NAVNEET KUMAR SANCHETI,BHOPAL vs. CIT(A), DELHI
Facts
The assessee, engaged in trading soyabeans, wheat, share, and commodity products, reported a net loss after claiming significant expenditures, which the AO disallowed as speculative in assessment under Section 143(3). The assessee's subsequent appeal before the NFAC was dismissed in limine without adjudication on merits, as the CIT(A) deemed the assessee unresponsive to notices.
Held
The Tribunal found that the CIT(A) erred in dismissing the appeal without ensuring proper service of hearing notices to the assessee's registered email or post, and merely uploading to the departmental portal was insufficient per Section 282 and judicial precedents. Citing the obligation of the appellate authority to decide appeals on merits, the Tribunal remanded the case back to the CIT(A) for a de novo hearing, granting the assessee a reasonable opportunity to present its case.
Key Issues
Whether the CIT(A) can dismiss an appeal in limine for non-prosecution without proper service of notice as per statutory provisions and whether the appellate authority is obliged to adjudicate an appeal on merits even in cases of non-prosecution.
Sections Cited
250, 143(3), 154, 282, 127, 12A(1)(ac)(iii), 250(6), 250(4), 251(1)(a), 251(1)(b), 251(2), 246A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI B.M. BIYANI & SHRI UDAYAN DAS GUPTA
आदेश/ O R D E R
Per UDAYAN DAS GUPTA, J.M.:
This appeal is filed by the assessee against the order of the Ld. Commissioner of Income-Tax (Appeals), National Faceless Appeal Centre (NFAC) Delhi passed u/s 250 of the Income Tax Act, 1961 dated 18.04.2024, which has emanated from the order of the Assessing Officer dated 22.03.2016 passed u/s 143(3), ITO, Sehore.
The grounds of appeal taken by the assessee in the memorandum of appeal
are as follows:
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Navneet Kumar Sancheti ITA No. 495/Ind/2024 – AY 2013-14, “1.That the disallowances of Rs.3,43,28,791/- being F & O Loss debited in the Profit & Loss Account be held to be bad, unreasonable and unjustified. The disallowances made be held to be without basis and be quashed. 2. That the disallowances of Rs. 76,94,771/- being Share Loss debited in the Profit & Loss Account be held to be bad, unreasonable and unjustified. The disallowances made be held to be without basis and be quashed. 3. That the disallowances of Rs.4,62,369/- being Share Expenses debited in the Profit & Loss Account be held to be bad, unreasonable and unjustified. The disallowances made be held to be without basis and be quashed. 4. That the disallowances of Rs. 12,230/- being Commodity Expenses debited in the Profit & Loss Account be held to be bad, unreasonable and unjustified. The disallowances made be held to be without basis and be quashed. 5. In the alternative and without prejudice to the grounds stated above, the disallowances made be held to be high, unreasonable and without basis and be suitably reduced. 6. The appellant craves leave to add, amend or alter any Ground of Appeal before or during the course of appellate proceedings.”
The brief facts of the case are that the assessee is an individual engaged in the
trading of soyabeans and wheat products and has disclosed a gross profit of
Rs.75.46 lakhs against total turnover of Rs.24.41 crores , which works out to
3.09 % , and he has also engaged in share and commodity trading during the
year, claiming an expenditure of Rs.4.24 crores on account of commodity
expenses, share expenses, F & O Loss and share loss , which resulted in a net
returned loss of Rs. 3.77 crores . However, due to inadequacy of documentary
evidences and due to reasons contained in the assessment order, the expenditure
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Navneet Kumar Sancheti ITA No. 495/Ind/2024 – AY 2013-14, of Rs. 4.24 lakhs claimed by the assessee on account of share transaction, was
treated as speculative loss, and the expenditure claimed has been disallowed in
assessment proceedings u/s 143(3) of the Act 61, resulting in a total income of
Rs.47,54,860/- which has been subsequently rectified u/s 154 of the Act 61 to
NIL total income.
4.The matter was carried in appeal before the Ld CIT ( A ) NFAC , on various
grounds contained in the memorandum of appeal in Form 35 , challenging the
disallowance of Rs. 4.24 crores. In absence of any response or representation to
the various notices issued from the office of the first appellate authority, on
five different dates of hearing , as evident from the appellate order , the appeal
has been dismissed by the Ld CIT ( A ) , without adjudication on the grounds of
appeal on merits .
