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Facts
The assessee, a temple, did not file its ITR for AY 2015-16. The AO initiated reassessment under Section 147 due to cash deposits and interest income, treating Rs. 12,35,291/- as unexplained income. The CIT(A) dismissed the assessee's appeal for non-prosecution, as the assessee failed to attend hearings.
Held
The ITAT ruled that the CIT(A) erred in dismissing the appeal solely for non-prosecution without adjudicating its merits, emphasizing the statutory obligation to pass a reasoned order. Citing a Bombay High Court precedent, the ITAT remanded the case back to the CIT(A) for fresh adjudication on merits after providing the assessee a proper hearing.
Key Issues
1. Whether the CIT(A) can dismiss an appeal for non-prosecution without adjudicating on its merits. 2. The validity of reassessment proceedings and taxing the temple's surplus income.
Sections Cited
147, 144, 144B, 250(6), 167B, 12AA, 12A(2), 148, 10(23BBA), 65, 194A, 142(1), 80G, 250, 251(1)(a), 251(1)(h), 246A, 251(2)
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Income Tax Appellate Tribunal, Visakhapatnam Bench, Visakhapatnam
Before: Shri Ravish Sood & Shri Balakrishnan S.
(िनधा�रण वष�/Assessment Year: 2015-16) Sri Koti Linga Hari Hara Vs. Income Tax Officer, Mahakshetram Temple, Exemption Ward, Visakhapatnam. Rajahmundry. PAN: ACGFS3064C (Appellant) (Respondent) िनधा�रती �ारा/Assessee by: Sri CR Hemanth Kumar, CA राज� व �ारा/Revenue by: Dr. Aparna Villuri, Sr. AR सुनवाई की तारीख/Date of 03/11/2025 Hearing: घोषणा की तारीख/Date of 07/11/2025 Pronouncement: आदेश / ORDER PER. RAVISH SOOD, JM :
The present appeal filed by the assessee is directed against the order passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, dated 20/03/2025, which in turn arises from the assessment order passed by the AO under section 147 r.w.s 144 r.w.s 144B of the Income-tax Act, 1961 (for short, “Act”) dated 29/03/2022 for the Assessment Year 2015–16. The assessee has “1. The order of the Ld. Commissioner of Income Tax (Appeals) is contrary to facts and law and therefore liable to be set aside.
2. The Ld. CIT(A) has erred in dismissing the appeal in contravention of the provisions of Section 250(6) of the Income Tax Act, without adjudicating the appeal on merits, thereby violating principles of natural justice and depriving the appellant of a fair opportunity to be heard.
3. In the facts and circumstances of the case, the Ld. CIT(A) is not justified in confirming the Order of the Assessing officer bringing to tax the excess of expenditure over income of Rs. 12,35,291/- 4. That the Ld. CIT(A) further erred in upholding the application of the Maximum Marginal Rate as per section 167B of the Act to the appellant, an endowment temple instead of normal slab of rates applicable to an Association of Persons (AOP), in line with the appellant's assessed status.
5. The appellant respectfully craves leave to add, amend, or alter any of the above grounds of appeal at the time of hearing.”
In addition, the assessee has also raised the following additional grounds of appeal:
“1. The Ld. CIT(A) erred in not appreciating that the Assessing Officer was unjustified in taxing the surplus of ₹12,35,291/-, despite the appellant having been granted registration u/s 12AA with effect from 28.02.2018 and that the benefit of such registration/exemption ought to have been extended to the year under consideration in light of the underlying spirit and purposive amendment made to Section 12A(2) In the Finance Act 2014 2. On the facts and in the circumstances of the case, the initiation of reassessment proceedings u/s 148 of the Income-tax Act, 1961 is bad in law, being contrary to the third proviso to section 12A(2). Consequently, the reassessment framed on such an incorrect foundation is illegal, void ab initio, and without jurisdiction.
The Ld. Commissioner of Income Tax (Appeals) failed to appreciate that the appellant, being a temple governed by the Endowments Department of the Government of Andhra Pradesh, is eligible for exemption u/s 10(23BBA)
Sri Koti Linga Hari Hara Mahakshetram Temple vs. ITO of the Income-tax Act, 1961, and accordingly the addition of ₹12,35,291/- is wholly unwarranted.
4. Without prejudice to the foregoing grounds, the Ld. CIT(A) erred in not appreciating the settled legal position that temple hundi collections amounting to 12,63,539/-constitute capital receipts, as per Explanation 1(g) to section 65 of the Andhra Pradesh Charitable and Hindu Religious Institutions and Endowments Act, and therefore, form part of the corpus and are not liable to tax under the Income-tax Act.”
