual engaged in liquor retail business (proprietor of M/s. Anant Beer Shopee) and transport contracting, had faced reassessment proceedings and an addition of Rs. 47,00,000 under Section 69A r.w.s. 115BBE on account of alleged unexplained cash loans routed through an alleged entry operator, one Sachin Nahar.

The assessee’s appeal before the CIT(A)/NFAC was dismissed ex-parte for non-compliance. The Tribunal was called upon to consider:

  • Whether the delay of 123 days in filing the appeal before the Tribunal should be condoned; and
  • Whether the ex-parte order of the CIT(A)/NFAC was valid in law when it lacked a reasoned discussion on the issues raised, particularly in light of Section 250(6).

Condonation of Delay – Liberal Approach Adopted

Justification for Condonation

There was a 123-day delay in filing the appeal before the Tribunal. The assessee filed an affidavit explaining the reasons for such delay. After hearing both sides, the Tribunal accepted that the delay was backed by “sufficient cause”.

Reliance on Supreme Court Precedents

The Tribunal followed the settled principle that procedural delays should not defeat substantive justice, and referred to:

  • Collector, Land Acquisition vs. Mst. Katiji & Ors. (1987) 167 ITR 471 (SC)
  • Inder Singh Vs. The State of Madhya Pradesh, 2025 Live Law (SC) 339

Guided by these decisions, the Tribunal adopted a justice-oriented and liberal view and condoned the delay, thereby admitting the appeal for adjudication.

Facts Giving Rise to the Dispute

Original Return and Reassessment

  1. The assessee, an individual and proprietor of M/s. Anant Beer Shopee, also carried out transport contract activities during AY 2017-18.
  2. A return of income was filed on 01.08.2017, declaring a total income of Rs. 2,75,000.
  3. Subsequently, based on departmental information, it was alleged that during FY 2016-17 the assessee had provided cash loans of Rs. 47,00,000 to several parties through broker Sachin Nahar, and that the source of such cash remained unexplained.
  4. On this basis, reassessment proceedings were initiated under Section 147, and a notice under Section 148 dated 27.07.2022 was issued after obtaining the necessary approvals under the Act.

Assessee’s Stand Before the AO

In response to the notice under Section 142(1), the assessee:

  • Filed bank statements and balance sheet; and
  • Filed a notarized affidavit categorically denying:
    • Having given any cash loan through Sachin Nahar; and
    • Any knowledge of or connection with Sachin Nahar.

The assessee asserted that the departmental information imputing such cash loans was incorrect and misleading.

AO’s Findings and Addition

The Assessing Officer (AO) noticed that the assessee’s name and PAN appeared in departmental records listing persons who had advanced cash loans through Sachin Nahar. On that basis, the AO concluded:

  • Mere denial by the assessee could not rebut “credible” information available with the Department;
  • The onus was on the assessee to produce cogent material disproving the alleged cash loans;
  • As no further supporting evidence was filed in response to show-cause, the AO treated the alleged cash loans as unexplained.