ASHISH DHAM,DELHI vs. DCIT, NEW DELHI

PER: ANADEE NATH MISSHRA, AM

This appeal by Assessee is filed against the order of the Learned Commissioner of Income Tax (Appeals)-16, New Delhi, [“Ld. CIT(A)” for short], dated 15.02.2016, for Assessment Year 2011-12, on the following grounds:

“1. Ld. CIT (Appeals), without appreciating the correct facts of the case and without giving proper opportunity of being heard is not justified in law and facts and circumstances of the case in not deciding the appeal on the merits of the case and as well as on validity /legality of assessment order passed by ld. Assessing Officer without having the jurisdiction over the case.

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(2) The Assessment Order U/s 143(3) of the Income Tax Act, 1961 (“I.T. Act” for

short) was passed on 31/12/2013, in which the following additions were made by the

Assessing Officer (AO):

• Income as declared by the assessee - Rs. 44,71,710 • Addition U/s 69 of the I.T. Act - Rs. 12,52,000/- • Addition on account of wrong claim of deduction u/s 24(b) of the I.T. Act Rs. 17,64,241/ - Rs. 17,64,241/- • Addition on account of difference in the receipts As per 26AS and return of income - Rs. 17,00,000 Total income - Rs. 91,87,951/- Rounded off - Rs. 91,87,950

(3) The Assessee filed appeal before the Ld. CIT(A). However, the assessee did not

comply with hearing notices issued by the Ld. CIT(A). As the assessee did not appear

before the Ld. CIT(A), the Ld. CIT(A) concluded that the Assessee was not interested

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in prosecuting his case and he dismissed the Assessee’s appeal with the following

observations in his aforesaid impugned order dated 15/02/2016:

“ Findings:- Opportunities granted to appellant:- (i) Case was fixed for 19/10/2015 by issuing notice u/s 250. No one attended. (ii) Another notice u/s 250 is issued on 16/11/2015 and hearing fixed on 09/12/2015. (iii) On 9/12/2015 case was adjourned to 30/12/2015. None attended on 30/12/2015. (iv) On 12/01/2016 another notice u/s 250 issued case fixed for hearing on 04/02/2016. (v) On 04/02/2016 case was adjourned to 11/02/2016. No one attended on 11/02/2016 or till the passing of this order. From the opportunities given to the assessee and his non compliant attitude, it is clear that appellant is not interested in prosecuting his case. As there is nothing on record to rebut the conclusion drawn by the Assessing Officer. The additions made by AO are confirmed. In the result the appeal of the appellant is dismissed.”

(3.1) The Assessee filed appeal in Income Tax Appellate Tribunal (ITAT), against the

impugned order dated 15/02/2016 of the Ld. CIT(A). We find from the perusal of

record, that the following grounds of appeal were raised by the Assessee before the Ld.

CIT(A).

“1. That order passed by ld. Assessing Officer is without jurisdiction and bad in law and should be quashed ab-initio. 2. That without prejudice to ground of appeal no. 1, order passed by ld. assessing officer is barred by limitation and bad in law and should be annulled. 3. That without prejudice to ground of appeal no. 1 and 2 ld. Assessing Officer without appreciating the correct facts of the case and giving proper opportunity of being heard is not justified in law and facts and circumstances of the case in making the addition of Rs. 12,52,000/-

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under section 69 of the I.T. Act on account of cash deposit in bank account. 4. That ld. Assessing Officer without appreciating the correct facts of the case and giving proper opportunity of being heard is not justified in law and facts ;and circumstances of the case in making the addition of Rs. 17,64,241/- by disallowing the interest on housing loan from income from house property. 5. That ld assessing officer without appreciating the correct facts of the case and giving proper opportunity of being heard and raising any query during the course of hearing is not justified in law and facts and circumstances of the case in making the addition of Rs. 17,00,000/- on account of alleged difference in the receipts as per 26AS and return of income. 6. Assessee has every right to make, add, delete, modify or alter any grounds of appeal at the time of hearing.

