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Facts
The assessee's appeal was dismissed ex-parte by the CIT(A) due to non-prosecution and lack of compliance during assessment proceedings. The assessee was not traceable, and despite opportunities, no explanation was provided.
Held
The Tribunal held that while the assessee has a duty to cooperate, the CIT(A) erred in dismissing the appeal without deciding on merits, violating natural justice principles. The Tribunal remanded the case for fresh adjudication.
Key Issues
Whether the CIT(A) was justified in dismissing the appeal ex-parte without considering the merits, and whether an opportunity of hearing was adequately provided to the assessee.
Sections Cited
148, 147, 250, 144
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Income Tax Appellate Tribunal, MUMBAI “C” BENCH, MUMBAI
Before: SHRI NARENDER KUMAR CHOUDHRY, JM & SHRI PRABHASH SHANKAR, AM
आदेश / O R D E R
Per Prabhash Shankar, AM:
This appeal preferred by the assessee emanates from the order of the ld. CIT(A), Mumbai, dated 15.10.2024 for A.Y.2010-11 as per the following grounds of appeal :-
1. On the facts and circumstances of the Appellant's case and in law the id CIT(A) erred in passing an ex-parte order, without providing adequate opportunity of being heard to the assessee
2. On the facts and circumstances of the case and in law the Id. CIT (A) erred in confirming the action of Id. AO in reopening the assessment by issue of notice u/s 148. which is illegal and bad-in- law or otherwise void for want of jurisdiction
3. On the facts and circumstances of the case and in law the Id. CIT (A) erred in confirming the action of Id. AO in reopening the assessment by issue of notice u/s, 148 of the Act, which barred by limitation in view of first proviso to section 147 of the Act.
4. On the facts and circumstances of the case and in law the Id. CIT (A) erred in confirming the action of Id. AO in passing the impugned assessment order in the name of non-existing entity 5. On the facts and circumstances of Appellant's case and in law the Id. CIT (A) erred in confirming the action of the Id. AO in treating the amount of Rs. 90,00,000/- paid to M/s Pellucid Securities Pvt Ltd towards purchase of shares as unexplained, for the reasons mentioned in the impugned order or otherwise. 6. The appellant craves leaves to alter, amend, withdraw or substitute any ground or grounds or to add any new ground or grounds of appeal on or before the hearing.
2. In this case, the assessment order was passed ex-parte invoking the provisions of section 144 of the Act since there was no compliance by the assessee during assessment proceedings. The assessee was not found at the address mentioned in the return and even physical service through Inspector could not be done as the assessee was not found traceable. As per the information by the Investigation wing of the department, the assessee was found to have purchased shares of certain Penny stock company for a sum of Rs 90 lakh. In absence of non- traceability of the assessee, the AO proceeded to complete the assessment ex parte. Even in the appellate proceedings, there was no compliance. The assessee did not come forward with any explanation to the impugned addition despite adequate opportunity of hearing.
Accordingly, the ld.CIT(A) dismissed the appeal on account of non- prosecution.
Before us, at the outset, ld. AR submitted that the principle of natural justice had not been followed in its case. The ld. CIT(A) has passed the impugned order without providing sufficient opportunity of hearing to it. The ld AR submitted that another opportunity may be provided to the assessee so that it could be able to represent its case before the ld. CIT(A).
On the other hand, ld. Sr. DR submitted that in the impugned order ld.CIT(A) makes a categorical remark that there were no documentary evidences furnished before him. Thus, the ld. Sr. DR submitted that the order of the ld. CIT(A) deserves to be upheld.
We have heard the rival parties and perused the material available on records. It is observed that the ld.CIT(A) dismissed the appeal solely on the ground of non-prosecution. He failed to adjudicate the issues raised in the grounds of appeal and did not examine the material available on record. Such dismissal without deciding the appeal on merits is contrary to the principles of natural justice. It is settled law that it is the duty of the appellate authority to dispose of an appeal on merits after considering the material on record, even if the appellant fails to appear.
5.1. However, it is equally true that it is the fundamental duty of the assessee to diligently pursue the appeal and comply with the notices and proceedings initiated by the Revenue authorities. The framework of the Act and the e-proceedings system rely heavily on the co-operation and active participation of the taxpayer. Despite the notices under section 250 of the Act by the CIT(A), no substantive explanation was submitted. The assessee’s contention of non-receipt of notices cannot absolve it of its duty to follow up on its appeal. The failure of the assessee to make any response before both the authorities below reflects gross negligence and an indifference that is unacceptable. 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, which not only delayed the appellate proceedings but also burdened the judicial system. Such conduct cannot be condoned.
5.2 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 appeals 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 indolence or negligence on the part of the assessee.
5.3 As the ld. AR has requested before us that the assessee shall be given one more opportunity and this request which was not objected by the ld. DR, in such a scenario, we are of the opinion that the scales of justice demands that the matter should be verified and revisited at the level of ld. CIT(A) and accordingly, we are of the considered view that the matter should be remanded back to the file of ld. CIT(A) for de novo adjudication by him while applying the principles of natural justice after affording sufficient opportunity of being heard to the assessee.
5.4 Moreover, considering assessee’s non-compliant and non-co- operative attitude and lack of diligence in pursuing the appeal, we impose Rs.11,000/- on it. The cost shall be deposited to the credit of the Income Tax Department within 15 days of the receipt of this order and proof of payment shall be submitted before the ld.CIT(A). Thus, the grounds of appeal of the assessee stand allowed for statistical purposes.
6. In the result, the appeal of the assessee stands allowed for statistical purposes. Order pronounced in the open court on 18/02/2025.