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Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI S. JAYARAMAN
आदेश /O R D E R
PER N.R.S. GANESAN, JUDICIAL MEMBER:
This appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeals) -1, Trichy, dated 06.05.2019 and pertains to assessment year 2007-08.
We heard Shri N. Quadir Hoseyn, the Ld.counsel for the assessee and Shri AR.V. Sreenivasan, the Ld. Departmental Representative.
The CIT(Appeals) has disposed of the appeal of the assessee as follows:- “4. The assessee has neither attended, nor sought adjournment and there has been no communication from appellant’s side. Keeping in view CBDT’s direction so as to have faster disposal of cases involving tax amount below ₹10 lakhs with a view to reduction in litigation and hence relief to tax payer as well to provide smoother and better tax administration, the appeal is hereby DISMISSED.”
It is not known whether the provisions of Section 251 of the Income-tax Act, 1961 (in short 'the Act') was brought to the notice of the CIT(Appeals) at any point of time. For the purpose of appreciating the issue involved in this case, we reproduce provisions of Section 251 of the Act which reads as follows:-
(1) In disposing of an appeal, the Commissioner (Appeals) shall have the following powers-- (a) in an appeal against an order of assessment, he may confirm, reduce, enhance or annul the assessment ; (aa) in an appeal against the order of assessment in respect of which the proceeding before the Settlement Commission abates under section 245HA, he may, after taking into consideration all the material and other information produced by the assessee before, or the results of the inquiry held or evidence recorded by, the Settlement Commission, in the course of the proceeding before it and such other material as may be brought on his record, confirm, reduce, enhance or annul the assessment ;
(b) in an appeal against an order imposing a penalty, he may confirm or cancel such order or vary it so as either to enhance or to reduce the penalty; (c) in any other case, he may pass such orders in the appeal as he thinks fit. (2) The Commissioner (Appeals) shall not enhance an assessment or a penalty or reduce the amount of refund unless the appellant has had a reasonable opportunity of showing cause against such enhancement or reduction. Explanation In disposing of an appeal, the Commissioner (Appeals) may consider and decide any matter arising out of the proceedings in which the order appealed against was passed, notwithstanding that such matter was not raised before the Commissioner (Appeals) by the appellant.
The above Section 251 of the Act specifically empowers the CIT(Appeals) not only to confirm the order of the Assessing Officer but also to enhance the assessment and penalty. By way of Explanation, the Parliament has clarified that the CIT(Appeals) to consider and decide the issue arising out of assessment order, notwithstanding that such matter was not raised before him by way of grounds of appeal. When such a power was conferred on the CIT(Appeals) by Parliament under the scheme of the Act, the present appeal was dismissed by the CIT(Appeals) on the basis of so-called CBDT circular instructing to dispose of the appeal involving tax amount below ₹10 lakhs with a view to reduce the litigation. This Tribunal in earlier occasion, has come across this kind of order of the CIT(Appeals) dismissing the appeal of the assessee on the basis of so-called CBDT circular with a view to reduce the litigation. This Tribunal in earlier occasions found that instructions to give priority where the tax effect involved is less than ₹10 lakhs, was misconstrued and instead of disposal of appeal on merit, on priority basis, the CIT(Appeals) dismissed the appeal. This Tribunal is confident that CBDT would not have directed the CIT(Appeals) to dismiss the appeal of the innocent tax payer with an intention to reduce the pendency.
The proceeding before the CIT(Appeals) is a judicial proceeding.
Therefore, all the established judicial norms have to be followed. The CBDT, being the apex administrative body of direct taxes, might have directed its officers to dispose the appeals at an early stage. This instruction of CBDT was misunderstood by the CIT(Appeals) as if the appeals filed by the innocent tax payers are to be dismissed with a view to reduce the litigation. Dismissing the appeal filed by the innocent tax payers in such a way would not reduce the pendency as the CIT(Appeals) felt in this case. Rather this would increase the litigation one way or other before all higher forums. Under the Income-tax Act, appeal / revisional remedies are provided before various forums and Constitutional Court. The Parliament would not have envisaged a situation that the appeal would be dismissed wherever the tax amount involved is less than ₹10 lakhs. Providing appeal remedy before various authorities/forum is not only to bring confidence in the mind of the taxpayer / litigant but also to rectify the possible human error with decision and decision making process. The power to dispose of the appeal by CIT(Appeals), even though technically flows from Section 250 and 251 of the Act, in fact, such power flows from the confidence / trust of the innocent taxpayers / citizens of the country, on the judicial administration of our country. Once the taxpayer / litigant looses confidence on the judicial system, there would be law and order problem.
Therefore, the grievance redressal mechanism established under the scheme of the Income-tax Act has to function effectively. In other words, unless the appeal filed by the assessee is disposed of on merit by a speaking order, the mechanism provided under the scheme of the Income-tax Act for redressal of the grievance would be meaningless. In our country, Constitution of India is supreme and CIT(A) is bound to follow the Rule of law.
This Tribunal is of the considered opinion that the CIT(Appeals) should be proactive to dispose the appeal on merit considering the responsibility imposed on him under the scheme of the Income-tax Act.
By dismissing the appeal with a view to reduce the litigation, the CIT(Appeals) in this case forced the assessee to approach the Tribunal by way of present appeal. This could have been avoided in case the appeal was disposed on merit. The CIT(Appeals) himself might have earned the confidence of the taxpayer / appellant in case the appeal was disposed of on merit by a speaking order. Disposal of appeal on merit by a speaking order would not only reduce the unwanted litigation in all forums but also repose the confidence of the citizens on the administration. This Tribunal is of the considered opinion that disposal of the appeal of the tax payer, even in the case where the tax amount is less than ₹.10 lakhs, would not prejudice the interest of the Revenue in any way. Since the present appeal was dismissed due to misunderstanding of CBDT circular, the CIT(Appeals) not only facilitated to increase the litigation but also be a cause for loosing confidence of the taxpayers.
For filing appeal before this Tribunal, the assessee has remitted the statutory appeal fee of ₹8100/- apart from incurring expenditure towards fees to engage the counsel to argue the appeal and miscellaneous expenditure for preparation of appeal before this Tribunal. Who is going to compensate this loss to the assessee? This loss to the assessee could have been avoided if the CIT(Appeals) disposed of the appeal on merit by a speaking order. This Tribunal is confident that the CIT(Appeals) would realise his statutory responsibility in future and dispose of the appeal on merit by a speaking order with an intention to regain the confidence / trust of the taxpayer. The CBDT and Principal Chief Commissioners of Income Tax shall ensure that such things would not happen in future.
With the above observation, the order of the CIT(Appeals) is set aside and the entire issue raised by the assessee is remitted back to his file. We make it very clear that the CIT(Appeals) shall dispose of the appeal on merit irrespective of the fact whether the assessee appeared before him or not after receipt of notice of hearing. It is open to the CIT(Appeals) to dispose the appeal on merit after re-appreciating the material available on record, including the assessment record by a speaking order.
With the above observation, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the court on 29th November, 2019 at Chennai.