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Facts
The assessee is engaged in agro industries. The AO framed an assessment under Section 201(1) & 201(1A) for non-deduction of TDS on license/product fees remitted to non-residents. The assessee failed to comply with notices from the AO and CIT(A). The CIT(A) dismissed the appeal for non-prosecution.
Held
The Tribunal held that the CIT(A) did not pass a speaking order deciding the issues on merits and violated Section 250(6) of the Act. Therefore, the order of the CIT(A) was set aside.
Key Issues
Whether the CIT(A) properly adjudicated the appeal on merits when he dismissed it for non-prosecution without passing a speaking order. Whether the assessee was a defaulter in deducting TDS.
Sections Cited
201(1), 201(1A), 133(6), 9(1)(vi), 195, 250(6)
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Income Tax Appellate Tribunal, “A” BENCH, PUNE
Before: SHRI R.K. PANDA & MS. ASTHA CHANDRA
आदेश / ORDER
PER ASTHA CHANDRA, JM :
The appeal filed by the assessee is directed against the order dated 09.01.2025 of the Ld. Commissioner of Income Tax (Appeals), Pune-13 [“CIT(A)/NFAC”] pertaining to Assessment Year (“AY”) 2019-20.
It is a case of assessment framed under section 201(1) & 201(1A) of the Income Tax Act, 1961 (the “Act”) vide order dated 11.04.2022. The assessee is engaged in the business of agro industries. It was observed from the assessment order that a notice u/s 133(6) of the Act, through ITBA was issued to the assessee on the basis of remittances without deduction of tax at source (“TDS”) on the strength of 15CA Forms. Accordingly, statutory notices were issued and served upon the assessee from time to time requesting the assessee to furnish its reply, which remained uncomplied with. Thereafter, the assessee submitted its reply to only one of the notice wherein the assessee was specifically asked to explain the nature of license fee/ product fee remitted by the assessee without TDS thereon. All the subsequent notices issued by the Ld. AO also remained uncomplied with. For lack of compliance in response thereto and failure to furnish TRC and no PE declaration by the assessee, the Ld. AO concluded that the payment(s) made by the assessee constitutes royalty u/s 9(1)(vi) of the Act and therefore subject to TDS u/s 195 of the Act. Since the assessee failed to withhold the required tax, it was treated as “assessee in default” under section 201(1) for an amount of Rs. 10,31,250/- and consequential interest under section 201(1A) of the Act amounting to Rs. 4,29,300/- aggregating to Rs.14,60,550/- .
Before the Ld. CIT(A), the assessee challenged the above order of the Ld. AO. There was non-compliance to the several notices issued by the Ld. CIT(A) and therefore the Ld. CIT(A) proceeded to pass the impugned order ex- parte qua assessee based on the material available on records. He dismissed the appeal of the assessee for non-prosecution and endorsed the findings of the Ld. AO on account of assessee’s failure to furnish any explanation /evidence in support of its claim.
Dissatisfied, the assessee is in appeal before the Tribunal raising the following grounds of appeal:
“1. The Hon CIT(A) ought to have appreciated the fact that the appellant could not represent its case due to circumstances beyond its control.
2. The Hon. CIT(A) and the Ld A.O. are not justified in considering the Appellant as Assessee in default in respect of payment made to Non- resident without appreciating the facts and circumstances of the case 3. The Hon CIT(A) and the Ld A O erred in considering the Assessee in default for Non deduction of Tax at source of Rs. 20,62,500/- 4. The Hon CIT(A) and the Ld A O erred in levying Interest on TDS @ 1% of Rs 8,58,600, without appreciating the facts and circumstances of the case 5. The Appellant craves leave to add, alter or amend the above Grounds of Appeal
, as the occasion may demand or circumstances may require
6. The Appellant prays that the TDS Liability imposed on appellant is unjustified and hence the same is required to be deleted in the interest of justice and equity or in the alternative the matter may please be restored back to the file of the Ld. A.O.”
We have heard the Ld. Representatives of the parties and perused the material available on records. Admittedly, there was non-compliance by the assessee to the notices issued by the Ld. AO as well as the Ld. CIT(A). Before us, the Ld. AR has submitted that the non-compliance before the lower authorities was not intentional and therefore in the interest of justice the assessee may be given an opportunity to substantiate its case before the Ld. CIT(A) by filing all the requisite details/ documents in support of its claim and requested that the matter may be set aside to the file of the Ld. CIT(A) for fresh adjudication on merits. The Ld. DR had no objection thereto. We find that the Ld. CIT(A) vide his impugned order dismissed the appeal of the assessee for non-prosecution and on merits upheld the decision of the Ld. AO for lack of any explanation/ evidence furnished by the assessee. The appellate order reveals that the Ld. CIT(A) has applied the decision of the Hon’ble Supreme Court in CIT Vs. B. N. Bhattachargee (1979) 118 ITR 461 (SC), Hon’ble MP High Court in the case of Estate of Late Tukojirao Holkar Vs. CWT, 223 ITR 480 (MP) and Hon’ble Punjab & Haryana High Court in the case of New Diwan Oil Mills Vs. CIT (2008) 296 ITR 495 (P&H) and in the case of Anil Goel Vs.CIT (2008) 306 ITR 212 (P&H). No doubt, the Ld. CIT(A) may decide the appeal ex-parte where the assessee does not prosecute his appeal in spite of several opportunities. Nonetheless, he has to adhere to the legislative mandate enshrined in sub-section (6) of section 250 of the Act which requires him to state the points for determination, the decision thereof and the reasons for the decision. We observe that the Ld. CIT(A) has passed the impugned order in concurrence of the order of Ld. AO without himself deciding the issues on merits by passing a speaking order. Thus, in our view, his order is in violation of the provisions of section 250(6) of the Act.
On the facts and in the circumstances of the case enumerated above, we deem it fit, in the interest of justice and fair play, to set aside the order of Ld. CIT(A) and restore the matter back to his file to adjudicate the issue afresh by passing a speaking order on merits as per fact and law after allowing one final opportunity of being heard to the assessee. The assessee shall provide the requisite support in terms of submitting the relevant documents/evidence as may be required/called upon on the appointed date without seeking any adjournment under any pretext unless required for a sufficient cause, failing which the Ld. CIT(A) shall be at liberty to pass appropriate order as per law. We direct and order accordingly.
In the result, the appeal of assessee is treated as allowed for statistical purposes.
Order pronounced in the open court on 08th September, 2025.