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Facts
The assessee filed two appeals against the orders of the CIT(A) for assessment years 2018-19 and 2017-18, both of which were dismissed by the CIT(A) for non-prosecution. The assessee contended that the CIT(A) cannot dismiss appeals for non-prosecution and relied on a Bombay High Court judgment. The Revenue argued that the assessee was a habitual defaulter.
Held
The ITAT held that the CIT(A) is obligated to decide appeals on merits and does not have the power to dismiss them for non-prosecution, citing the Bombay High Court in CIT vs. Premkumar Arjundas Luthra (HUF). Therefore, the ITAT set aside the orders of the CIT(A) and remanded both matters to the Assessing Officer for fresh adjudication after providing proper opportunity of hearing to the assessee.
Key Issues
Whether the CIT(A) has the power to dismiss appeals for non-prosecution, or if it is mandatory to decide them on merits as per the Income Tax Act.
Sections Cited
250, 251, 250(4), 250(6), 251(1)(a), 251(1)(b), 251(2), 246A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, Hyderabad ‘B’ Bench, Hyderabad
Before: SHRI VIJAY PAL RAO & SHRI MANJUNATHA G
ORDER
PER VIJAY PAL RAO, VICE PRESIDENT :
These two appeals by the Assessee are directed against the two separate orders of the learned CIT(A), Hyderabad- 11, Hyderabad, dated 08.02.2025 and 13.03.2025 for the assessment years 2018-2019 and 2017-2018, respectively.
2 ITA.Nos.617 & 969/Hyd./2025 2. The assessee has raised the following grounds for the assessment year 2018-2019 :
“On the facts and in the circumstances of the case, the order passed by the ld. Commissioner of Income Tax (Appeals)-11, Hyderabad, is erroneous and unsustainable on facts and in law apart from being passed in violation of principles of natural justice.
The ld. Commissioner of Income Tax (Appeals)-11, Hyderabad, erred in dismissing the appeal for want of prosecution. The ld. Commissioner (Appeals) failed to appreciate that as per the provisions of section 250/251 of the Act, the ld. Commissioner (Appeals) cannot dismiss the appeal for alleged 'non-prosecution'.
3. Without prejudice to above grounds, the Id. Commissioner (Appeals) erred in sustaining the additions of Rs.1,10,00,000 and Rs.3,10,00,000 as unexplained income of the Appellant.
Without prejudice to the above grounds, the Id. Commissioner (Appeals) erred in sustaining the action of the AO in estimating the income of the Appellant at 8% on the bank credits in the absence of evidence to that effect.
3 ITA.Nos.617 & 969/Hyd./2025 5. For these and other grounds that may be urged, it is prayed that the Hon'ble Tribunal may be pleased to allow the appeal.”
3. The assessee has raised the following grounds for the assessment year 2017-2018 : 1. “On the facts and in the circumstances of the case, the order of the ld. CIT(A) is erroneous and unsustainable in law apart from being passed in violation of principles of natural justice. The ld. CIT(A) failed to appreciate that in response to notices issued the Appellant on couple of occasions sought adjournment and that the Id. CIT(A) without granting sufficient opportunity has dismissed the appeal for non-prosecution.
2. Without prejudice to the above, the Id. CIT(A) erred in sustaining the addition made by the AO of Rs.40,00,000 as unexplained income.
The authorities below failed to appreciate that once the Appellant denies the signature in the document, it is for the revenue to prove that the amount mentioned in the document is received by the Appellant.
