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Facts
The assessee's appeal was preferred against an order confirming additions made by the AO under section 143(3) read with section 68 of the Income Tax Act. The CIT(A) had dismissed the appeal due to non-compliance and non-appearance of the assessee, referring to several case laws on non-prosecution.
Held
The Tribunal held that the CIT(A) order suffered from a fundamental infirmity as the issue was not adjudicated on merits. While non-appearance is not a ground to dismiss an appeal in limine, the CIT(A) must still pass a reasoned order. The Tribunal set aside the CIT(A) order and restored the matter for fresh adjudication on merits, allowing one more opportunity to the assessee.
Key Issues
Whether the CIT(A) can dismiss an appeal for non-prosecution without adjudicating the issue on merits, and if a fresh opportunity should be granted to the assessee.
Sections Cited
143(3), 68, 250
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Income Tax Appellate Tribunal, MUMBAI BENCH “F” MUMBAI
Before: SHRI OM PRAKASH KANT & MS. SUCHITRA RAGHUNATH KAMBLE
ORDER PER OM PRAKASH KANT, AM
This appeal by the assessee is preferred against order dated 19.03.2025 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2017-18, raising following ground:
The Hon’ CIT (A) has erred in confirming the additions made by the Learned AO in his assessment Order u/s 143 (3) of the Act of Rs. 75,55,552/- u/s 68 of the Act.
2. At the very threshold, we find that the impugned order passed At the very threshold, we find that the impugned order passed At the very threshold, we find that the impugned order passed by the Learned Commissioner of Income by the Learned Commissioner of Income-tax (Appeals) [‘Ld. CIT(A)’] tax (Appeals) [‘Ld. CIT(A)’] suffers from a fundamental infirmity inasmuch as the issue in suffers from a fundamental infirmity inasmuch as the issue in suffers from a fundamental infirmity inasmuch as the issue in dispute has not been adjudicated on merits. It is well settled under dispute has not been adjudicated on merits. It is well settled un dispute has not been adjudicated on merits. It is well settled un section 250 of the Income section 250 of the Income-tax Act, 1961 (hereinafter referred to as tax Act, 1961 (hereinafter referred to as ‘the Act’) that the Ld. CIT(A), being a quasi ‘the Act’) that the Ld. CIT(A), being a quasi-judicial authority, is judicial authority, is statutorily enjoined to dispose of an appeal by a reasoned order statutorily enjoined to dispose of an appeal by a reasoned order statutorily enjoined to dispose of an appeal by a reasoned order dealing with the merits of the controversy, even i dealing with the merits of the controversy, even in a situation where n a situation where the assessee chooses to remain absent or fails to file the requisite the assessee chooses to remain absent or fails to file the requisite the assessee chooses to remain absent or fails to file the requisite submissions. Non-appearance of the assessee cannot be a ground, appearance of the assessee cannot be a ground, appearance of the assessee cannot be a ground, in itself, to dismiss an appeal in limine, nor can it absolve the first in itself, to dismiss an appeal in limine, nor can it absolve the first in itself, to dismiss an appeal in limine, nor can it absolve the first appellate authority of his stat appellate authority of his statutory obligation to adjudicate the utory obligation to adjudicate the dispute on merits.
