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Income Tax Appellate Tribunal, MUMBAI BENCHES “C”, MUMBAI
Before: SHRI G. MANJUNATHA (AM) & SHRI RAM LAL NEGI (JM)
O R D E R
PER RAM LAL NEGI, JM
This appeal has been filed by the assessee against the order dated 03.08.2018 passed by the Commissioner of Income Tax (Appeals)-13 (for short ‘the CIT(A), Mumbai, for the assessment year 2015-16, whereby the Ld. CIT(A) has dismissed the appeal filed by the assessee against the assessment order passed u/s 144 of the Income Tax Act, 1961 (for short the ‘Act’).
2. In this case, the assessee filed its return of income for the assessment year under consideration declaring the total income of Rs. 6,00,210/-. Since, the case was selected for limited scrutiny. The AO issued notices u/s 143 (2) and 142 (1) of the Act. Since, the AO did not receive any response to the said notices, the AO issued letter and directed the assessee to appear before him. However, neither the assessee appeared before the AO nor filed any details. Accordingly, the AO completed the assessment u/s 144 of the Act determining the total income of Rs. 1,25,48,755/- after making disallowance of increased Assessment Year: 2015-16 unsecured loan Rs. 97,95,733/- and Rs. 21,52,182/- as undisclosed expenditure. The assessee challenged the assessment order before the Ld. CIT (A). The Ld. CIT (A) proceeded ex parte and dismissed the appeal and confirmed the addition made by the AO on the basis of material on record as the assessee did not appear before the Ld. CIT (A) on the date fixed for hearing. The assessee is in appeal before the ITAT against the said findings of the Ld. CIT(A).
The assessee has challenged the impugned order passed by the Ld. CIT (A) on the following effective grounds:- “1. The Learned Assessing Officer has erred in adding Rs. 97,95,733 on account of increase in Unsecured Loans as unexplained money to total income.
The Learned Assessing Officer has erred by disallowing and adding Rs. 21,52,812/- as undisclosed expenditure to total income.”
At the outset, the Ld. counsel for the assessee submitted that the AO has passed the assessment order u/s 144 of the Act. In the first appeal, the Ld. CIT (A) also proceeded ex-parte and confirmed the additions made by the AO. The Ld. counsel further pointed out that the Ld. CIT (A) has dismissed the appeal relying on the decision of the Hon’ble MP High Court and the decision of the Delhi Bench of the Tribunal. The Ld. counsel further submitted that since the assessee did not receive any notice, the assessee could not appear before the Ld. CIT (A) on the dates fixed for hearing. The Ld. counsel further submitted that under these circumstances, assessee may be given an opportunity to present its case before the Ld. CIT (A).
On the other hand, the Ld. Departmental Representative (DR) submitted that since the assessee failed to appear before the Ld. CIT (A) the Ld. CIT (A) has rightly dismissed the appeal and confirmed the assessment order. The Ld. DR further submitted that since there is no evidence on record to show that the assessee did not receive notice, there is no merit in the contention of the assessee.
We have perused the material on record in the light of the rival contentions of the parties. We notice that the Ld. CIT(A) has dismissed the Assessment Year: 2015-16 appeal of the assessee by relying on the judgments of Hon’ble MP High Court in the case of Estate of Late Tukojirao Holkar vs. CIT 223 ITR 480 (MP) and the decision of the Delhi Bench of the ITAT in the case of CIT vs. Multiplan India (P) Ltd. (38 ITD 320) (Delhi).
As is apparent from the impugned order that the ld. CIT(A) has dismissed the appeal of the assessee holding that the assessee is not interested in pursuing its case. Even if it is assumed that the assessee did not appear despite service of notice, the Ld. CIT(A) should have decided the appeal on merits taking into consideration the entire evidence on record in the light of the judgment of the Hon’ble Bombay High court in the case of CIT (Central) Nagpur vs. Premkumar ArjundasLuthra(HUF) 297 CTR 614 (Bom). In the said case, the Hon’ble High court has held that the law does not empower the CIT (A) to dismiss the appeal for non prosecution. The operative part of the judgment of the Hon’ble High court reads as under:- “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 for 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 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 1stJune, 2001 the power of the CIT (A) to set aside the order of the Assessing Officer and Assessment Year: 2015-16