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Facts
The assessee's original assessment for AY 2012-13 u/s 143(3) resulted in an addition of Rs. 2,05,00,000 as unexplained income from share premium, which the AO justified by citing CIT vs. Durga Prasad More and Sumati Dayal vs. CIT. The assessee's appeal to the CIT(A) was dismissed ex-parte. The assessee subsequently filed an appeal before the ITAT with a delay of 280 days, seeking condonation for the delay.
Held
The Tribunal condoned the delay in filing the appeal, finding sufficient cause. It held that the CIT(A) erred in passing an ex-parte order without adjudicating the appeal on merits, which violates Section 250(6) of the Act. Citing various precedents, the Tribunal set aside the CIT(A)'s order and remitted the matter back for fresh adjudication on merits after providing a reasonable opportunity of being heard to the assessee.
Key Issues
1. Whether the CIT(A) can dismiss an appeal ex-parte without deciding on the merits. 2. Condonation of delay in filing appeal to the ITAT.
Sections Cited
250, 143(3), 143(2), 142(1), 131, 245, 250(4), 250(6), 251, 251(1)(a), 251(1)(b), 251(2), 246A
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Income Tax Appellate Tribunal, KOLKATA ‘D’ BENCH, KOLKATA
Before: SHRI SONJOY SARMA & SHRI RAKESH MISHRA
PER RAKESH MISHRA, ACCOUNTANT MEMBER:
This appeal filed by the assessee is against the order of the Commissioner of Income Tax (Appeals)-NFAC, Delhi [hereinafter referred to as Ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for AY 2012-13 dated 28.12.2023, which has been passed against the assessment order u/s 143(3) of the Act, dated 12.03.2015. I.T.A. No.: 2431/KOL/2024 Assessment Year: 2012-13 Rishikesh Mercantile Pvt. Ltd.
The Registry has informed that the appeal filed by the assessee is barred by limitation by 280 days. An application along with affidavit seeking condonation of delay has been filed by the assessee stating as under: “Affidavit of Mr. Bikash Chandra Jana son of Sri Haripada Jana working for gain at Tobacco house 1 old court house corner Kolkata 700001 aged 53 years, with appellant Rishikesh mercantile Pvt Ltd. That I the above-named deponent, am well conversant with the facts deposed to below, duly declare and affirm for and on behalf of the appellant
That the appeal filed by the Assessee Company before the Commissioner (Appeals) was disposed of by his ex-parte order dated 28.12.2023 passed by Commissioner (Appeals), NFAC New Delhi.
That the time for filing of the appeal before the Tribunal expired on 26.02.2024, and there is a delay of 280 days in filing the appeal before the Hon'ble Tribunal.
That the Appellant could not file the appeal in time due to absence of any intimation/knowledge about the servicing of the 1st appellate order. The 1st Appellate order, passed, ex-parte, was posted in the income tax portal 28.12.2023, as per information now visible. No intimation about the passing of impugned appellate order was sent either by SMS or by mail to the registered Id and phone. As per income tax records, the contact details of the assessee in ITBA portal arc:-mobile 8017265864 and email bikashjana250@supersmelt.com.
The posting of 1st appellate order passed ex-parte was on the notice of hearing u/s 250 of the Act dated 04.01.2023. As per records and information available, no information of said notice too, as no SMS or mail was sent to the assessee. The assessee was registered at that time with income tax department with mobile no: 7044519457 and email id of bikash.jana@supersmelt.com.
On 29.11.2024, the assessee received the message about the proposed adjustment u/s 245 of the Act against this assessment year's outstanding tax demand. Thereafter the assessee searched the ITBA portal and found that an ex-parte order is passed u/s 250 of the Act by the 1st appellate authority, NFAC I.T.A. No.: 2431/KOL/2024 Assessment Year: 2012-13 Rishikesh Mercantile Pvt. Ltd.
The assessee has taken steps to file the appeal against said 1st appellate order and filed the appeal before the Hon'ble ITAT on next working day i.e.02.12.2024. 7. There is delay of 280 days in filing the appeal under the circumstances beyond the control and knowledge of the assessee.
The assessee pray for the admission of appeal and condone the delay caused in filing for the cause of natural justice.”
Considering the affidavit as well as the condonation application and the reasons stated therein, we are satisfied that the assessee had reasonable and sufficient cause and was prevented from filing the instant appeal within statutory time limit. We, therefore, condone the delay and admit the appeal for adjudication on merits.
The assessee is in appeal before the Bench raising the following grounds of appeal:
“1. The Ld. CIT(A), NFAC erred in law in passing ex-parte order u/s.250 of the Act, in haste without considering the submission made in this appellate hearing before the Ld. CIT(A)-10, Kolkata and ignoring the steps taken by latter CIT(A)-10 Kolkata u/s.250(4) for remand proceeding.