2.1 From the record, it emerges that the Ld. CIT(A), after recording 2.1 From the record, it emerges that the Ld. CIT(A), after recording 2.1 From the record, it emerges that the Ld. CIT(A), after recording the non-compliance on the part of the assessee to repeated notices, compliance on the part of the assessee to repeated notices, compliance on the part of the assessee to repeated notices, has mainly referred to section 68 of the Act and certain judicial has mainly referred to section 68 of the Act and certain judicial has mainly referred to section 68 of the Act and certain judicial precedents relating to dismissal for non precedents relating to dismissal for non-prosecution, prosecution, and thereafter dismissed the appeal. The relevant extract of the Ld. CIT(A)’s order dismissed the appeal. The relevant extract of the Ld. CIT(A)’s order dismissed the appeal. The relevant extract of the Ld. CIT(A)’s order is reproduced as under: is reproduced as under:
“8: NON-COMPLIANCE TO THE APPEAL NOTICES COMPLIANCE TO THE APPEAL NOTICES It is seen that the appellant has been offered sufficient It is seen that the appellant has been offered sufficient It is seen that the appellant has been offered sufficient opportunities before disposal of the appeal opportunities before disposal of the appeal since the appeal since the appeal was instituted as on 24.01.2020, but the appellant did not was instituted as on 24.01.2020, but the appellant did not was instituted as on 24.01.2020, but the appellant did not furnish any documentary evidences on the dates posted for furnish any documentary evidences on the dates posted for furnish any documentary evidences on the dates posted for hearing in support of his claim the appellant failed to hearing in support of his claim the appellant failed to hearing in support of his claim the appellant failed to substantiate his grounds of appeal with evidences. substantiate his grounds of appeal with evidences.
There are no re There are no responses to the following notices/letters as sponses to the following notices/letters as under; 1. Hearing notice u/s 250 dated; 08.01.2021. Hearing notice u/s 250 dated; 08.01.2021.
Hearing notice u/s 250 dated; 21.01.2021 Hearing notice u/s 250 dated; 21.01.2021 3. Hearing notice u/s 250 dated; 27.09.2023 Hearing notice u/s 250 dated; 27.09.2023 4. Hearing letter dated; 26.09.2024 Hearing letter dated; 26.09.2024 5. Hearing letter dated; 07.03.2025 Hearing letter dated; 07.03.2025 Since the appea Since the appeal filed, the assessee remains unresponsive. The l filed, the assessee remains unresponsive. The issue of non issue of noncompliance of appeal proceedings are squarely compliance of appeal proceedings are squarely covered vide following decisions as under; covered vide following decisions as under; As there is no response to appeal notices, the appeal is liable to As there is no response to appeal notices, the appeal is liable to As there is no response to appeal notices, the appeal is liable to be . dismissed in terms of verdicts of be . dismissed in terms of verdicts of the Hon'ble Apex Court the Hon'ble Apex Court and the various High Courts. The Hon'ble Apex Court, in and the various High Courts. The Hon'ble Apex Court, in and the various High Courts. The Hon'ble Apex Court, in the case of CIT v. B.N.Bhattacharjee and another (10 CTR the case of CIT v. B.N.Bhattacharjee and another (10 CTR the case of CIT v. B.N.Bhattacharjee and another (10 CTR 354) held that an appeal means an effective appeal; held that an appeal means an effective appeal; “Expression "prefers an appeal" would mean effectively “Expression "prefers an appeal" would mean effectively “Expression "prefers an appeal" would mean effectively prosecuting an Appeal” prosecuting an Appeal” Purposefully interpreted, preferring an appeal means more than Purposefully interpreted, preferring an appeal means more than Purposefully interpreted, preferring an appeal means more than formally filing it but effectively pursuing it. If a party retreats formally filing it but effectively pursuing it. If a party retreats formally filing it but effectively pursuing it. If a party retreats before the contest begins, it is as good as not having entered the before the contest begins, it is as good as not having entered the before the contest begins, it is as good as not having entered the fray. The The The Hon'ble Hon'ble Hon'ble MP MP MP High High High Court Court Court in in in Estate Estate Estate of of of Late Lat Lat TukojiRaoHolkar v. CIT, 223 ITR 48(MP) has held TukojiRaoHolkar v. CIT, 223 ITR 48(MP) has held TukojiRaoHolkar v. CIT, 223 ITR 48(MP) has held that if a party, at whose instance the reference is made, fails to appear party, at whose instance the reference is made, fails to appear party, at whose instance the reference is made, fails