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Income Tax Appellate Tribunal, “H” BENCH, MUMBAI
Before: SHRI ABY T. VARKEY, JM & SHRI OM PRAKASH KANT, AM
O R D E R
PER ABY T. VARKEY, JM:
This is an appeal preferred by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals) (NFAC), Delhi dated 25.12.2021 for the assessment year 2012-13.
The grounds of appeal of the assessee reads as under: - “The Ld. CIT(A) erred in not giving proper opportunity to be heard to the appellant. Even though the appellant has attend the case before CIT(A)-45 from time to time but the Ld. CIT has not passed the order and transferred all the files to National Faceless Appeal Centre (NFAC) therefore, the order pass by National Faceless is bad in law and the order passed by the National Faceless appeal Centre (NFAC) is to be quashed. The Ld. CIT(A) erred in not giving proper opportunity to be heard to the appellant. Even though the appellant has attend the case before the CIT(A) 45 from time to time but the Ld. CIT has not passed the order 2 A.Y. 2012-13 MHS Builders Developers therefore, the order pass by National Faceless Appeal Centre (NFAC) is bad in law.” 3. None appeared for the assessee. However, a perusal of the aforesaid grounds of appeal
reveals that the assessee did not get proper opportunity of hearing during the First Appellate Proceedings. According to the assessee, it had attended the hearing/first appellate proceeding before the Ld. CIT(A)-45 from time to time, but the Ld. CIT(A) without adjudicating the appeal has transferred the case to National Faceless Appeal Centre (NFAC) and the NFAC has passed the order without hearing the assessee.
4. We also note from the assessment order that the assessee had filed the return of income declaring total income of Rs.5,83,430/-. Later on, the case was taken up for scrutiny. Though the AO acknowledges that the assessee had filed details pursuant to the notices issued u/s 142(1) of the Income Tax Act, 1961 (hereinafter “the Act”) which have been verified and placed on record (refer para-2 of his order), but the AO notes that the assessee had taken unsecured loan from fourty-one (41 persons/HUF/entities totaling of Rs.6,72,77,622/-. According to the AO, the assessee was asked vide order sheet noting dated 30.01.2015 to prove the creditworthiness of lenders as well as genuineness of the transaction. According to the AO, pursuant to it the assessee filed only loan confirmation without any bank details and Income Tax Return of the lenders. According to the AO, despite giving opportunities the assessee failed to furnish the details as sought by him for proving the identity, creditworthiness and genuineness of the forty- one (41) lenders. Therefore, according to him, the assessee failed to 3 A.Y. 2012-13 MHS Builders Developers discharge the burden to prove the nature & source of the unsecured loan taken by it. Therefore, he added of Rs.6,72,77,622/- as unexplained income. Thereafter, the AO also noted that the assessee had claimed major expenses to the tune of Rs.17,00,648/-. According to him, no documentary evidences were filed to prove the expenses. Therefore, according to him, the personal expenses in respect of the said expenses cannot be ruled out. Therefore, he made adhoc disallowance of 10% and made an addition of Rs.1,70,065/-. Aggrieved, the assessee preferred an appeal before the Ld. CIT(A) which was dismissed on the ground that the assessee neither responded, nor furnished any adjournment applications on five (5) dates of hearing between 03.02.2020 and 18.08.2021. Therefore, the CIT(A)/NFAC was pleased to dismiss the same by taking note of the legal maxim “VIGILANTIBUS ET NON DORMIENTIBUS JURA SUB VENIUNT”.
5. From the grounds of appeal of the assessee, it is discerned that the assessee’s main grievance is against the action of NFAC dismissing the appeal without hearing it. According to the assessee the appeal of the assessee was initially within the appellate jurisdiction of CIT(A)-45 where the assessee used to appear time to time. However, after the Ld. CIT(A) has transferred the matter to the NFAC. And before the NFAC, the assessee did not get opportunity of hearing and the impugned order has been passed. We note that the NFAC has mentioned five (5) dates of hearing and according to it (NFAC) since, none-appeared nor the adjournment application was given, the NFAC 4 A.Y. 2012-13 MHS Builders Developers was pleased to dismiss it without going into merits of the case. As per scheme of the Act, the First Appellate Authority is duty bound while disposing of the appeal which arises from the order of AO, shall specify the points for determination and the decision thereon and spell out the reason for the decision (refer Section 250(6) of the Act). Meaning that the Ld. CIT(A) has to decide the grounds of appeal preferred by assessee on merits. Since the grounds of appeal raised by the assessee have not been decided on merits, we set aside the order of the Ld. CIT(A)/(NFAC) and remand the same back to the file of NFAC/CIT(A) and direct the First Appellate Authority to decide the appeal on merits after hearing the assessee in accordance to law. The assessee is directed to file the written submissions as well as file the documentary evidences in respect of the grounds of appeal raised before the First Appellate Authority and be diligent during the dates fixed for hearing. With the aforesaid direction, we dispose of this appeal.