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Facts
The assessee filed an appeal against an ex parte order passed by the CIT(A) without adjudicating the grounds raised. The CIT(A) had dismissed the appeal due to the assessee's non-appearance.
Held
The Tribunal held that the CIT(A) erred in dismissing the appeal without adjudicating on merits and that an appeal cannot be dismissed solely for non-prosecution. The matter was restored to the CIT(A) for fresh adjudication.
Key Issues
Whether the CIT(A) can dismiss an appeal for non-prosecution without adjudicating on merits, and whether the payment to Facebook Netherlands for advertisements is subject to TDS in India considering DTAA provisions.
Sections Cited
250
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “F” BENCH, MUMBAI
Before: SHRI SANDEEP SINGH KARHAILSHRI JAGADISH
The assessee has filed the present appeal against the impugned order dated 29/08/2025, passed under section 250 of the Income Tax Act, 1961 (“the Act”) by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, [“learned CIT(A)”], for the assessment year 2021-22.
2. In this appeal, the assessee has raised the following grounds: -
“1. The learned commissioner of appeal erred in passing the order without going through the fact of the case. The payment made to facebook netherland ltd. Without deducting the tds. the assessee has strong reason to believe that the facebook is not having PE that is permanent establishment in India for their advertisement platform and secondly there is double taxation treaty (DTAA) with netherland government. In these circumstances the income is not arised in India and secondly it will amount to double taxation.
Since the facebook do not have PE in India and income is arised in Netherland with DAA so we cannot deduct TDS.
There is no person available of office is there so it is direct debit of our account in digital form without any human intervention and we cannot recover the TDS as it will amount to double taxation as per DTAA.
4. In view of the above discussions and directions as set out above, we see no need to address the broader issue of whether OR not tax is deductible from the payments made by the assessee to Facebook Ireland Limited for the advertisements placed on Facebook, and whether OR not income embedded in such payments in taxable in India.”
3. We have considered the submissions of both sides and perused the material available on record. In the present case, at the outset, it is evident that the learned CIT(A) has passed the order ex parte due to the non- appearance of/on behalf of the assessee. Now, in the appeal before us, the assessee is duly represented by the learned AR and wishes to pursue the litigation against the addition made by the AO. We further find that the learned CIT(A) merely on the basis of non-compliance with notices, dismissed the appeal filed by the assessee without adjudicating the grounds raised by the assessee on merits, as required under section 250(6) of the Act. In CIT v/s Premkumar Arjundas Luthra (HUF), reported in [2016] 69 taxmann.com 407 (Bombay), the Hon’ble Jurisdictional High Court held that the Commissioner (Appeals) cannot dismiss the appeal on account of non-prosecution of the appeal by the assessee. Consequently, we deem it fit and proper to set aside the impugned order and restore the matter to the file of the learned CIT(A) for de novo adjudication of the appeal on merits. We further direct that no (A.Y. 2021-22) 3 order shall be passed without affording reasonable opportunity of hearing to the parties. The assessee is directed to appear before the learned CIT(A) on all the hearing dates as may be fixed without any default, and also submit the operational email address of the assessee to the learned CIT(A). As the matter is being restored to the file of the learned CIT(A) for adjudication on merits, the other grievances raised by the assessee in the present appeal do not call for adjudication at this stage. Accordingly, the grounds raised by the assessee are allowed for statistical purposes.
In the result, the appeal by the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 08/04/2026