4. The ld. CIT(A) erred in sustaining addition of interest on TDS of Rs.42,525.
4 ITA.Nos.617 & 969/Hyd./2025 5. Any other ground that may be urged at the time of hearing.”
4. At the time of hearing, the learned Authorised Representative of the Assessee has submitted that the learned CIT(A) has dismissed the appeals of the assessee for both the assessment years for want of prosecution. Thus, the learned Authorised Representative of the Assessee has submitted that the impugned orders passed by the learned CIT(A) are not sustainable and liable to be set-aside as the appeals of the assessee were not decided on merits as per the provisions of sec.250 and 251 of the Act. In support of her contentions, she has relied upon the Judgment of Hon’ble Bombay High Court in the case of CIT vs., Premkumar Arjundas Luthra (HUF) [2016] 240 Taxman 133 (Bom.) and submitted that the Hon’ble High Court has held that the learned CIT(A) cannot dismiss the appeals for non- prosecution, but, ought to decide and dispose of the appeals in writing after stating the points for determination and then render a decision on each of the point which arises for 5 ITA.Nos.617 & 969/Hyd./2025 consideration with reasons in support. Thus, the learned Authorised Representative of the Assessee has pleaded that The impugned orders of the learned CIT(A) be set-aside and the matter may be remanded to the record of the Assessing Officer.
On the other hand, Learned DR for the Revenue has submitted that the assessee is a habitual defaulter as he has neither appeared before the Assessing Officer nor before the learned CIT(A) despite various opportunities given by the authorities below. He has further submitted that the learned CIT(A) has given as many as 13 opportunities to the assessee, but, there was no response on behalf of the assessee to any of the notices.
We have considered the rival submissions as well as relevant material on record. The learned CIT(A) has dismissed the appeals of the assessee by identical orders. For the assessment year 2018-2019, the learned CIT(A) has dismissed the appeal of the assessee for non-prosecution in Paras-6.9 and 7 as under :
6 ITA.Nos.617 & 969/Hyd./2025 “6.9. In view of the ratio laid down by the Hon'ble Courts referred to supra and since In the present case appellant has not furnished any information substantiating with supporting evidence in response to several opportunities afforded, it has to be inferred that the appellant is not interested in pursuing his appeal. With due respect to the principles of natural justice, several opportunities for presenting his case were provided to the appellant but in vain. In view of these facts and circumstances, the appeal is dismissed for non-prosecution.
In the result, the appeal is dismissed for non- prosecution.”
7. Thus, it is apparent from the impugned orders of the learned CIT(A) that the appeals of the assessee were not decided on merits in terms of sec.250(6) r.w.s.251 of the Income Tax Act, 1961. The Hon’ble Bombay High Court in the case of CIT vs., Premkumar Arjundas Luthra (HUF) (supra), while considering an identical issue has held in Para-8 as under :
8. From the aforesaid provisions, it is very clear once an appeal is preferred before the Commissioner (Appeals), then in disposing of the appeal, he is obliged 7 ITA.Nos.617 & 969/Hyd./2025 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 Commissioner (Appeals) 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 Commissioner (Appeals) would have the power to confirm, reduce, enhance or annul an assessment and/or penalty. Besides Explanation to subsection (2) of section 251 of the Act also makes it clear that while considering the appeal, the Commissioner (Appeals) 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 Commissioner (Appeals). 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 Commissioner (Appeals) is obliged to dispose of the appeal on merits. In fact with effect from 1-6-2001 the power of the Commissioner (Appeals) 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 8 ITA.Nos.617 & 969/Hyd./2025 powers of the Commissioner (Appeals) is co-terminus with that of the 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 Commissioner (Appeals) 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 Commissioner (Appeals) 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 Commissioner (Appeals) to dismiss the appeal for non- prosecution as is evident from the provisions of the Act.
Accordingly, in the facts and circumstances of the case when the learned CIT(A) has not decided the appeals of the assessee on merits, but, the same were dismissed for non-prosecution, the impugned orders of the learned CIT(A) are not sustainable. Hence, the impugned orders of the learned CIT(A) are set-aside. Since, the assessment orders were also passed ex-parte and, therefore, it would be 9 ITA.Nos.617 & 969/Hyd./2025 appropriate that the relevant record, details and facts to be presented before the Assessing Officer for proper verification and examination and then, deciding the matter. Accordingly, the matters for both the assessment years are remanded to the record of the Assessing Officer for fresh adjudication, after giving proper opportunity of hearing to the assessee.
In the result, both the appeals of the Assessee are allowed for statistical purposes. A copy of this common order be placed in the respective case files.