MURUGAN,TIRUNELVELI vs. ITO, TIRUNELVELI

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ITA 975/CHNY/2026Status: DisposedITAT Chennai13 May 2026AY 2020-20216 pages
AI SummaryRemanded

What did the Tribunal hold?

The tribunal held that the CIT(A) is duty-bound to dispose of an appeal on merits, even if ex-parte, and cannot dismiss it solely for non-prosecution. The matter was remanded for fresh disposal.

What were the facts?

The assessee did not file a return of income. Based on information of property sale, the AO initiated reassessment proceedings and made an addition for short-term capital gains. The CIT(A) dismissed the appeal for non-prosecution without adjudicating on merits.

What were the issues?

Whether the CIT(A) can dismiss an appeal for non-prosecution without deciding the merits of the case, and whether rural agricultural land is a capital asset.

Which sections of the Income-tax Act were involved?

Section 139,Section 148,Section 148A,Section 147,Section 144,Section 144B,Section 250,Section 2(14)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, CHENNAI BENCHES “C” :: CHENNAI

Before: SHRI ABY T VARKEY & SHRI INTURI RAMA RAO

For Appellant: Ms. Yuvarani. E – Advocate
Hearing: 21/04/2026Pronounced: 13/05/2026

आयकर अपीलीय अिधकरण ”सी” �ायपीठ चे�ई म�। IN THE INCOME TAX APPELLATE TRIBUNAL CHENNAI BENCHES “C” :: CHENNAI BEFORE SHRI ABY T VARKEY, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No.975/CHNY/2026 �नधा�रण वष� / Assessment Year: 2020-21 Murugan, Vs Income Tax Officer, 5/2-1, East Street, Athiguthu, CHE-W-(513)(14), Alangulam, Tirunelveli – 627851. Tirunelveli. PAN: DMDPM7528F Appellant/ Revenue Respondent / Assessee Assessee by Ms. Yuvarani. E – Advocate Revenue by Mrs. Anitha – Addl.CIT(DR) Date of hearing 21/04/2026 Date of pronouncement 13/05/2026 आदेश/ ORDER PER INTURI RAMA RAO, AM : This appeal filed by the Assessee directed against the order of ld.Commissioner of Income Tax(Appeal)[NFAC], dated 22.12.2025 passed under section 250 of the Income Tax Act, 1961 for the 2020-21.

2.

The Assessee raised the following grounds of appeal :

“ 1. The learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, erred in dismissing the appeal ex-parte for non-prosecution, without adjudicating the issues on merits, which is bad in law and opposed to the principles of natural justice. 2. The learned CIT(A) failed to appreciate that detailed facts and documentary evidence were already placed on record through Form No. 35, and therefore dismissal of the appeal merely for non-appearance is unjustified. 3. The learned CIT(A) erred in confirming the addition of 23,33,988 without examining the nature of the land, which is agricultural land (Punja land) and does not fall within the definition of "capital asset" under section 2(14) of the Income- tax Act, 1961. 4. The authorities below erred in treating the entire sale consideration as taxable capital gains, ignoring the settled legal position that transfer of rural agricultural land is not chargeable to capital gains tax. 5. Without prejudice to the above, the learned CIT(A) erred in not appreciating that even assuming the transaction gives rise to short-term capital gains, the resultant gain of 211,892 is below the basic exemption limit, and therefore no tax is payable. 6. The learned CIT(A) erred in relying upon judicial precedents relating to non- prosecution without discharging the statutory duty to adjudicate the appeal on merits, especially when all relevant material was available on record. 7. The impugned order passed u/s 250 is arbitrary, unsustainable in law, and liable to be set aside. 8. The appellant craves leave to add, alter, amend or withdraw any of the above grounds at the time of hearing.” 3. Briefly the facts of the case are that the appellant is an Individual. No regular return of income under the provisions of Section 139 of the Act for the Assessment Year 2020-21 was filed by the appellant. However, based on the information received from RMS Module of Insight Portal of the Department, but appellant had sold immovable property for consideration of Rs.28,55,000/- during the previous year relevant to assessment year under consideration, the Jurisdictional Assessing Officer formed an opinion that income got escaped assessment from tax. Accordingly, Jurisdictional Assessing Officer issued a notice u/s.148 of the Act on 27.02.2024 after duly complying with the procedure laid down u/s.148A of the Income Tax Act, 1961. However, the appellant neither complied with the notice u/s.148 of the Act nor the notice u/s.142(1) of the Act. In the circumstances, e- Assessment Unit of the Department (hereinafter called ‘AO’) had proceeded with framing best judgment assessment vide order dated 25.02.2025 passed u/s.147 r.w.s 144 read with section 144B of the Income Tax Act at a total income of Rs.3,33,988/-. While doing so, the Assessing Officer made addition under head “Short Term Capital Gains” of Rs.3,33,988/- on the sale of immovable property.