Succinctly stated, the Assessing Officer based on the information available with the department noted that during the AY 2015-16 cash deposits aggregating to Rs.1,39,39,225/- were made in the assessee’s bank account. Further, it was also noted by the AO that as per the TDS return, the assessee was in receipt of other interests under section 194A of Rs. 3,47,101/-. The AO also observed that the assessee did not file its return of income for the AY 2015-16. Accordingly, based on the above information, the AO opined that the income chargeable to tax to the extent of Rs. 1,42,86,326/- has escaped assessment for the AY 2015-16. Accordingly, the case of the assessee was reopened under section 147 of the Act and notice under section 148 of the Act was issued on 27/03/2021. During the assessment proceedings, the AO issued statutory notices under section 142(1) of the Act, dated 20/12/2021 and 13/10/2021 and the assessee was called upon to Sri Koti Linga Hari Hara Mahakshetram Temple vs. ITO furnish certain information as mentioned in the said notices. In response, the assessee furnished the information as called for by the AO. On perusal of the assessee’s submissions, it was noticed by the AO that as per the income and expenditure account furnished by the assessee, there was an excess income over expenditure to the extent of Rs. 12,35,291/-. However, in support of the income and expenses, the assessee did not furnish any bills, vouchers and receipts to substantiate its claim. Thereafter, the AO issued notice under section 142(1) of the Act dated 09/02/2022 and called for the information, viz., Trust Deed/Memorandum of Association, Certificate of Registration under section 12AA of the Act, Certificate under section 80G of the Act etc. However, as the assessee did not respond to the same, therefore, the AO was proposed to complete the assessment under section 144 of the Act and a final show cause notice, dated 25/03/2022 was issued to the assessee, however, there was no response from the assessee. Hence, the AO completed the assessment and treated Rs. 12,35,291/- as excess of income over the expenditure declared by the assessee and brought the same to tax as its unexplained income. Thus, the AO
3. Aggrieved, the assessee carried the matter in appeal before CIT(A).
We find that as the assessee despite having been put to notice about the fixation of the appeal on four occasions i.e., vide notices dated 01/08/2024, 24/01/2025, 05/03/2025 and 11/03/2025 had failed to comply to the same, therefore, the CIT(A) held a conviction that he was not interested in prosecuting the appeal. Accordingly, the CIT(A) dismissed the appeal filed by the assessee for non-prosecution.
The assessee being aggrieved with the order of the CIT(A) has carried the matter in appeal before us.
We have heard the Learned Authorized Representatives of both the parties, perused the orders of the lower authorities and the material available on record.
Sri Koti Linga Hari Hara Mahakshetram Temple vs. ITO 7. Sri C.R. Hemanth Kumar, Chartered Accountant, the Learned Authorized Representative (for short “Ld. AR”) for the assessee, at the threshold of hearing of the appeal, submitted that the CIT(A) had grossly erred in law and facts of the case in dismissing the appeal by a non-speaking order on the standalone reason of want of prosecution.
Per contra, Dr. Aparna Villuri, Senior Departmental Representative (for short “Ld. DR”) relied upon the orders of the lower authorities. However, the Ld. DR on being confronted by the fact that there was no whisper in the CIT(A) order qua the merits of the case and the appeal was dismissed on the simpliciter basis of non-prosecution, failed to rebut the same.
We have given a thoughtful consideration to the contentions advanced by the Learned Authorized Representatives of both parties in the backdrop of the orders of the authorities below.
Admittedly, there is no denying of the fact that the assessee despite having been put to notice about the fixation of the hearing of the appeal on four occasions had neither participated nor filed Sri Koti Linga Hari Hara Mahakshetram Temple vs. ITO any written submissions with the CIT(A). Although, we are principally in agreement with the CIT(A) that in case of the failure on the part of an assessee/appellant to participate in the appellate proceedings, the said proceedings cannot be stalled, but at the same time are unable to persuade ourselves to concur with the manner in which the said appeal had been disposed of vide a non-speaking order and dismissed for the standalone reason of want of prosecution on the part of the assessee appellant.
We have heard both the parties, perused the orders of the lower authorities and the material available on record.
We find that the CIT(A) had simply dismissed the appeal of the assessee for want of prosecution. We are unable to persuade ourselves to concur with the manner in which the CIT(A) had disposed of the present appeal. We say so, for the reason that even if the assessee appellant had failed to participate in the proceedings before the CIT(A) and prosecute his matter, the latter remained under the statutory obligation to have adverted to adjudicate the specific grounds based on which the additions/disallowances were assailed by the assessee appellant Sri Koti Linga Hari Hara Mahakshetram Temple vs. ITO before him. Our aforesaid view is fortified by the judgment of the Hon'ble High Court of Bombay in the case of CIT Vs. Premkumar Arjundas Luthra (HUF) (2017) 297 CTR 614 (Bom). The Hon’ble High Court in the aforementioned case had observed as under:
"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 AO to make further inquiry and report the result of the same to him as found in Sec. 250 of the Act. Further, Sec. 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. Sec. 251(1)(a) and (h) 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-s. (2) of s. 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 s. 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 w.e.f. 1st June, 2001 the power of the CIT(A) to set aside the order of the AO and restore it to the AO for passing a fresh order stands withdrawn. Therefore, it would be noticed that the powers of the CITIA) are co- terminus with that of the AO i.e. he can do all that A.O could do. Therefore, just as it is not open to the AO 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 s.251(1)(a) and (b) and Explanation to Sec. 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."
Sri Koti Linga Hari Hara Mahakshetram Temple vs. ITO 13. We, thus, in terms of our observations are unable to persuade ourselves to subscribe to the dismissal of the assessee’s appeal vide a non-speaking order by the CIT(A). We are of a firm conviction that the matter requires to be revisited by the CIT(A), who is directed to re-adjudicate and dispose of the appeal vide a speaking and a reasoned order. Needless to say, the CIT(A) in the course of the set aside proceedings shall afford a reasonable opportunity of being heard to the assessee.
Resultantly, the appeal filed by the assessee is allowed for statistical purposes in terms of our aforesaid observations.
Order pronounced in the open court on 07th November, 2025.