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Facts
The assessee, a bank in liquidation since 2014, challenged an assessment order for AY 2018-19, which included additions for bank interest and profit, and denied a deduction under Section 80P and set-off of carried forward losses. The CIT(A) had dismissed the assessee's appeal ex-parte without adjudicating on the merits of the case.
Held
Citing the Bombay High Court's ruling that a CIT(A) cannot dismiss an appeal for non-prosecution but must decide it on merits, the Tribunal set aside the CIT(A)'s order. The case was remanded to the CIT(A) for de novo adjudication, with directions to provide the assessee a proper opportunity to be heard and to decide the appeal on its merits.
Key Issues
Whether the CIT(A) can dismiss an appeal for non-prosecution without adjudicating on merits, and the validity of additions related to bank interest, profit, and the assessee's eligibility for Section 80P deduction and carry forward of losses.
Sections Cited
250, 147, 144, 148, 151A, 21(2), 80P, 250(4), 250(6), 251(1)(a), 251(1)(b), 246A, 251(2)
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Income Tax Appellate Tribunal, PUNE BENCHES “B” :: PUNE
Before: MS.ASTHA CHANDRA & DR.DIPAK P. RIPOTE
Assessment Year: 2018-19 The Merchants Co-Op Bank V The Income Tax Officer, Ltd., (In Liquidation), s. Ward-1, Dhule. CS No.2111, Lane No.6, Near Old Amnalner Stand, Nagarpatti, Dhule-424001. PAN: AAABT0123H Appellant/ Assessee Respondent / Revenue Assessee by Shri Kishor B Phadke Revenue by Smt Indira R. Adakil-Addl.CIT(DR) Date of hearing 02/12/2025 Date of pronouncement 12/12/2025 आदेश/ ORDER
PER DR. DIPAK P. RIPOTE, AM:
This appeal is filed by the Assessee against the order of ld.Commissioner of Income Tax(Appeal)[NFAC] passed under section 250 of the Income Tax Act, 1961 for A.Y.2018-19, dated 11.03.2025 emanating from Assessment Order 147 r.w.s 144 of the Income Tax Act, 1961 dated 29.03.2023. The assessee has raised following grounds of appeal :
1. Appellant contends that the learned CIT(A), NFAC ought to have decided the appeal on the merits of the case. Appellant submits that the non-submission before the learned CIT(A), NFAC and the learned AO was un-intentional and if granted another opportunity of being heard, appellant undertakes to make submissions before the learned I-T Authorities.
2. Appellant contends that the order passed by the learned AO u/s 147 r.w.s. 144 of the ITA, 1961 is invalid and bad in law, as it is based on the notice u/s 148 of the ITA, 1961 issued by the learned jurisdictional AO instead of the learned faceless AO, which is not in accordance with the provisions of section 151A of the ITA, 1961.
3. Appellant contends that the addition made by the learned AO and confirmed by the learned CIT(A), NFAC of Rs. 11,15,220/-on account of interest received on fixed deposits with Banks is uncalled for. Appellant contends that the total interest received of Rs. 33,70,270/- on fixed deposits with Banks is not an income of appellant, as DICGC has an over-riding title on the said income, as per provisions of section 21(2) of the DICGC Act, 1961 r.w. regulation 22 of the DICGC General Regulation, 1961.
4. Appellant contends that the addition made by the learned AO and confirmed by the learned CIT(A), NFAC of Rs. 1,02,39,932/- on account of Profit as appearing in the Profit & Loss A/c in uncalled for as the said Profit also includes Profit for FY 2016-17 of Rs. 1,30,35,035/-, which needs to be excluded for determining total income of appellant for FY 2017-18. If the said profit for FY 2016-17 is excluded, there will be loss of Rs. 27,95,104/
Alternatively, and without prejudice to the above Grounds of Appeal, appellant contends that it is eligible for deduction u/s 80P of the ITA, 2 1961 on the surplus (in any), as the status of appellant during AY 2018-
19 is that of a credit co-operative society, as appellant's banking license was cancelled by the RBI w.e.f. 27/08/2014.
Alternatively, and without prejudice to the above Grounds of Appeal, appellant contends that appellant is eligible to set-off brought forward losses and unabsorbed depreciation of past years (to the extent available), against the income assessed (if any) for AY 2018-19.
7. Appellant craves leave to add / alter / modify / amend / delete all / any of the Grounds of Appeal.”
Delay : 2. There was a delay of 74 days in filing appeal before this Tribunal. Assessee filed an Affidavit for condonation of delay. We have perused the Affidavit and are convinced that there is reasonable and sufficient cause for delay. Hence, delay is condoned.
Findings & Analysis : 3. We have heard both the parties and perused the records. Ld.Authorised Representative(ld.AR) for the Assessee submitted that Assessee is in liquidation since 2014. Ld.AR has submitted that Assessee has huge carried forward losses for earlier years. Ld.AR further submitted that Assessee has not done any business since 2014. Ld.AR submitted that Assessee had filed Return of Income for those years in time for which Assessee has claimed carry 3 forward of losses. Ld.AR further submitted that therefore, Assessee is eligible for carry forward of losses.
Ld.AR submitted that ld.CIT(A) has passed an ex-parte order and submitted that one more opportunity may be provided to the Assessee.
5. In this case, it is observed that ld.CIT(A) has dismissed the appeal of the Assessee as assessee could not file any reply to the three notices issued by ld.CIT(A). Ld.CIT(A) has not adjudicated the grounds of appeal raised by the Assessee. The ld.CIT(A) has not adjudicated grounds raised by the assessee on merits.
5. The Hon’ble Bombay High Court has held in the case of Pr.CIT(Central) Vs. Premkumar Arjundas Luthra (HUF) (Bombay)/[2017] 297 CTR 614 (Bombay) as under : Quote, “8.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 4 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 coterminous 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 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.” Unquote.
5.1 Thus, the Hon’ble Bombay High Court has categorically held that ld.CIT(A) has to decide the appeal on merit and ld.CIT(A) does 5 not have any power to dismiss appeal for non-prosecution.
6. In view of the above, in the interest of justice, we set-aside the order of the ld.CIT(A) to ld.CIT(A) for denovo adjudication. Ld.CIT(A) shall provide opportunity to the assessee. Assessee shall file all the necessary documents before the ld.CIT(A). Accordingly, grounds of appeal raised by the assessee are allowed for statistical purpose.
In the result, appeal of the assessee is allowed for statistical purpose. Order pronounced in the open Court on 12 December, 2025.