MUSKU RAJINI REDDY,NIZAMABAD vs. ITO., WARD-1, NIZAMABAD

Succinctly stated, the assessee had filed his return of income for AY 2020- 21 on 30/03/2021, declaring an income of Rs. 13,23,820/-. The return of income was initially processed under Section 143(1)(a) of the Act, dated 15/02/2021, wherein the income was determined at Rs. 45,53,530/-. Subsequently, the case of the assessee was selected for scrutiny assessment under Section 143(2) of the Act.

Thereafter, the AO vide his order passed under section 143(3) r.w.s. 144B of the Act, dated 19/09/2022, determined the income of the assessee after carrying out certain variations in respect of “Long Term Capital Gain” disclosed by the assessee in his return of income.

Aggrieved, the assessee carried the matter in appeal before the CIT(A), NFAC, Delhi.

As transpires from the record, the CIT(A), during the course of the appellate proceedings, issued notices dated 10.01.2025, 20.01.2025 and 27.01.2025 fixing the hearing of the appeal. Since there was no compliance on behalf of the assessee, the CIT(A), placing reliance on certain judicial precedents, dismissed the appeal in limine for want of prosecution without adjudicating the grounds of appeal raised by the assessee on merits.

The assessee, aggrieved by the order of the CIT(A), has carried the matter in appeal before us.

Before proceeding with the adjudication of the present appeal, it is noticed that there is a delay of 28 days in filing of the same before the Tribunal. We have considered the petition seeking condonation of delay and the affidavit filed in support thereof, and being satisfied that the assessee was prevented by sufficient cause from presenting the appeal within the prescribed period, condone the delay of 28 days and admit the appeal for adjudication.

Shri A Srinivas, CA, Ld. Authorized Representative (for short, “AR”) at the time of hearing, submitted that the CIT(A) has erred in dismissing the appeal for non-prosecution without deciding the grounds of appeal on merits. Elaborating on his contention, the Ld. AR submitted that the CIT(A), being the first appellate authority, is statutorily required to adjudicate each ground of appeal by passing a reasoned and speaking order. The Ld. AR, therefore, submitted that the impugned order of the CIT(A) be set aside and the matter be restored to his file for fresh adjudication on merits after providing an adequate opportunity of being heard to the assessee-appellant.

Per Contra, Shri K Prasad, Ld. Senior Departmental Representative (for short, “Sr-DR”), on the other hand, supported the orders of the authorities below.

We have heard the Ld. Authorized Representatives of both parties, perused the orders of the authorities below and the material available on record.

Admittedly, it is a matter of fact borne from record that the CIT(A) has dismissed the appeal solely for want of prosecution without adjudicating the grounds of appeal raised by the assessee-appellant. In our considered view, such an approach cannot be sustained in law. The CIT(A), being the first appellate authority, is vested with co-terminus powers with those of the AO and is under a statutory obligation to examine the issues arising in the appeal and dispose of the same by passing a reasoned and speaking order. The mere absence of the assessee- appellant during the appellate proceedings does not empower the CIT(A) to dismiss the appeal in limine without deciding the issues on merits. In this regard, we find that the Hon'ble High Court of Bombay in Prem Arjundas Luthra (HUF) v. CIT [(2016) 240 Taxman 133 (Bom.)] has held that the CIT(A) has no jurisdiction to dismiss an appeal for non-prosecution and is duty-bound to dispose of the appeal on merits by passing a speaking order. The ratio laid down in the aforesaid decision squarely applies to the facts of the present case.

We thus, respectfully following the aforesaid decision of the Hon'ble High Court of Bombay, set aside the impugned order of the CIT(A) and restore the matter to his file with a direction to adjudicate the appeal afresh on merits by passing a reasoned and speaking order in accordance with law. Needless to say, the CIT(A) shall, in the course of the set aside proceedings, afford a reasonable opportunity of being heard to the assessee-appellant.

In the result, the appeal of the assessee is allowed for statistical purposes.