(3.2) However, the Ld. CIT(A) in his aforesaid impugned order dated 15/02/2016, has

not disposed off various grounds of appeal through a speaking order on merits.

Instead, the Ld. CIT(A) has dismissed assessee’s appeal on merits, in a summary

manner through a non-speaking order, on merits.

(4) The relevant provisions under I.T. Act regarding procedure in appeal, and

powers of the Commissioner [Appeals] are contained in Sections 250 and 251 of I.T.

Act, which are reproduced below for ready reference:

“250. (1) The Commissioner (Appeals) shall fix a day and place for the hearing of the appeal, and shall give notice of the same to the appellant and to the Assessing Officer against whose order the appeal is preferred. (2) The following shall have the right to be heard at the hearing of the appeal— (a) the appellant either in person or by an authorized representative; (b) the Assessing Officer, either in person or by a representative. (3) The Commissioner (Appeals) shall have the power to adjourn the hearing of the appeal from time to time.

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(4) The Commissioner (Appeals) may, before disposing of any appeal, make such further inquiry as he thinks fit, or may direct the Assessing Officer to make further inquiry and report the result of the same to the Commissioner (Appeals). (5) The Commissioner (Appeals) may, at the hearing of an appeal, allow the appellant to go into any ground of appeal not specified in the grounds of appeal, if the Commissioner (Appeals) is satisfied that the omission of that ground from the form of appeal was not wilful or unreasonable. (6) The order of the Commissioner (Appeals) disposing of the appeal shall be in writing and shall state the points for determination, the decision thereon and the reason for the decision. [(6A) In every appeal, the Commissioner (Appeals), where it is possible, may hear and decide such appeal within a period of one year from the end of the financial year in which such appeal is filed before him under sub-section (1) of section 246A (7) On the disposal of the appeal, the Commissioner (Appeals) shall communicate the order passed by him to the assessee and to the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner.

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(4.1) A perusal of the above provisions of law shows that U/s 250(6) of I.T. Act the Ld.

CIT(A) was obliged to dispose of the appeal in writing after stating the points for

determination and to then pass an order on each of the points which arose for

consideration; and the Ld. CIT(A) was further obliged to state the reasons for his

decision on each such points which arose for determination. Thus, the Ld. CIT(A) was

duty bound to dispose of the appeal on merits. Moreover, the perusal of Section

251(1)(a) and (b) of I.T. Act and the further perusal of Explanation of Section 251(2) of

I.T. Act shows that the Ld. CIT(A) was required to apply his mind to all the issues which

arose from the impugned order before him, whether or not these issues had been

raised by the Assessee before him. Also, Section 251(1)(a) of I.T. Act provides that

while disposing of an appeal against Assessment Order, Commissioner (Appeals) shall

have the power to confirm, reduce, enhance or annul the assessment. Similarly, the

section 251(1) (b) provides that in disposing of an appeal against an order imposing a

penalty, Commissioner (Appeals) may confirm or cancel such orders or vary it so as to

either to enhance or to reduce the penalty. On cumulative consideration the provisions

U/s 250(6) read with sections 250(4), 250(5), 251(1)(a), 251(1)(b) and Explanation of

Section 251(2) of I.T. Act , we come to the conclusion that the Ld. CIT(A) is not

empowered to dismiss the appeal for non-prosecution of appeal and is

obliged to dispose of the appeal on merits. Once the Assessee files an appeal

U/s 246A of I.T. Act, the Assessee sets in motion the machinery designed for

disposal of the appeal under Sections 250 and 251 of I.T. Act. If the appeal

filed by the assessee fulfils the requirements of maintainability and

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admissibility prescribed under Sections 246, 246A, 248 and 249 of I.T. Act;

neither the Assessee can stop the further working of that machinery as a

matter of right by withdrawing the appeal, or by not pressing the appeal, or

by non-prosecution of the appeal; nor the first appellate authority, CIT(A) in

this case, can halt this machinery by ignoring either the procedure in appeal

prescribed U/s 250 of I.T. Act or powers of Commissioner (Appeals)

prescribed U/s 251 of I.T Act. CIT(A), the first appellate authority, cannot

dismiss assessee’s appeal in limine for non- prosecution without deciding the

appeal on merits through an order in writing, stating the points of

determination in the appeal, the decision thereon and the reason for the

decision. It is well-settled that powers of Ld. CIT(A) are co-terminus with powers of

the Assessing Officer. Useful reference may be made to order of Apex Court decision in