The Ld. CIT (A), NFAC erred in law as well as on facts to provide adequate and proper opportunities to be heard to the appellant before passing the order.
The Ld. CIT(A), NFAC erred in law as well as on fats to confirm the addition of Rs.2,05,00,000 as the unexplained income of the appellant.
That the appellate craves leave to add, modify or amend the ground of appeal and to adduce additional evidence in support of ground of appeal at the time of hearing of the case.”
Brief facts of the case are that the assessee company e-filed the return of income for AY 2012-13 on 28.09.2012 declaring total income of Rs. 11,46,030/-. The case was selected for scrutiny through CASS for the reason of large share premium received. Accordingly, notices u/s 143(2) and 142(1) of the Act were issued and duly served upon the assessee and which were complied with by the assessee. The Ld. AO I.T.A. No.: 2431/KOL/2024 Assessment Year: 2012-13 Rishikesh Mercantile Pvt. Ltd. found that the assessee company being a closely held company, had issued its shares involving different entities against high premium. Subsequently, notice u/s 131 of the Act was issued for personal appearance along with all the Principal Officers, Directors of all the investor companies and individual investors to verify the identity and creditworthiness of the shareholders and genuineness of the transactions made by them in the assessee company. However, despite being provided several opportunities the assessee could not justify the same. The Ld. AO relied upon the decisions of Hon'ble Apex Court in the cases of CIT vs. Durga Prasad More 82 ITR 540 and Sumati Dayal vs. CIT 214 ITR 801 and treated the entire amount as unexplained money and assessed the total income at Rs. 2,16,46,030/- u/s 143(3) of the Act. Aggrieved with the assessment order the assessee filed appeal before the Ld. CIT(A) who passed an ex parte order dismissing the appeal of the assessee as sufficient opportunity of being heard was provided to the assessee yet no compliance was made. Aggrieved with the order of the Ld. CIT(A), the assessee has filed the appeal before this Tribunal.
Rival contentions were heard and the submissions made have been examined. It was submitted by the Ld. AR that the case was physically heard by two CIT(A)s and since the notices of hearing were sent to the wrong e-mail ID, the assessee was not aware of the proceedings. However, when outstanding demand was noted from the portal, the assessee came to know of the dismissal of the appeal. It is also submitted that the Ld. CIT(A) neither considered the submissions made in the hearing of the appeal before the Ld. CIT(A)-10, Kolkata nor acknowledged the documents filed and the pendency of the remand proceedings. The assessment order was passed only on the non- compliance of summons issued to the Directors of the share subscriber I.T.A. No.: 2431/KOL/2024 Assessment Year: 2012-13 Rishikesh Mercantile Pvt. Ltd. companies. Although the details were filed yet the addition was made on account of non-compliance by the Directors. Before the Ld. CIT(A) also proper compliance could not be made for the reason that the notices of hearing were sent to the wrong e-mail. Hence, in the interest of justice, it was requested that adequate opportunity may be provided as the assessee has all the evidence to file before the Ld. CIT(A).
On perusal of the appellate order it is noticed that while the Ld. CIT(A) has discussed non-compliance on the part of the assessee as the notices sent by e-mail were not complied with but he has not adjudicated the appeal on merit. In this respect, it is relevant to examine the provisions of section 250(6) which are reproduced as under: “250(6) – The order of the Commissioner (Appeals) disposing of the appeal shall be in writing and shall state the points for determination, the decision thereon and the reason for the decision.”
Thus, section 250(6) of the Act casts a duty on the Ld. CIT(A) to pass an order in appeal which should state the points for determination and the decision as well as the reason for arriving at such decision. In the present case before us, the Ld. CIT(A) has not mentioned the reasons after examining the records while disposing of the appeal. The Ld. CIT(A) has neither adjudicated upon various grounds of appeal nor has passed a reasoned order for arriving at the decision, as is required u/s 250(6) of the Act. We further note that in Ajji Basha Vs. CIT (2019) 111 taxmann.com 348 (Madras) it has been held that a speaking order on merits with reasons and findings is to be passed by Commissioner (Appeals) on basis of ground raised in assessee's appeal; he cannot dispose the assessee's appeal merely by holding that Assessing Officer's order is a self-speaking order which requires no interference. The relevant extract from the order is as under: I.T.A. No.: 2431/KOL/2024 Assessment Year: 2012-13 Rishikesh Mercantile Pvt. Ltd. “6. … The first respondent is the appellate authority. Needless to state that the Appellate Authority is also a fact finding authority and therefore, he has to consider the order of assessment on the grounds raised in the appeal and thereafter, pass a speaking order on merits and in accordance with law by giving his own reasons and findings as to whether the order of assessment can be sustained or not. In other words, the order passed by the Appellate Authority should explicitly exhibit his application of mind to the facts and circumstances and the objections raised in the grounds of appeal, also by expressing his reasons and findings in support of his conclusion.
