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Facts
The assessee filed their income tax return under the new tax regime (u/s 115BAC). However, the Assessing Officer (AO), CPC processed the return under the old tax regime, leading to a demand of Rs. 85,910/-. The assessee's rectification application was rejected, and an appeal to the Addl./JCIT(A) was dismissed ex-parte due to non-compliance with notices.
Held
The Tribunal held that the Addl./JCIT(A)'s ex-parte order was violative of Section 250(6) of the Act, as it did not provide a speaking order or adequate opportunity of hearing. The Tribunal found merit in the assessee's claim that the AO had mechanically applied the old regime.
Key Issues
Whether the AO/CIT(A) erred in not allowing the new tax regime option claimed by the assessee and dismissing the appeal ex-parte without proper hearing.
Sections Cited
115BAC, 154, 250(6), 143(1)
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Before: SHRI DINESH MOHAN SINHA & SHRI BIJAYANANDA PRUSETH
आदेश / O R D E R
PER BIJAYANANDA PRUSETH, AM:
This appeal by the assessee emanates from the order passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’), dated 20.02.2025 by the Additional/Jt. Commissioner of Income-tax (Appeals)-1, Mumbai [in short ‘Addl./JCIT(A)-1’] for the assessment year (AY) 2023-24.
The grounds of appeal
raised by the assessee are as under: “1. CIT(A) has erred and was not just and proper on the facts of the case and in law in 'not allowing' confirming the option of new tax regime as claimed by the assessee in his income tax return.
2. PRAYER: 2.1 The option for new tax regime in all be kindly allowed. 2.2 Personal hearing may be granted. 2.3 Any other relief that your honour may deem fit may be granted.
/AY.2023-24 Raj Kumar Agarwal 3. The assessee craves leave to add, amend, modify alter or delete any of the grounds at the time of hearing.”
The facts of the case in brief are that the assessee derived income from house property, profits and gains of business or profession and other sources. He filed his return of income on 30.07.2023 and computed tax under new tax regime u/s 115BAC of the Act. The Assessing Officer (in short, ‘AO’), Centralized Processing Centre (CPC) processed the return but did not allow the option for new tax regime. The AO, CPC has computed tax under the old tax regime by raising demand of Rs.85,910/-. The assessee filed rectification application u/s 154 of the Act, which was rejected by AO, CPC vide e-mail dated 08.10.2024.
Aggrieved by the order of AO, CPC, the assessee filed appeal before the Addl./JCIT(A). During appellate proceedings, the Addl./JCTI(A) issued notices, and the assessee sought time for filing a reply within 20 days. Even after the extended period, the appellant has not filed any reply even after lapse of 40 days. A final notice was issued to the assessee but assessee did not respond. The CIT(A) held that assessee has nothing valid to say and the CPC has rightly taxed the income of the assessee. He dismissed the appeal of the assessee.
Aggrieved by the order of Addl./JCIT(A), the assessee filed appeal before the Tribunal. The learned Authorized Representative (ld. AR) of the assessee submitted that the assessee had clearly chosen the new tax regime u/s 115BAC of the Act, but AO, CPC has ignored the valid option and mechanically applied the old regime. The rectification application u/s 154 of the Act was also rejected. The /AY.2023-24 Raj Kumar Agarwal assessee could not file his submissions before the Addl./JCIT(A) due to circumstances beyond his control. He submitted that the Addl./JCIT(A) passed an ex parte order without hearing the appellant on merit. Adequate opportunity of hearing was not given to the assessee during the appellate proceedings. The appellant is ready to submit all details and evidences before the Addl./JCIT(A). The ld. AR requested that one more opportunity may be given to the appellant to plead his case on merit. He relied upon the decisions of Tribunal in cases of (i) Harbans Singh vs. AO, CPC, (2024) 165 taxmann.com 146 (Amritsar – Trib.) and (ii) Arun Gopilal Ssmnani vs. ITO, (2025) 174 taxmann.com 33 (Ahd – Trib.) 6. On the other hand, the learned Senior Departmental Representative (ld. Sr. DR) for the revenue supported the order of lower authorities. He would, however, have no objection if the matter is restored to file of CIT(A).
We have heard both the parties and perused the materials available on record. It is not in dispute that the appellant filed return of income under new tax regime u/s 115BAC of the Act. But, the AO, CPC has computed tax under the old tax regime by raising demand of Rs.85,910/-. The Addl./JCIT(A) has dismissed appeal due to the non-compliance to the notices after availing time by way of adjournment. After considering the contentions of both parties, we find that the Addl./JCIT(A) has not passed an order as per the mandate of section 250(6) of the Act and dismissed the appeal of assessee by upholding the findings of the AO, CPC. The ex parte order passed by the CIT(A) is clearly violative of the express provisions of section 250(6) of the Act. The underlying rationale of the provision