CIT vs. Kanpur Coal Syndicate 53 ITR 225 (SC) in which it was held that AAC has

plenary powers in disposing off an appeal; that the scope of his power is co-terminus

with that of the ITO, that he can do what the ITO can do and also direct him to do

what he failed to do. In this context, useful reference may also be made to Apex

Court’s decisions in the cases of CIT vs. Rai Bahadur Hardutroy Motilal Chamaria

66 ITR 443 and CIT vs. B.N. Bhattachargee 118 ITR 461 (SC) for the proposition

that an assessee having once filed an appeal, cannot withdraw it and even if the

assessee refuses to appear at the hearing, the first appellate authority can proceed with

the enquiry and if he finds that there has been an under-assessment, he can enhance

the assessment. Just as, once the assessment proceedings are set in motion, it

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is not open to the Assessing Officer to not complete the Assessment

Proceedings by allowing the Assessee to withdraw Return of Income; it is

similarly, by analogy, not open for Ld. CIT(A) to not pass order on merits on

account of non-prosecution of appeal by the Assessee or if the Assessee

seeks to withdraw the appeal or if the assessee does not press the appeal.

When the Commissioner (Appeals) dismisses the appeal of assessee for non-

prosecution of appeal by the assessee; in effect, indirectly it leads to same results as

withdrawal of appeal by assessee. When the assessee is not permitted to

withdraw the appeal filed before the first appellate authority, the first

appellate authority is duty bound to not allow a situation to arise, through

dismissal of appeal for non-prosecution of appeal before the first appellate

authority; in which, in effect, indirectly the same results are obtained as

arise from withdrawal of appeal by the assessee. What cannot be permitted

in law to be done directly, cannot be permitted to be done indirectly either,

as is well settled. In view of the foregoing discussion; and on careful perusal of

Section 250(6) r.w.s. 250(4), 250(5), 251(1)(a), 251(1)(b) and Explanation to Section

251(2) of I.T. Act; it is amply clear that Ld. CIT(A) has no power to dismiss appeal in

limine for non-prosecution of appeal by the assessee. We draw support from order of

Hon’ble Bombay High Court in the case of CIT vs. Premkumar Arjundas Luthra

(HUF) [2016] 240 taxman 133 for the propositions that Ld. CIT(A) is required to

apply his mind to all issues which arise from impugned order before him whether or not

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same had been raised by appellant before him; and that CIT(A) is obliged to dispose of

the appeal on merits. In this case, it was held as under:

“8…… 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 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 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.”

(5) In view of the foregoing paragraphs, we are of the view that the Ld. CIT(A)

erred in dismissing Assessee’s appeal on merits in a summary manner, without giving

detailed reasons for his order, on various grounds of appeal before him. We further

hold that the Ld. CIT(A) erred in passing a non-speaking order on each of the points

which arose for his consideration and he failed in discharging the statutory obligation to

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state the reasons for his decision on each such points, which arose for determination in

assessee’s appeal before the Ld. CIT(A). Therefore, we set aside the impugned order

dated 15/02/2016 of Ld. CIT(A); and we direct the Ld. CIT(A) to pass denovo order as

per law, in accordance with Sections 250 and 251 of I.T. Act, for fresh disposal of

appeal filed by the Assessee before the Ld. CIT(A) against the aforesaid Assessment

Order dated 31/12/2013.

(5) In the result, Assessee’s appeal is treated as partly allowed for statistical

purposes.

Order pronounced in the open court on 04/ 01/2019

Sd/- Sd/- (H.S. SIDHU) (ANADEE NATH MISSHRA) JUDICIAL MEMBER ACCOUNTANT MEMBER

Dated: 04.01.2019 Pooja/-