to appear at the hearing, or fails in taking steps for preparation of paper at the hearing, or fails in taking steps for preparation of paper at the hearing, or fails in taking steps for preparation of paper books so as to enable hearing of the reference, the court is not books so as to enable hearing of the reference, the court is not books so as to enable hearing of the reference, the court is not bound to answer the ound to answer the Similar view has also been taken in the case of CIT v. Multiplan Similar view has also been taken in the case of CIT v. Multiplan Similar view has also been taken in the case of CIT v. Multiplan (India) Pvt. Ltd., 38 1TD 320 (Del).Following the ratio of (India) Pvt. Ltd., 38 1TD 320 (Del).Following the ratio of (India) Pvt. Ltd., 38 1TD 320 (Del).Following the ratio of Multiplan (India) Ltd (supra), the Chennai Tribunal has also Multiplan (India) Ltd (supra), the Chennai Tribunal has also Multiplan (India) Ltd (supra), the Chennai Tribunal has also dismissed appeal for non dismissed appeal for non- prosecution in the case of M/S Helios M/S Helios and Matheson Information Technology Ltd v ITO in Matheson Information Technology Ltd v ITO in Matheson Information Technology Ltd v ITO in ITA No. 134/Mds/2011 dated 5.7.2011 for A.Y.2006 134/Mds/2011 dated 5.7.2011 for A.Y.2006-07. It is pertinent 07. It is pertinent to add here that the laws assist those who are vigilant and not to add here that the laws assist those who are vigilant and not to add here that the laws assist those who are vigilant and not those who sleep over their rights. This principle is embodied those who sleep over their rights. This principle is embodied those who sleep over their rights. This principle is embodied in the the well-known well known maxim maxim "Vigilantibus "Vigilantibus non non dormientibusjurasubveniunt". It means equity comes to the aid dormientibusjurasubveniunt". It means equity comes to the aid dormientibusjurasubveniunt". It means equity comes to the aid of the vigilant and not the slumbering. In all actions, suits and of the vigilant and not the slumbering. In all actions, suits and of the vigilant and not the slumbering. In all actions, suits and other proceedings at law and in equity, the diligence and careful other proceedings at law and in equity, the diligence and careful other proceedings at law and in equity, the diligence and careful plaintiff is favoure plaintiff is favoured to the prejudicial of him who is careless. d to the prejudicial of him who is careless.
In case of: Sanjay ChandrakantGaonkarVs ITO (ITAT In case of: Sanjay ChandrakantGaonkarVs ITO (ITAT In case of: Sanjay ChandrakantGaonkarVs ITO (ITAT Mumbai) Appeal Number:
Date of Mumbai) Appeal Number: Date of Mumbai) Appeal Number: ITA No. 364/MUM/2022 Date of Judgement/Order: 17/07/2023 (ITAT Mumbai) Held as Judgement/Order: 17/07/2023 (ITAT Mumbai) Held as Judgement/Order: 17/07/2023 (ITAT Mumbai) Held as under; “5. We find that the Ld. CIT(A) has issued as much a “5. We find that the Ld. CIT(A) has issued as much a “5. We find that the Ld. CIT(A) has issued as much as four notices and thereafter issues final opportunity but no effective notices and thereafter issues final opportunity but no effective notices and thereafter issues final opportunity but no effective compliance was made on the part of the assessee. Further on compliance was made on the part of the assessee. Further on compliance was made on the part of the assessee. Further on 28.02.2017 the Ld. Authorised Representative of the assessee 28.02.2017 the Ld. Authorised Representative of the assessee 28.02.2017 the Ld. Authorised Representative of the assessee filed reply, which was forwarded by the Ld. CIT(A) to the filed reply, which was forwarded by the Ld. CIT(A) to the filed reply, which was forwarded by the Ld. CIT(A) to the Assessing Officer calling for remand report. Consequently, the sing Officer calling for remand report. Consequently, the sing Officer calling for remand report. Consequently, the Assessing Officer called for the assessee for verification of the Assessing Officer called for the assessee for verification of the Assessing Officer called for the assessee for verification of the documents, but again no compliance was made on the part of documents, but again no compliance was made on the part of documents, but again no compliance was made on the part of the assessee and this fact was reported by the Assessing the assessee and this fact was reported by the Assessing the assessee and this fact was reported by the Assessing Officer to the L Officer to the Ld. CIT(A). Once again, the assessee filed part d. CIT(A). Once again, the assessee filed part detail on 10.03.2017, which was forwarded to the Assessing detail on 10.03.2017, which was forwarded to the Assessing detail on 10.03.2017, which