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Facts
The assessee's appeal was dismissed in limine by the CIT(Appeals) for non-prosecution without addressing the merits. The assessee failed to appear for multiple hearings, despite notices being served.
Held
The Tribunal held that the CIT(Appeals) has a statutory obligation to dispose of an appeal on its merits and cannot summarily dismiss it for want of prosecution. The case was remanded to the CIT(Appeals) for fresh adjudication.
Key Issues
Whether the CIT(Appeals) can dismiss an appeal for non-prosecution without considering its merits, and whether a final opportunity for adjudication is warranted.
Sections Cited
250, 43CA, 56(2)(vii)(b), 143(3), 263, 251(1)(a), 251(1)(h), 251(2), 246A
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Income Tax Appellate Tribunal, “J (SMC
Before: SHRI AMIT SHUKLA & SHRI ARUN KHODPIA
आदेश / ORDER PER ARUN KHODPIA, AM:
The present appeal filed by the assessee is directed against the order passed by the Ld. CIT(Appeals)/NFAC, dated 22.07.2024 for the assessment year 2012-13 as per the following grounds of appeal:
“1. On the facts, in the circumstances of the case and in law the learned Commissioner of Income Tax – Appeals (CIT-A) has erred in making the order u/s.250 without giving the appellant proper opportunity of being heard.
2. On the facts, in the circumstances of the case and in law the learned CIT-A has erred in sustaining the addition of Rs 46,24,350/- made by the Learned Assessing Officer (A.O) u/s 43CA r.w.s56(2)(vii)(b) under the pretext of sale of flats below the market value without considering the fact that the agreements of those flats were made in earlier years against advance payment received through cheque, when the market value was lower than agreement value and accordingly the said transactions were covered by section 43CA(3), hence the addition was required to be deleted.
3. On the facts, in the circumstances of the case and in law the learned CIT-A has failed to appreciate that the Learned A.O erred in not giving the appellant sufficient opportunity to produce the relevant documents to prove that the case was covered by exception provided under sub section 3 of section 43CA, therefore, the impugned assessment order is against natural law of justice.
4. The appellant therefore prays your honour to be kind enough to: i. Admit the appeal and grant stay against the recovery of demand, ii. Set aside the order of A.O., iii. Delete all illegal additions and disallowances upheld by the CIT(A)., iv. Grant justice.
5. The appellant prays your honour to crave leave to add, amend, alter, delete, modify and/or change any of the grounds of appeal, which are independent, and without prejudice to each other.”
At the time of hearing none appeared on behalf of the assessee. Since it is the 4th hearing out of which three time none appeared to represent the assessee, thus, it is deemed appropriate to dispose of the appeal. Accordingly, the matter is heard after recording the submissions of the Ld. CIT-DR and on careful perusal of the documents available on record.
At the very outset, it is noted that as per Paras 4 & 4.1, the Ld. CIT(Appeals)/NFAC, the appeal of assessee was dismissed in limine due to non-prosecution without dealing with the merits of the case. For the sake of completeness, Paras4 & 4.1 of the Ld. CIT(Appeals)/NFAC order are culled out as follows:
The Ld. Sr. DR has fairly conceded that the matter may be adjudicated denovo on merits before the first appellate authority providing one final opportunity to the assessee.
We have carefully considered the contents in the documents/material available on record. As per the aforesaid examination of the entire spectrum of the matter in the interest of natural justice, we deem it fit and proper to provide one final opportunity to the assessee to represent its case on merits before the Ld. CIT(Appeals)/NFAC.
On a perusal of the order of the Ld.CIT(Appeals)/NFAC, it is observed that the Ld.CIT(Appeals)/NFAC dismissed the appeal of the assessee in limine for non-prosecution without dealing with the merits of the case. In our considered view, once an appeal is preferred before the CIT(Appeals), it becomes obligatory on his part to dispose off the same on merit and it is not open for him to summarily dismiss the appeal for want of prosecution. In fact, a perusal of Sec.251(1)(a) and (b), as well as the “Explanation” to Sec.251(2) of the Act reveals that the CIT(Appeals) remains under a statutory obligation to apply his mind to all the issues which arises from the impugned order before him. As per the mandate of law the CIT(Appeals)/NFAC is not vested with any power to summarily dismiss the appeal on account of non prosecution. The 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). In the aforementioned case the Hon’ble High Court had observed as under:
"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 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 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 CIT(A) 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.”
Respectfully following the aforesaid order, we set-aside the order of the Ld. CIT(Appeals)/NFAC and remand the matter back to his file for denovo adjudication while complying with the principles of natural justice. At the same time, it is directed that this being the final opportunity, the assessee shall duly comply with the hearing notices from the Ld.CIT(Appeals)/NFAC, failing which an appropriate order would be passed in accordance with the mandate of law.
In the result, appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 20th August, 2025.