Now the assessee is before the tribunal on the grounds contained in the
memorandum of appeal. The Ld AR of the assessee, submitted that no notice of
hearing of the appeal case has been received by the assessee from the office of
the Ld CIT ( A ) NFAC, on the email id provided in form 35 and no notice of
hearing has been received vide post either. Referring to the details contained in
the appellate order in respect of the issue of notice on five different dates, he
submitted that notice might have been uploaded in the department portal but the
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Navneet Kumar Sancheti ITA No. 495/Ind/2024 – AY 2013-14, assessee was unaware of any such date of hearing because none has been issued
through email id as mentioned in form 35.
The Ld DR , relied on the order of the Ld CIT ( A ) and argued that since an
appeal is preferred by the assessee , it is an obligation on the part of the assessee
and his AR to keep track of the appeal portal , till disposal of the above appeal.
We have considered the rival arguments and considered the materials on record
and we find that the email id specially mentioned in row 17 of Form 35 is
rarinwa@gmail.com , for issue of notices for hearing , but no notice of hearing
has been issued through the given mail id, and none by post either. The Ld DR
has also not been able to put forth any evidence regarding issue of notices
through the given mail id mentioned in Form 35.
We also observe that, uploading of notice of hearing in the departmental
portal is not exactly as per provisions of section 282 of the Act 61 ( rwr 127 of
the IT Rules ’62.) , as opined by the Hon’ble Punjab and Haryana High court in
the case of CWP-21028-2023 (O&M) Date of Decision: 04.03.2024
MUNJAL BCU CENTRE OF INNOVATION AND
ENTREPRENEURSHIP, LUDHIANA THROUGH ITS AUTHORIZED
SIGNATORY SH. BHARAT GOEL. ........Petitioner V/s.
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Navneet Kumar Sancheti ITA No. 495/Ind/2024 – AY 2013-14, COMMISSIONER OF INCOME TAX EXEMPTIONS, CHANDIGARH
( Relevant portion reproduced )
In view of the above, it is essential that before any action is taken, a communication of the notice must be in terms of the provisions as enumerated herein above. The provisions do not mention of communication to be "presumed" by placing notice on the e-portal. A pragmatic view has to be adopted always in these circumstances. An individual or a Company is not expected to keep the e-portal of the Department open all the time so as to have knowledge of what the Department is supposed to be doing with regard to the submissions of forms etc.. The principles of natural justice are inherent in the income tax provisions and the same are required to be necessarily followed. 9. Having noticed as above, this Court is of the firm view that the petitioner has not been given sufficient opportunity to put up his pleas with regard to the proceedings under Section 12A(1)(ac)(iii) of the Act of 1961 and as he was not served with any notice. Therefore, he would be entitled to file his reply and the Department would of course be entitled to examine the same and pass a fresh order thereafter. 7.1 Moreover, in the instant case , we observe that all documentary evidences
regarding the claim of the assessee has been filed before the AO and are on
record , but the Ld CIT ( A ) , in absence of any representation from assessee ,
has dismissed the appeal in limne without adjudication on merits of the case on
the grounds contained in the memorandum of appeal , which is not in
accordance with the statutory requirements of section 250(6) of the Act 61 ,
because the Ld first appellate authority is obliged to dispose of appeal on merits
even in cases of non prosecution. The relevant findings in the case of Premkumar
Arjundas Luthra ( HUF ),[2016] ( 240 Taxman 133 Hon'ble Bombay HC, are
extracted for ready reference, as under:
"............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
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Navneet Kumar Sancheti ITA No. 495/Ind/2024 – AY 2013-14, 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(l)(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 dear 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 CTT(A) is co- terminus 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 dear from the Section 251(l)(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."
7.2 Respectfully following the law laid down by the Hon’ble courts and in
the interest of justice we remand the matter back to the Ld CIT ( A ) to decide
the appeal afresh on the merits of the case as per the grounds contained in the
memorandum of appeal after allowing reasonable opportunity to the assessee to
represent his case and the assessee is also directed to file all necessary
documentary evidences and submissions in support of his appeal and to fully
cooperate in the appellate proceedings.
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Navneet Kumar Sancheti ITA No. 495/Ind/2024 – AY 2013-14, 8.As a result the appeal is allowed for statistical purpose. Order pronounced in the open court on 23.01.2025.
Sd/- Sd/-
(B.M. BIYANI) (UDAYAN DAS GUPTA) ACCOUNTANT MEMBER JUDICIAL MEMBER
Indore िदनांक/Dated : 23/01/2025 Patel/Sr. PS
Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Sr. Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore
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