was forwarded to the Assessing Officer for verification but again no compliance was made by Officer for verification but again no compliance was made by Officer for verification but again no compliance was made by the assessee before the Assessing Officer. In view of the above before the Assessing Officer. In view of the above facts and circumstance, i facts and circumstance, it is evident the assessee has not t is evident the assessee has not cooperated before the lower authorities for verification of the its cooperated before the lower authorities for verification of the its cooperated before the lower authorities for verification of the its own documents and claims. Before us the Ld. Counsel of the own documents and claims. Before us the Ld. Counsel of the own documents and claims. Before us the Ld. Counsel of the assesses requested for restoring the matter back to the file of assesses requested for restoring the matter back to the file of assesses requested for restoring the matter back to the file of the Ld. CIT(A). In the interest the Ld. CIT(A). In the interest of the substantial justice, we feel it of the substantial justice, we feel it appropriate to restore the issue back to the Ld. CIT(A), however appropriate to restore the issue back to the Ld. CIT(A), however appropriate to restore the issue back to the Ld. CIT(A), however looking to the non looking to the non-compliant conduct of the assessee and total compliant conduct of the assessee and total disregard of the proceedings before the Ld. CIT(A), impose cost disregard of the proceedings before the Ld. CIT(A), impose cost disregard of the proceedings before the Ld. CIT(A), impose cost of Rs. 20,000/ of Rs. 20,000/-. The assessee is directed to deposit the same essee is directed to deposit the same into Prime Minister Relief Fund within seven days of receipt of into Prime Minister Relief Fund within seven days of receipt of into Prime Minister Relief Fund within seven days of receipt of this order. Further, ITAT Mumbai in case of Jerry John Mendonca In Further, ITAT Mumbai in case of Jerry John Mendonca In Further, ITAT Mumbai in case of Jerry John Mendonca In ITA No/1197/Mum/2023 order held under; ITA No/1197/Mum/2023 order held under; “Jerry John MendoncaVs ITO (ITAT Mumbai) Introdu “Jerry John MendoncaVs ITO (ITAT Mumbai) Introdu “Jerry John MendoncaVs ITO (ITAT Mumbai) Introduction: The Income Tax Appellate Tribunal (ITAT) Mumbai recently heard an Income Tax Appellate Tribunal (ITAT) Mumbai recently heard an Income Tax Appellate Tribunal (ITAT) Mumbai recently heard an appeal filed by Jerry John Mendonca against the order of the appeal filed by Jerry John Mendonca against the order of the appeal filed by Jerry John Mendonca against the order of the Ld. Commissioner of Income Ld. Commissioner of Income-tax (Appeals) for the assessment tax (Appeals) for the assessment year 2011-12. The appeal raised grounds regarding non 12. The appeal raised grounds regarding non 12. The appeal raised grounds regarding non- compliance ce ce with with with income income income tax tax tax proceedings proceedings proceedings before before before lower lower lower authorities. Analysis: The ITAT considered the reasons cited by authorities. Analysis: The ITAT considered the reasons cited by authorities. Analysis: The ITAT considered the reasons cited by the assessee for the delay in filing the appeal and condoned the the assessee for the delay in filing the appeal and condoned the the assessee for the delay in filing the appeal and condoned the delay of 208 days. However, the ITAT observed that the delay of 208 days. However, the ITAT observed that the delay of 208 days. However, the ITAT observed that the assessee had failed to compl assessee had failed to comply with income tax proceedings y with income tax proceedings before the Assessing Officer (AO) and the Ld. CIT(A). Despite before the Assessing Officer (AO) and the Ld. CIT(A). Despite before the Assessing Officer (AO) and the Ld. CIT(A). Despite various notices and opportunities, the assessee did not respond various notices and opportunities, the assessee did not respond various notices and opportunities, the assessee did not respond or participate in the proceedings. The ITAT noted that the appeal or participate in the proceedings. The ITAT noted that the appeal or participate in the proceedings. The ITAT noted that the appeal had been dismissed by the Ld. CIT( had been dismissed by the Ld. CIT(A) due to the lack of A) due to the lack of ITA No. 3528/MUM/2025 compliance and non compliance and non-participation by the assessee. However, participation by the assessee. However, the ITAT found it appropriate to impose a cost of Rs. 5,000 on the ITAT found it appropriate to impose a cost of Rs. 5,000 on the ITAT found it appropriate to impose a cost of