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Facts
The assessee filed an appeal against the order of the CIT(A)/Addl.CIT which dismissed the appeal for non-prosecution. The assessee had raised grounds related to the addition of Rs. 4,97,000/- on account of deemed rent and Rs. 5,62,318/- on account of sundry creditors.
Held
The Tribunal held that the CIT(A) does not have the power to dismiss an appeal for non-prosecution and must decide the appeal on its merits. Therefore, the order of the CIT(A) was set aside for denovo adjudication.
Key Issues
Whether the CIT(A) can dismiss an appeal for non-prosecution instead of deciding it on merits, and whether the additions made on account of deemed rent and sundry creditors are tenable.
Sections Cited
250, 23(4), 246A, 251
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Income Tax Appellate Tribunal, PUNE BENCHES “B” :: PUNE
Before: DR.DIPAK P. RIPOTE & SHRI VINAY BHAMORE
Assessment Year: 2017-18 Rohan Housing Private V The Deputy Limited, s. Commissioner of Income 1-Modibaug, Commercial Tax, Central Circle-1(2), Building, Shivajinagar, Pune. Ganeshkhind road, Near Agriculture College, Pune – 410016. Maharashtra. PAN: AADCR6403N Appellant/ Assessee Respondent / Revenue Assessee by Shri Sarvesh Kandelwal – AR Revenue by Shri Vinod Pawar – Addl.CIT(DR) Date of hearing 07/05/2025 Date of pronouncement 16/05/2025 आदेश/ ORDER
PER DR. DIPAK P. RIPOTE, AM:
This appeal filed by the Assessee is against the order of ld.Commssioner of Income Tax(Appeal)/Addl.CIT[NFAC] passed under section 250 of the Act, 1961, passed under section 250 of the Income Tax Act, 1961 for the A.Y.2017-18, dated 06.01.2025.The Assessee has raised the following grounds of appeal :
“1. On the facts and circumstances of the case and the provisions of the Act it may be held that based on the principles of natural justice, the appellant may be given one more opportunity before CIT Appeals and its case be heard on merit. Just and proper relief be granted to the assessee.
On the facts and circumstances of the case and as per provisions and scheme of the Act it be held that addition made amounting to Rs. 4,97,000/- on account of deemed rent is not in accordance with the provisions of the Act and therefore just and proper relief be granted to the assessee.
On facts and circumstances prevailing in the case and as per provisions and scheme of the Act it be held that the addition made amounting to Rs.5,62,318/- made on account of sundry creditors is not as per the provisions of the Act. Just and proper relief to be granted to the assessee.
The appellant prays to be allowed to add, amend, modify, rectify, delete and raise any grounds of appeal at the time of hearing.”
Findings & Analysis : 2. We have heard both the parties and perused the records. In this case, as per Form No.35 filed before the ld.CIT(A), Assessee had raised following grounds of appeal : “On facts and circumstances and as per the provisions of the Act it be held that the provisions o f Sec. 23(4) of the Income Tax Act dealing with computation of deemed rent in case of vacant properties are not applicable to the developer s who are engaged in the business of development of estate and reflects unsold flats as stock i n trade in his balance sheet. Accordingly it be held that the additions made of Rs.497000/- is not tenable in law and therefore such additions made be deleted.
On facts and circumstances and as per the provisions of the Act it be held that the addition ma de of Rs.562318/- on account of sundry credit ors are outstanding more than three years not being accordance with the provisions of the Act be deleted. Just and proper relief be granted t o the assessee
3. The appellant prays to be allowed to add, am end, modify, rectify, delete raise any grounds o f appeal at the time of hearing.”
2.1 However, ld.CIT(A)/Addl.CIT(A) observed in the order that notices u/s.250 were issued on 22.01.2021, 01.07.2024, 15.07.2024, 23.07.2024. However, Assessee had not complied to the notices, only once Assessee filed request for adjournment on 08.07.2024. Then, the ld.CIT(A)/Addl.CIT(A) in para 4.3 held as under : “4.3 Under these circumstances, I am compelled to believe that the appellant has nothing to substantiate its contention or submit against the addition made by the A.O. The same is, therefore, confirmed.
5. Conclusion : In the result, the instant appeal is dismissed.” 2.2 Thus, it can be observed that the ld.CIT(A) had not adjudicated the Grounds of appeal raised by the assessee.
3. 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. 3.1 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.
4. In view of the above, in the interest of justice, we set-aside the order of the ld.CIT(A)/Addl.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 16 May, 2025.