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Facts
The assessee did not file an Income Tax Return for AY 2017-18 but deposited Rs. 5,58,000 during demonetisation. The AO issued a notice under Section 142(1), then completed an ex-parte assessment under Section 144, treating the deposit as unexplained investment under Section 69, determining an income of Rs. 11,35,045. The CIT(A) dismissed the assessee's subsequent appeal ex-parte for non-prosecution.
Held
The ITAT held that a CIT(A) is legally obligated to dispose of an appeal on merits, even if heard ex-parte, citing the Bombay High Court. The tribunal remanded the case back to the CIT(A) for a de novo disposal on merits, instructing to afford the assessee a reasonable opportunity of hearing.
Key Issues
Whether the CIT(A) can dismiss an appeal ex-parte for non-prosecution without deciding it on merits, or is bound to dispose of it on merits.
Sections Cited
142(1), 144, 69
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Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI INTURI RAMA RAO, AM & SHRI PRAKASH CHAND YADAV, JM
O R D E R Per: Inturi Rama Rao, AM This appeal filed by the assessee is directed against the order of the National Faceless Appeal Centre, Delhi [CIT(A)] dated 10.12.2022 for Assessment Year (AY) 2017-18.
Brief facts of the case are that the assessee, an individual, had not filed his return of income for AY 2017-18. On the basis of the information available with the department that the appellant had Sivan Chandran deposited Rs. 5,58,000/- during the demonetisation period, the Income Tax Officer, Ward-2, Palakkad (hereafter “the AO”) issued notice u/s. 142(1) of the Income Tax Act, 1961 (the Act) requiring the to file the return of income for AY 2017-18. Since the appellant failed to comply with the notice, the AO completed the assessment vide order dated 17.12.2019 passed u/s. 144 of the Act at a total income of Rs. 11,35,045/- by treating the deposit as unexplained investment u/s. 69 of the Act.
Being aggrieved, an appeal was filed before the CIT(A), who vide the impugned order dismissed the appeal exparte for non prosecution placing reliance on the judgement of the Hon'ble Supreme Court in the case of CIT vs. B.N. Bhattacharys 118 ITR 461.
Being aggrieved, the assessee is in appeal before the Tribunal in the present appeal.
We have heard the rival contentions of both the parties and perused the material available on record. We find that the learned CIT(A) dismissed the appeal in limine for non prosecution. It is the settled position of law that the CIT(A), even while disposing of the appeal exparte, is duty bound to dispose of the appeal on merits. Reliance in this regard can be placed on the decision of the Hon'ble Bombay High Court in the case of PCIT vs. Premkumar Arjundas Luthra 279 CTR 614. Therefore, in the light of the above legal Sivan Chandran position we are of the considered view that the matter requires to be remanded to the file of the CIT(A) with the direction to dispose of the appeal de novo on merits after affording reasonable opportunity of hearing to the assessee.
In the result, the appeal filed by the assessee is allowed for statistical purposes.