MADHAVI PENCHALA,KARIMNAGAR vs. ITO, WARD-2, KARIMNAGAR

Succinctly stated, the AO, based on information that the assessee had during the subject year, carried out substantial financial transactions as well as received rental incomes, but had not filed her return of income for the year under consideration, initiated proceedings under section 147 of the Act. Thereafter, the AO issued notice under section 148 of the Act, dated 25/04/2022. In response, the assessee filed her return of income, declaring an income of Rs. 1,74,160/-.

During the course of the assessment proceedings, the AO, after carrying out necessary verifications, observed that out of the total credits in the bank account of the assessee of Rs. 25,99,209/-, those to the extent of Rs.11,90,296/- remained unexplained. Accordingly, the AO vide his order passed under section 19/03/2024, determined the income of the assessee at Rs. 13,64,456/-.

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

As is discernible from the record, the CIT(A), observing that the assessee, despite having been afforded sufficient opportunities on four occasions on which the appeal was fixed for hearing, had either not participated or adopted an evasive approach by seeking adjournments, thus held a conviction that the assessee was not keen to pursue the appeal. Accordingly, the CIT(A), based on his aforesaid conviction, dismissed the appeal on the ground of want of prosecution.

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

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

Smt. S Sandhya, Advocate, Learned Authorised Representative (for short, “Ld. AR”) for the assessee, at the threshold of hearing of the 4 Representative (for short, “Ld. Sr-DR”) relied upon the orders of the authorities below.

We have given thoughtful consideration to the contentions advanced by the Learned Authorised Representatives of both parties in the backdrop of the orders of the authorities below.

Admittedly, it is a matter of fact borne from the record that the assessee, despite having been afforded four opportunities, had failed to effectively participate in the proceedings before the CIT(A) on all the said occasions on which the appeal was fixed for hearing, i.e., on 18/07/2025, 13/08/2025, 29/08/2025 and 06/10/2025, either for the reason that there was no compliance on her part or an adjournment was requested. Although we concur with the CIT(A) that in case an 5

Be that as it may, we are of firm conviction that the CIT(A) had grossly erred in law and facts of the case in dismissing the appeal for want of prosecution. Our aforesaid view is fortified by the judgment of the Hon'ble High Court of Bombay in the case of CIT Vs. Premkumar Arjundas Luthra (HUF) (2017) 297 CTR 614 (Bom). The Hon’ble High Court in the aforementioned case had observed as under:

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 AO to make further inquiry and report the result of the same to him as found in Sec. 250 of the Act. Further, Sec. 250(6) of the Act obliges the CIT(A) to dispose of an appeal in writing after stating the points for 6 Madhavi Penchala vs. ITO determination and then render a decision on each of the points which arise for consideration with reasons in support. Sec. 251(1)(a) and (h) 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-s. (2) of s. 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 s. 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 w.e.f. 1st June, 2001 the power of the CIT(A) to set aside the order of the AO and restore it to the AO for passing a fresh order stands withdrawn. Therefore, it would be noticed that the powers of the CITIA) are co- terminus with that of the AO i.e. he can do all that A.O could do. Therefore, just as it is not open to the AO 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 s. 251(1)(a) and (b) and Explanation to Sec. 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.”

We thus, in terms of our aforesaid observations, are unable to persuade ourselves to subscribe to the summary dismissal of the assessee’s appeal by the CIT(A) and set aside the matter to his file for redeciding the same. 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.

In the result, the appeal filed by the assessee is allowed for statistical purposes in terms of our aforesaid observations.

The Principal Commissioner of Income Tax, Hyderabad.

"वभागीय""त"न"ध, आयकरअपील"यअ"धकरण /DR,ITAT, Hyderabad.

The Commissioner of Income Tax 6. गाड"फ़ाईल / Guard file