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Facts
The assessee company filed appeals against ex-parte orders passed by the CIT(A) for Assessment Years 2016-17 and 2017-18. The appeals were dismissed by the CIT(A) for non-prosecution and non-compliance by the assessee, despite opportunities of hearing.
Held
The Tribunal held that while the assessee has a duty to diligently pursue proceedings, the principles of natural justice require adequate opportunity of hearing. Since the CIT(A) dismissed the appeals without adjudicating on merits, the Tribunal set aside the orders and remanded the cases for de novo consideration, imposing a cost on the assessee.
Key Issues
Whether the CIT(A) was justified in dismissing the appeals ex-parte without adjudicating on merits due to the assessee's non-compliance, and whether the principles of natural justice were violated.
Sections Cited
147, 148, 148A(d), 68, 69A, 270A, 14A, 143(3), 69C, 271(1)(c), 271(1)(b), 142(1), 250(4)
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Before: SHRI NARENDER KUMAR CHOUDHRY & SHRI PRABHASH SHANKAR
Appellant by : Sri Pankaj Soni, Adv a/w Ms. S. Shanmugam,ARs Respondent by : Sri Biswanath Das, (CIT DR) Date of Hearing 24.04.2025 Date of Pronouncement 28.04.2025 आदेश / O R D E R PER PRABHASH SHANKAR [A.M.] :- The above captioned appeals have been preferred by the assessee company against the orders of even date as passed by the Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”] pertaining to assessment orders passed under the Income-tax Act, 1961 [hereinafter referred to as “Act”] for the Assessment Years [A.Y.] 2016-17 and 2017-18. Since the appeals were P a g e | 2 1423,1424/Mum/2025 A.Y. 2016-17, 2017-18 Emerald Alchymicus Pvt. Ltd. heard together, they are being taken up together for adjudication vide this composite order for the sake of brevity.
2. The grounds of above captioned appeals are as under:- ITA 1422/MUM/2025 (A.Y. 2017-18) 1 . 2 . 1. That the ex-parte order dated 18.12.2024, passed by the CIT(A) is perverse, arbitrary and bad in law and without providing sufficient opportunity of being heard to the appellant. 2. That the CIT(A) erred in law and fact in dismissing the appeal of the appellant ex-parte, without examining that the reopening of the assessment proceeding in case of the appellant under section 147, issuing notice under section 148, and passing order under section 148A(d) of the Act is invalid, without jurisdiction, perverse, arbitrary and bad in law.
3. That the CIT(A) erred in law and fact in dismissing the appeal of the appellant ex-parte and confirming the addition of Rs. 10,05,00,000/- made by the assessing officer rejecting the writing off stock by the appellant due to the expiry of the useful life of the product and turned out to be obsolete as on 31.03.2017. 4. That the CIT(A) erred in law and fact in dismissing the appeal of the appellant ex-parte and confirming the addition of assessing officer of Rs. 2,00,00,000/- as alleged unexplained cash credit under section 68 of the Act for depositing cash during demonetisation period without application of mind (vide assessment order dated 24.12.2019). The said amount is treated by the assessing officer as ‘unexplained money’ under section 69A while determining assessed income vide assessment order dated 24.12.2019. 5. That the CIT(A) erred in law and fact in dismissing the appeal of the appellant ex-parte and confirming the action of the assessing officer in not allowing set off of losses with alleged income of Rs. 2,00,00,000/- assessed under section 68/69A of the Act. 6. That the CIT(A) erred in law and fact in dismissing the appeal of the appellant ex-parte and confirming the levy of penalty under section 270A of the Act for alleged under-reporting of income, in consequence of misreporting the particulars of income. ITA 1423/MUM/2025 (A.Y. 2017-18) 1. That the ex-parte order dated 18.12.2024, passed by the CIT(A) is perverse, arbitrary and bad in law and without providing sufficient opportunity of being heard to the appellant.
P a g e | 3 1423,1424/Mum/2025 A.Y. 2016-17, 2017-18 Emerald Alchymicus Pvt. Ltd.
2. That the CIT(A) erred in law and fact in dismissing the appeal of the appellant ex-parte and confirming the addition of assessing officer of Rs. 2,00,00,000/- as alleged unexplained cash credit under section 68 of the Act for depositing cash during demonetisation period without application of mind. The said amount is treated by the assessing officer as ‘unexplained money’ under section 69A while determining assessed income.
3. That the CIT(A) erred in law and fact in dismissing the appeal of the appellant ex-parte and confirming the action of the assessing officer in not allowing set off of losses with alleged income of Rs. 2,00,00,000/- assessed under section 68/69A of the Act.
4. That the CIT(A) erred in law and fact in dismissing the appeal of the appellant ex-parte and confirming the disallowance of Rs. 10,000/- made by the assessing officer under section 14A.
5. That the CIT(A) erred in law and fact in dismissing the appeal of the appellant ex-parte and confirming the levy of penalty under section 270A of the Act for alleged under-reporting of income. ITA 1424/MUM/2025 (A.Y. 2016-17) 1. That the ex-parte order dated 18.12.2024, passed by the CIT(A) is perverse, arbitrary and bad in law and without providing sufficient opportunity of being heard to the appellant.
