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Facts
The assessee, an agent for BSNL, filed an income tax return for AY 2018-19. The AO completed the assessment by disallowing Rs. 29,48,455/- under Section 40(a)(ia) for non-deduction of tax at source and adding Rs. 1,40,383/- under Section 43B for unpaid GST. The CIT(A) subsequently dismissed the assessee's appeal in limine for non-prosecution.
Held
The ITAT held that the CIT(A) erred by dismissing the appeal without considering its merits, which is contrary to settled law requiring disposal on merits even in ex-parte cases. The ITAT noted the assessee's specific plea regarding no TDS liability under Section 194H due to turnover limits under Section 44AB. Consequently, the ITAT remanded the matter back to the CIT(A) for a fresh disposal on merits after providing a reasonable opportunity of hearing.
Key Issues
1. Whether the CIT(A) can dismiss an appeal in limine for non-prosecution without deciding on merits. 2. Whether the assessee was liable to deduct tax at source under Section 194H given their turnover limits under Section 44AB.
Sections Cited
143(3), 144B, 40(a)(ia), 43B, 194H, 44AB, 250(6)
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Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI INTURI RAMA RAO, AM
O R D E R This appeal filed by the assessee is directed against the order of the National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 01.08.2024 for Assessment Year (AY) 2018-19.
Brief facts of the case are that the appellant is an individual engaged in the business of distribution of mobile phone recharge coupons as an agent of BSNL. The return of income for AY 2018-19 was filed on 27.10.2018 declaring total income of R. 5,19,410/-. Against the said return of income, the assessment was completed by the Income Tax Officer, Ward 1(3), Trivandrum (hereinafter called "the AO") vide order Sivaramanpillai Anilkumar dated 21.04.2021 passed u/s. 143(3) r.w.s 144B of the Income Tax Act, 1961 (the Act) at a total income of s. 35,73,940/-. While doing so, the AO disallowed Rs. 29,48,455/- being 30% of the total business expenditure of Rs. 97,13,806/- u/s. 40(a)(ia) of the Act for non deduction of tax source. The AO also made an addition of Rs. 1,40,383/- u/s. 43B for nonpayment of GST.
Being aggrieved, an appeal was filed before the CIT(A), who vide the impugned order dismissed the appeal in limine for non-prosecution.
Being aggrieved, the appellant is in appeal before the Tribunal in the present appeal.
When the appeal was called on nobody appeared on behalf of the assessee despite due service of notice of hearing. Therefore, I proceeded to dispose of the appeal after hearing the learned Sr. DR.
The AO made adhoc disallowance while framing the assessment order. On appeal before the CIT(A), the CIT(A) dismissed the appeal for non-prosecution. It is the settled position of law that even in the case of an exparte order passed by the CIT(A), the CIT(A) is duty bound to dispose of the appeal on merits. In the grounds of appeal the appellant took a specific plea that there is no liability on its part to deduct tax at source, since the turnover for FYs 2017-18 does not exceed the monetary limit specified u/s. 44AB of the Act. Therefore, by virtue of provisions of section 194H of the Act there was no liability to deduct tax at source. The CIT(A), without adverting to the grounds of appeal dismissed the appeal.
Sivaramanpillai Anilkumar 7. As contemplated u/s. 250(6) of the Act the CIT(A) is required to frame points of determination followed by a detailed discussion thereupon before passing the order. 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 position I am 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. Ordered accordingly.
In the result, the appeal filed by the assessee stands allowed for statistical purposes.
Order pronounced in the open court on 19th February, 2025. 9.
Sd/- (INTURI RAMA RAO) ACCOUNTANT MEMBER Cochin, Dated: 19th February, 2025 n.p.