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Facts
The assessee's appeal was dismissed by the CIT(A) ex-parte due to non-compliance and lack of appearance. The assessee claims this was due to a tax consultant's failure and that they were not given a proper opportunity to explain their case. The CIT(A) confirmed additions made by the AO under section 69A.
Held
The Tribunal held that the CIT(A) cannot dismiss an appeal for non-prosecution and is obliged to decide the appeal on merits, as per the Hon'ble Bombay High Court ruling. Therefore, the CIT(A)'s order was set aside for de novo adjudication.
Key Issues
Whether the CIT(A) erred in dismissing the appeal for non-prosecution without deciding the merits, and if the CIT(A) has the power to dismiss an appeal without adjudication.
Sections Cited
250, 144, 69A, 246A, 251(1)(a), 251(1)(b), 251(2)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCHES “SMC” :: PUNE
Before: MS.ASTHA CHANDRA, & DR.DIPAK P. RIPOTE
आदेश/ ORDER
PER DR. DIPAK P. RIPOTE, AM:
This is an appeal filed by Assessee against the order of ld.Commissioner of Income Tax(Appeal)[NFAC], passed under section 250 of the Income Tax Act, 1961 for the A.Y.2017-18 dated 29.08.2022, emanating from order u/s.144 of the Income Tax Act, 1961, dated 18.12.2019. The Assessee has raised following grounds of appeal :
1. The Ld. CIT(A) has erred in confirming addition u/s 69A of the I. T. Act, 1961 of Rs. 12,03,250/- being cash deposits during demonetization period in The Seva Vikash Bank Co-operative Ltd. while passing ex- party order u/s 144 of the I.T. Act dated 18/12/2019 by the AO.
2. The Ld. CIT(A) has not followed principle of natural justice and dismissed the appeal after providing 2 opportunities only without considering the fact that the appellant was doing business of sale of milk and milk products, however, dismissed the appeal of the appellant by confirming unexplained non-business receipts without making any comments on it.
3. The Ld. CIT(A) has not provided real opportunity to explain his case, actually the appellant had made mainly sale of milk during the year under consideration which was purchased from Gujrat Co-operative Milk Marketing Federation (GCMMF) and retail cash sale consideration was deposited in bank and paid the GCMMF through cheque, the nexus between cash deposits and payment to GCMMF is clearly visible from the bank statements which was relied by the AO, hence, the facts may kindly be considered.
4. The Ld. CIT(A) has failed to make justification of profit determined by the AO on sale of milk and milk products @ 8% which is highly unreasonable, however, confirmed finding of the AO without making any comments on it, therefore, the order of Ld. CIT(A) may kindly be set aside and hear the appeal on merit.
5. The Appellant craves leave to add, to alter, amend, or delete all or any of the aforesaid grounds of appeal on or before or at the time of hearing.” Submission of Ld.AR :
2. The ld.Authorised Representative(ld.AR) for the Assessee submitted that the Assessee is a milk and milk product seller and he is not educated enough to understand the Income Tax Laws, Income Tax Notices and its implications. He further submitted that his previous tax consultant was looking after the correspondence and compliance and notices if any in his email id updated in the Income Tax Portal. Unfortunately, the then tax consultant neither informed nor responded to the notices, as a result the impugned appeal dismissed ex-parte before lower authorities. Ld.AR further submitted that the ld.CIT(A) did not decide the grounds of appeal on merit but merely dismissed the appeal of the assessee for non- compliance. The ld.CIT(A) has not adjudicated grounds raised by the assessee on merits. Hence, ld.AR requested that one more opportunity may kindly be provided for hearing before the ld.CIT(A).
Submission of ld.DR : 3. Ld.DR for the Revenue relied on the order of Assessing Officer and ld.CIT(A).
Findings & Analysis : 4. We have heard both the parties and perused the records. It an admitted fact that there was no compliance by the assessee before the ld.CIT(A). The ld.CIT(A) has dismissed assessee’s appeal in limine for lack of appearance in the course of appeal proceedings.
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 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 not have any power to dismiss appeal for non-prosecution.
5.2 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. Delay: We found that there is a delay in filing appeal before the ITAT. Assessee filed an Affidavit and pleaded for the condonation of delay. We have perused the Affidavit and are convinced that there is sufficient and reasonable cause for delay. Accordingly, the Delay is condoned. Order pronounced in the open Court on 22 July, 2025.