In this case, the Appellate Authority, after extracting the order of the Assessing Officer in full, has not given any other reason or finding to dismiss the appeal except by stating that he is of the considered view that the Assessing Officer's order is a self speaking order and does not call for any interference. In my considered view, such single line finding of the Appellate Authority, cannot be sustained as a proper exercise of the Appellate Authority, while disposing the appeal. Therefore, it is apparent that the order impugned in this writ petition is an outcome of total non-application of mind. Consequently, the impugned order cannot be sustained. It is further contended that before passing the order, the petitioner was not heard.”
1 It has also been held in the case of Commissioner of Income-tax (Central) Nagpur v. Premkumar Arjundas Luthra (HUF) [2016] 69 taxmann.com 407 (Bombay) that the law does not empower the CIT(A) to dismiss the appeal for non-prosecution as is evident from the provisions of the Act. The relevant extract is as under:
“7. An appeal is filed with the CIT(A) from appealable orders listed in Section 246A of the Act. We find that the procedure in appeal before the CIT(A) and the powers of the CIT(A) are governed by Sections 250 and 251 of the Act respectively. The relevant provisions for consideration are as under:— 'Procedure in appeal 250 (4) The Commissioner (Appeals) may, before disposing of any appeal, make such further inquiry as he thinks fit, or may direct the Assessing Officer to make further inquiry and report the result of the same to the Commissioner (Appeals). … (6) The order of the Commissioner (Appeals) disposing of the appeal shall be in writing and shall state the points for determination, the decision thereon and the reason for the decision. I.T.A. No.: 2431/KOL/2024 Assessment Year: 2012-13 Rishikesh Mercantile Pvt. Ltd. … Powers of the Commissioner (Appeals) "Section 251(1) In disposing of an appeal, the Commissioner (Appeals) shall have the following powers — (a) in an appeal against an order of assessment, he may confirm, reduce, enhance or annul the assessment. … (b) in an appeal against an order imposing a penalty, he may confirm or cancel such order or vary it so as either to enhance or to reduce the penalty." … (2) The Commissioner (Appeals) shall not enhance an assessment or a penalty or reduce the amount of refund unless the appellant has had a reasonable opportunity of showing cause against such enhancement or reduction. Explanation. - In disposing of an appeal, the Commissioner (Appeals) may consider and decide any matter arising out of the proceedings in which the order appealed against was passed, notwithstanding that such matter was not raised before the Commissioner (Appeals) by the appellant.'
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 Assessing Officer to make further inquiry and report the result of the same to him as found in Section 250(4) of the Act. Further Section 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. Section 251(1)(a) and (b) 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-section (2) of Section 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 Section 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 with effect from 1st June, 2001 the power of the CIT(A) to set aside the order of the Assessing Officer and restore it to the Assessing Officer for passing a fresh order stands withdrawn. Therefore, it would be noticed that the powers of the CIT(A) is co-terminus with that of the I.T.A. No.: 2431/KOL/2024 Assessment Year: 2012-13 Rishikesh Mercantile Pvt. Ltd. Assessing Officer i.e. he can do all that Assessing Officer could do. Therefore just as it is not open to the Assessing Officer 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 Section 251(1)(a) and (b) and Explanation to Section 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.”
After examining the facts of the case, we deem it appropriate to set aside the order of the Ld. CIT(A) and remit the matter back to the Ld. CIT(A) for disposal of the grounds taken by the assessee on merit, by passing a speaking order. Needless to say, the assessee shall be given a reasonable opportunity of being heard to make any further submission it wants to make in support of its grounds of appeal and shall not seek unnecessary adjournments and rule 46A of the I.T. Rules, 1962 shall also be followed, if required. Accordingly, the grounds taken by the assessee in his appeal are allowed for statistical purposes.
In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open Court on 6th March, 2025. [Sonjoy Sarma] [Rakesh Mishra] Judicial Member Accountant Member Dated: 06.03.2025 Bidhan (P.S.) I.T.A. No.: 2431/KOL/2024 Assessment Year: 2012-13 Rishikesh Mercantile Pvt. Ltd. Copy of the order forwarded to:
Rishikesh Mercantile Pvt. Ltd., C/o. Jain Vinod K & Associates, 41 A, A.J.C. Bose Road, Suite No. 613, 6th Floor, Kolkata, West Bengal, 700017. 2. ITO, Ward-4(1), Kolkata.
CIT(A)-
CIT-
CIT(DR), Kolkata Benches, Kolkata.
Guard File. //// By order