4.

Being aggrieved, an appeal was filed before the ld.CIT(A) contending that entire sale consideration received on the sale of immovable property cannot be taxed as a Short Term Capital Gain. Further, he submitted that the Assessing Officer ought not to have taxed entire sale consideration amount at maximum margin rate of tax without giving benefit of rebate or relief for basic exemption limit. However, ld.CIT(A) dismissed the appeal for non- prosecution in limine.

5.

On the other hand, the ld.Sr.Departmental Representative opposed the above submissions and submits that the order passed by ld.CIT(A) is justified as the appellant had not caused appearance before the ld.CIT(A).

6.

We heard rival submissions and perused the material available on record. We find that the ld.CIT(A) dismissed the appeal of the appellant for non-prosecution without entering into the merits of the addition. The ld.CIT(A) without dealing with the contentions of the appellant merely dismissed the appeal in limine for non-prosecution. As contemplated u/s.250(6) of the Act the ld.CIT(A) is required to frame points of determination followed by a detailed discussion thereupon before passing the order. It is the settled position of law that the ld.CIT(A), even while disposing of the appeal ex-parte, he is duty bound to dispose of the appeal on merits. Reliance in this regard can be placed on the decision of the Hon'ble Bombay High Court in the case of PCIT vs. Premkumar Arjundas Luthra 279 CTR 614. The Hon’ble Bombay High Court has held in the case of Pr.CIT(Central) Vs. Premkumar Arjundas Luthra (HUF) [2017] 297 CTR 614 (Bombay) as under : Quote, “8.From the aforesaid provisions, it is very clear once an appeal is preferred before the CIT(A), then in disposing of the appeal, he is obliged to make such further inquiry that he thinks fit or direct the Assessing Officer to make further inquiry and report the result of the same to him as found in Section 250(4) of the Act. Further Section 250(6) of the Act obliges the CIT(A) to dispose of an appeal in writing after stating the points for determination and then render a decision on each of the points which arise for consideration with reasons in support. Section 251(1)(a) and (b) of the Act provide that while disposing of appeal the CIT(A) would have the power to confirm, reduce, enhance or annul an assessment and/or penalty. Besides Explanation to sub-section (2) of Section 251 of the Act also makes it clear that while considering the appeal, the CIT(A) would be entitled to consider and decide any issue arising in the proceedings before him in appeal filed for its consideration, even if the issue is not raised by the appellant in its appeal before the CIT(A). Thus once an assessee files an appeal under Section 246A of the Act, it is not open to him as of right to withdraw or not press the appeal. In fact the CIT(A) is obliged to dispose of the appeal on merits. In fact with effect from 1st June, 2001 the power of the CIT(A) to set aside the order of the Assessing Officer and restore it to the Assessing Officer for passing a fresh order stands withdrawn. Therefore, it would be noticed that the powers of the CIT(A) is coterminous with that of the Assessing Officer i.e. he can do all that Assessing Officer could do. Therefore just as it is not open to the Assessing Officer to not complete the assessment by allowing the assessee to withdraw its return of income, it is not open to the assessee in appeal to withdraw and/or the CIT(A) to dismiss the appeal on account of non-prosecution of the appeal by the assessee. This is amply clear from the Section 251(1)(a) and (b) and Explanation to Section 251(2) of the Act which requires the CIT(A) to apply his mind to all the issues which arise from the impugned order before him whether or not the same has been raised by the appellant before him. Accordingly, the law does not empower the CIT(A) to dismiss the appeal for non-prosecution as is evident from the provisions of the Act.” Unquote.

Therefore, in the light of above legal position, we are of the 7. considered opinion and deem it proper to remit the matter requires to be remanded to the file of CIT(A)/NFAC for de novo disposal of the issue on merits by passing a speaking order after allowing reasonable opportunity to the appellant, in accordance with law. All the contentions raised by the appellant are left open for consideration before the ld.CIT(Appeals).

8.

In the result, the appeal filed by the assessee stands partly allowed for statistical purposes. Order pronounced in the open Court on 13th May, 2026.

Sd/- Sd/- (ABY T VARKEY) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER Chennai; �दनांक / Dated : 13th May, 2026 SGR, Sr.PS आदेश क� ��त�ल�प अ�े�षत / Copy of the Order forwarded to : अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The CIT Chennai/Madurai/Coimbatore/Salem. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “सी” ब�च, 4. चे�नई / DR, ITAT Chennai. गाड� फ़ाइल / Guard File. 5.

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