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Facts
The assessee's appeal against the CIT(A) order for AY 2018-19 was dismissed ex-parte without discussing merits. The CIT(A) found the assessee's attitude ignorant and lacking in evidence, leading to dismissal.
Held
The Tribunal held that the CIT(A) cannot dismiss an appeal for non-prosecution and is obligated to decide the appeal on its merits, following the Bombay High Court's decision.
Key Issues
Whether the CIT(A) is justified in dismissing an appeal ex-parte without adjudicating the grounds of appeal on merits. Whether the CIT(A) has the power to dismiss an appeal for non-prosecution.
Sections Cited
250, 143(3), 32, 251, 246A
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Income Tax Appellate Tribunal, PUNE BENCHES “SMC” :: PUNE
Before: AND DR.DIPAK P. RIPOTE
Assessment Year: 2018-19 Myvishwa Technologies Pvt. V The Dy.Commissioner of Ltd., s Income Tax, Circle-7, Flat No.16, Sawali, Pan Mala, Pune. Off Sinhgad Road, Pune- 411030. Maharashtra. PAN: AAFCM9656E Appellant/ Assessee Respondent / Revenue Assessee by Shri Mahavir Jain – AR Revenue by Shri Rajesh Haladkar – Addl.CIT(DR) Date of hearing 26/06/2025 Date of pronouncement 27/06/2025 आदेश/ ORDER
PER DR. DIPAK P. RIPOTE, AM:
This appeal filed by the Assessee is directed against the order of ld.Commissioner of Income Tax(Appeals)[NFAC] passed under section 250 of the Income Tax Act, 1961, dated 07.02.2025 emanating from the Assessment Order passed u/s.143(3) of the Income Tax Act, 1961, for A.Y.2018-19 dated 24.02.2021. The Assessee has raised following grounds of appeal :
“1] The Ld. CIT(A)/NFAC has erred in confirming the income of appellant at Rs. 48,30,730/-as against returned income of Rs. 16,25,840/- there by confirming the disallowance of Rs. 32,04,890/- being amount depreciation claimed on Intangible assets. 21 The Ld. CIT(A)/NFAC has erred in disposing off the case ex-parte without appreciating that the appellant has requested for granting additional time for the submission. 3] The Ld. CIT(A)/NFAC erred in upholding the disallowance of depreciation of Rs. 32,04,890/- claimed @ 12.5% (1/2 of 25%) on 'Intangible Asset' u/s. 32 of the Income Tax Act without appreciating that the cost capitalized as Intangible assets in the books was covered as "Intangible Assets" as defined explanation 3 to section 32(1) of the Act. 3.1] The Ld. AO/CIT(A) further erred in upholding that the cost incurred is in the nature of pre-operative expense and therefore, it is not allowable as deduction. 3.2] The Ld. CIT(A) has erred in not appreciating that the cost incurred over the years for development of Web portal and Mobile App for its Matrimonial Product was satisfying all the conditions for recognition of Intangible Assets as stipulated in AS 26 and therefore, the amount was rightly accounted as Intangible Assets in the books and was eligible for amortization as per section 32 of the Act. 4] Without prejudice to the above, even if the expenditure is considered as pre-operative expenses, the appellant may alternatively be allowed to claim deduction to the extent of 1/5th of cost for 5 successive years. 5] The appellant craves leave to add, alter, amend or delete any of the above grounds of appeal
.” Submission of ld.AR :
2. Mr.Mahavir Jain -ld.AR filed a paper book containing 51 pages. Ld.AR explained us the activities of the assessee and took us through the relevant accounting policies i.e.AS-10 and AS-26.
2.1 However, ld.AR also explained that the ld.CIT(A) has dismissed the appeal of the assessee for non-compliance without discussing the merits of the case. Ld.AR explained that four grounds of appeal were raised before the ld.CIT(A), but ld.CIT(A) has not adjudicated these grounds. Ld.AR invited our attention to page no.15 of the paper book which was E-Proceedings Response Acknowledgment requesting the ld.CIT(A) for an adjournment. Ld.AR submitted that Assessee had requested ld.CIT(A) for adjournment vide the letter filed electronically on 04.02.2025, but ld.CIT(A) dismissed the appeal vide order dated 07.02.2025.
Submission of ld.DR : 3. Ld.DR for the Revenue relied on the order of the Assessing Officer and ld.CIT(A).
Findings & Analysis : 4. We have heard both the parties and perused the records. In this case, Assessee had filed an appeal against the assessment order before ld.CIT(A) for A.Y.2018-19. On perusal of the paper book(page no.15), it is observed that Assessee had requested for an adjournment electronically filed on 04.02.2025. However, ld.CIT(A) dismissed the appeal of the assessee vide order dated 07.02.2025 without discussing merits of the case. The relevant paragraph 5.4 of the ld.CIT(A)’s order is reproduced here as under : “5.4 It is observed from the events, that after 4 non-complied notices, the appellant started requesting for adjournment against each hearing notice issued by this office. Since, September 2024, the appellant filed request for adjournment of every hearing.
From the ignorant attitude towards the appellate proceedings, it is inferred that the appellant is not having any evidence against the action of the AO. It is also construed to state that all scheduled hearing cannot be adjourned without any sufficient grounds. The undersigned has given sufficient and reasonable opportunities to the appellant to press its points before the undersigned in which the appellant failed to do so. Further, despite of giving several opportunities of being heard, the appellant did not file any details and supporting evidence. Therefore, in the absence of any details and evidence against the action of the AO, the grounds raised by the appellant become baseless. The undersigned is also of view that no further opportunity is required in the case and hence, the grounds raised by the appellant are treated baseless and hence dismissed.”
Thus, it can be observed that ld.CIT(A) has not adjudicated the specific grounds raised by the assessee. As per Section 250 of the Act, ld.CIT(A) has to adjudicate each and every ground raised by the assessee on merits of the case.
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.
6.1 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.
In these facts and circumstances of the case, respectfully following the decision of Hon’ble Bombay High Court, we set-aside the order of ld.CIT(A) to ld.CIT(A) for denovo adjudication. The Assessee shall file all necessary details before the ld.CIT(A). The ld.CIT(A) shall provide opportunity of hearing to the assessee. In this case, though ld.AR has filed elaborate paper book on the merits of the case and also started arguing on merits of the addition, but we decided to confine ourselves to Ground No.2 of the assessee which is regarding Ex-parte order of the ld.CIT(A). Accordingly, Ground No.2 of the Assessee is allowed for statistical prose.
Ground No.1, 3, 4 and 5 are not adjudicated as we have already set-aside the order of ld.CIT(A) to ld.CIT(A) for denovo adjudication. Accordingly, Ground No.1, 3, 4 and 5 raised by the assessee are dismissed as unadjudicated.
In the result, appeal of the assessee is partly allowed for statistical purpose. Order pronounced in the open Court on 27 June, 2025.