Rs. 5,000 on the assessee for its non the assessee for its non-compliant behaviour. The ITAT directed compliant behaviour. The ITAT directed the assessee to deposit the cost into the Prime the assessee to deposit the cost into the Prime Minister Relief Minister Relief Fund within 30 days of the receipt of the order”. Fund within 30 days of the receipt of the order”. Further in landmark decision in the case of CIT Vs Shree Further in landmark decision in the case of CIT Vs Shree Further in landmark decision in the case of CIT Vs Shree Nirman Foundation Charitable Trust (Gujarat High Court) Nirman Foundation Charitable Trust (Gujarat High Court) Nirman Foundation Charitable Trust (Gujarat High Court) R/Tax Appeal No. 1335 of 2018 Date of Judgement/Order: R/Tax Appeal No. 1335 of 2018 Date of Judgement/Order: R/Tax Appeal No. 1335 of 2018 Date of Judgement/Order: 30/07/2019 while deciding the issue under consideration if ing the issue under consideration if Assessee remained absent on more than one occasions and Assessee remained absent on more than one occasions and Assessee remained absent on more than one occasions and appeal decided on merits then whether it will be called as Ex appeal decided on merits then whether it will be called as Ex appeal decided on merits then whether it will be called as Ex- parte order. The Hon’ble High Court states that if an order is parte order. The Hon’ble High Court states that if an order is parte order. The Hon’ble High Court states that if an order is passed by the CIT (A) on merits despit passed by the CIT (A) on merits despite the fact that the e the fact that the assessee failed to appear before the CIT (A) at the time of the assessee failed to appear before the CIT (A) at the time of the assessee failed to appear before the CIT (A) at the time of the final hearing of the appeal, the order passed by the CIT(A) final hearing of the appeal, the order passed by the CIT(A) final hearing of the appeal, the order passed by the CIT(A) cannot be termed as ex cannot be termed as ex-prate. An order having been passed by prate. An order having been passed by the CIT (A) after service of notices on the assesse the CIT (A) after service of notices on the assessee, there is no e, there is no question of failure of natural justice. It cannot be said that the question of failure of natural justice. It cannot be said that the question of failure of natural justice. It cannot be said that the assessee was not given an opportunity of hearing. The order of assessee was not given an opportunity of hearing. The order of assessee was not given an opportunity of hearing. The order of the CIT (A) is more than clear. On more than one occasion, the the CIT (A) is more than clear. On more than one occasion, the the CIT (A) is more than clear. On more than one occasion, the assessee remained absent before the CIT (A), and assessee remained absent before the CIT (A), and assessee remained absent before the CIT (A), and in such circumstances, the CIT had no option but to look into the records circumstances, the CIT had no option but to look into the records circumstances, the CIT had no option but to look into the records and decide the and decide the appeal on its own merit. In view of the above the primary onus of complying to the In view of the above the primary onus of complying to the In view of the above the primary onus of complying to the notices and furnishing the evidence/documentary evidence are notices and furnishing the evidence/documentary evidence are notices and furnishing the evidence/documentary evidence are with that of the with that of the appellant. In view of the above non- compliance compliance the appeal is dismissed. the appeal is dismissed. 8.1 To sum up appeal is dismissed on all grounds on merits as 8.1 To sum up appeal is dismissed on all grounds on merits as 8.1 To sum up appeal is dismissed on all grounds on merits as well as on non well as on noncompliance accordingly.” 2.2 While there can be no quarrel with the principle that the While there can be no quarrel with the principle that the While there can be no quarrel with the principle that the assessee is duty bound to diligently prosecute his appeal, it is bound to diligently prosecute his appeal, it is bound to diligently prosecute his appeal, it is equally trite that the dismissal of an appeal for default simpliciter is equally trite that the dismissal of an appeal for default simpliciter is equally trite that the dismissal of an appeal for default simpliciter is not contemplated by the statute. What is required is a disposal on not contemplated by the statute. What is required is a disposal on not contemplated by the statute. What is required is a disposal on merits, based upon the material available on record. merits, based upon the material available on record.