That the CIT(A) erred in law and fact in dismissing the appeal of the appellant ex-parte, without examining that the reopening of the assessment proceeding in case of the appellant under section 147, issuing notice under section 148, and passing order under section 148A(d) of the Act is invalid, without jurisdiction, perverse, arbitrary and bad in law.
3. That the CIT(A) erred in law and fact in dismissing the appeal of the appellant ex-parte and confirming the addition of Rs. 28,29,00,000/- (Rs. 18.03 Crore, for LC received from bank Rs. 10 Crore for loan received from Vivank Enterprises Pvt. Ltd) made by the assessing officer as alleged unexplained cash credit under section 68 of the Act.
4. That the CIT(A) erred in law and fact in dismissing the appeal of the appellant ex-parte and confirming the addition of Rs. 5,00,00,000/- made by the assessing officer as alleged unexplained expenditure under section 69C of the Act for advance paid to Kalinga Inceptum Pvt. Ltd. to carry out research and developing products.
That the CIT(A) erred in law and fact in dismissing the appeal of the appellant ex-parte and confirming the levy of penalty under section 271(1)(c) of the Act for alleged concealment of income and 271(1)(b) for non-compliance of notice issued under section 142(1) of the Act.
P a g e | 4 1423,1424/Mum/2025 A.Y. 2016-17, 2017-18 Emerald Alchymicus Pvt. Ltd.
It may be stated here that two appeals relate to AY 2017-18. While ITA No.1422/Mum/2025 pertains to the assessment order passed u/s 147/144 r.w 144B, ITA No.1423/Mum/2025 relates to the assessment order passed u/s 143(3) of the Act. AY 2016-17 relates to assessment order u/s 147/144 r.w section 144B of the Act. Further, all these appeals have been dismissed in limine by the ld.CIT(A) on account of non- prosecution by the assessee during appellate proceedings despite several notices of hearing issued by him. No written submissions were made either. Accordingly, he concluded that no useful purpose would be served by keeping the appeal pending and therefore, the appeals were decided on the basis of documents available on record. He finally dismissed the appeals by holding that the appeals were not maintainable.
We have carefully considered all the relevant facts of the case. It is evident from the contents of the impugned orders that despite several opportunities of hearing allowed, there was no compliance by the assessee before the AO. It is observed that the ld.CIT(A) dismissed the appeals solely on the ground of non-appearance. He did not adjudicate the grounds of appeal
and the issues involved, though the provisions of section 250(4) of the Act enjoin upon him to decide the appeals on merit P a g e | 5 1423,1424/Mum/2025 A.Y. 2016-17, 2017-18 Emerald Alchymicus Pvt. Ltd. despite non-compliance by the assessee. However, it is equally true that it is the fundamental duty of the assessee to diligently pursue the proceedings and comply with the notices and proceedings initiated by the Revenue authorities. The failure of the assessee to make any response before the authority concerned reflects gross negligence and an indifference. The principles of natural justice operate both ways, while the Revenue authorities are required to provide a reasonable opportunity of being heard, the taxpayer is equally obligated to co- operate with the authorities and utilize the opportunities extended. In the present case, despite receiving adequate opportunities, the assessee displayed a casual approach and indifference 4.1 In light of the non-compliant attitude of the assessee, levy of cost needs to be evaluated in this case as cost serves as a necessary deterrent to ensure that taxpayers act with due diligence in pursuing their tax cases and respecting the timelines and processes laid down under the law. It also emphasizes the principle that while justice must be ensured, the system cannot cater to negligence on the part of the assessee. Considering assessee’s non-compliant and non-cooperative attitude and lack of diligence in pursuing the appeals, we impose a cost of Rs.1,100/- on it for each of the above appeals. The cost (Rs 3,300/- in aggregate)shall be deposited to the credit of the Income Tax Department P a g e |
6. ITA No. 1422, 1423,1424/Mum/2025 A.Y. 2016-17, 2017-18 Emerald Alchymicus Pvt. Ltd. within 15 days of the receipt of this order and proof of payment shall be submitted before the ld.CIT(A).
5. Considering all the relevant facts of the case, we are of the view that following the principles of natural justice, it would be fair and judicious to allow an opportunity of hearing to the assessee to explain the matter before authorities below in the interests of justice. During the hearing, the Bench proposed for restoration of above appeals to the ld.CIT(A) for a de novo consideration. The Revenue did not oppose this plea. Thus, in the interest of justice, we deem it appropriate to send back the case for fresh consideration. The ld. CIT(A) shall give proper and adequate opportunity of being heard to the assessee in accordance with principles of natural justice in the set aside remand proceedings for de novo adjudication of the entire matter. Needless to state, the assessee will comply with notices and make available any details as deemed fit and sought by the appellate authority.
Before parting with the subject, we would like to make it clear that setting aside the appeals for de novo consideration by us, should not be construed in any manner affecting the merits of the cases for which the ld.AO is duly empowered to take an independent decision in accordance with the provisions of law.
P a g e | 7 1423,1424/Mum/2025 A.Y. 2016-17, 2017-18 Emerald Alchymicus Pvt. Ltd. 7. In the result, above captioned appeals filed by the assessee are allowed for statistical purposes.
Order pronounced in the open court on 28/04/2025. NARENDER KUMAR CHOUDHRY PRABHASH SHANKAR (न्याययक सदस्य/JUDICIAL MEMBER) (लेखाकार सदस्य/ACCOUNTANT MEMBER)