2.3 In the present case, what weighs with us is that the assessee ent case, what weighs with us is that the assessee ent case, what weighs with us is that the assessee has indeed remained unresponsive on multiple occasions, thereby has indeed remained unresponsive on multiple occasions, thereby has indeed remained unresponsive on multiple occasions, thereby displaying negligence in the conduct of the appellate proceedings. displaying negligence in the conduct of the appellate proceedings. displaying negligence in the conduct of the appellate proceedings. Nonetheless, the interest of substantial justice would be better Nonetheless, the interest of substantial justice would be better Nonetheless, the interest of substantial justice would be better served if one more opportunity is afforded to the assessee to present one more opportunity is afforded to the assessee to present one more opportunity is afforded to the assessee to present its case before the Ld. CIT(A), subject to the condition that the its case before the Ld. CIT(A), subject to the condition that the its case before the Ld. CIT(A), subject to the condition that the assessee diligently cooperates in the proceedings hereafter. At the assessee diligently cooperates in the proceedings hereafter. At the assessee diligently cooperates in the proceedings hereafter. At the same time, it is made clear that the assessee cannot be permitted to same time, it is made clear that the assessee cannot be permi same time, it is made clear that the assessee cannot be permi take the process of law for granted, and any further failure on its take the process of law for granted, and any further failure on its take the process of law for granted, and any further failure on its part shall entitle the Ld. CIT(A) to decide the appeal strictly on part shall entitle the Ld. CIT(A) to decide the appeal strictly on part shall entitle the Ld. CIT(A) to decide the appeal strictly on merits, on the basis of material available on record, in accordance merits, on the basis of material available on record, in accordance merits, on the basis of material available on record, in accordance with law.
3. In view of the foregoing discuss . In view of the foregoing discussion, we set aside the impugned ion, we set aside the impugned order of the Ld. CIT(A) and restore the matter to his file for fresh order of the Ld. CIT(A) and restore the matter to his file for fresh order of the Ld. CIT(A) and restore the matter to his file for fresh adjudication on merits, after affording due opportunity to the adjudication on merits, after affording due opportunity to the adjudication on merits, after affording due opportunity to the assessee. The assessee is directed to cooperate in the proceedings assessee. The assessee is directed to cooperate in the proceedings assessee. The assessee is directed to cooperate in the proceedings without fail. The Ld. CIT( without fail. The Ld. CIT(A), in turn, shall pass a reasoned and A), in turn, shall pass a reasoned and speaking order in accordance with law. speaking order in accordance with law. The ground of appeal of the The ground of appeal of the assessee is accordingly allowed for statistical purposes. assessee is accordingly allowed for statistical purposes. assessee is accordingly allowed for statistical purposes.
In the result, the appeal of the assessee is allowed for In the result, the appeal of the assessee is allowed for In the result, the appeal of the assessee is allowed for statistical purposes.