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Facts
The assessee filed an appeal against an order passed by the Commissioner of Income Tax (Appeals) [CIT(A)] which confirmed a disallowance of Rs. 5,05,605/- for alleged failure to furnish documentary evidence. The CIT(A) had dismissed the appeal in limine for non-prosecution without examining the merits of the additions made by the Assessing Officer.
Held
The Tribunal held that the CIT(A) is duty-bound to dispose of the appeal on merits, even if it is an ex-parte appeal. Dismissing the appeal for non-prosecution without considering the merits violates the principles of natural justice and settled legal position.
Key Issues
Whether the CIT(A) erred in dismissing the appeal for non-prosecution without adjudicating on the merits of the case and whether the disallowance made by the Assessing Officer was justified.
Sections Cited
143(3), 143(3A), 143(3B), 37(1), 145, 234A, 234B, 234C, 250
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Income Tax Appellate Tribunal, ‘C’ BENCH :: CHENNAI
Before: SHRI INTURI RAMA RAO & SHRI MANU KUMAR GIRI
PER INTURI RAMA RAO, ACCOUNTANT MEMBER :
This is an appeal filed by the assessee directed against the Order of the ld. Commissioner of Income Tax [National Faceless Appeal Centre], Delhi (hereinafter called as ‘NFAC’) passed under section 250 of the Act, dated 10.09.2025 for the Assessment Year 2018-19.
The assessee raised the following grounds of appeal:
1. For that, the Order of the Commissioner of Income Tax (Appeals) is without jurisdiction, is contrary to the case's law, facts, and circumstances, and in any case, is opposed to the principles of equity, natural justice, and fair play.
2. For that, the Commissioner of Income Tax (Appeals) failed to appreciate that the order passed u/s. 143(3) r.w.s 143(3A) & 143(3B) by the Assessing Officer is without jurisdiction.
3. For that, the Commissioner of Income Tax (Appeals) erred in confirming the ad-hoc disallowance of Rs 5,05,605/- being 50% of travelling expenses, vehicle maintenance expenses and other business expenses, without any legal basis or cogent reasoning.
4. For that, the Commissioner of Income Tax (Appeals) failed to appreciate that disallowance under section 37(1) cannot be made on an ad-hoc or estimated basis in the absence of any finding that the expenses were not incurred wholly and exclusively for the purpose of business
5. For that, the Commissioner of Income Tax (Appeals) erred in upholding the disallowance merely on the ground of non-production of certain vouchers, without appreciating that the books of accounts were not rejected under section 145 of the Income Tax Act, 1961.
6. For that, the Commissioner of Income Tax (Appeals) failed to appreciate that once books of accounts are accepted, selective and arbitrary disallowance of expenses is impermissible in law.
7. For that, the Commissioner of Income Tax (Appeals) erred in confirming the action of the Assessing Officer in treating non- submission of vouchers as conclusive proof for disallowance, without granting adequate and effective opportunity to the appellant, thereby violating the principles of natural justice.
8. The disallowance confirmed is excessive, arbitrary, and not based on any comparable cases, past history of the appellant, or industry standards and hence liable to be deleted.
9. For that, the Commissioner of Income Tax (Appeals) erred in confirming the above additions merely out of conjectures, surmises, and suspicions.
10. For that, the appellant objects to the levy of interest u/s 234A, 234B, and 234C.
11. The above grounds are taken without prejudice to one another. For these grounds and such other grounds that may be urged before or during the hearing of the appeal, it is most humbly prayed that this Hon'ble Income Tax Appellate Tribunal may be pleased to a. Quash the order of assessment and/or 3 -: b. Delete the addition amounting to Rs.5,05,605/-made under the Income Tax Act, 1961, and/or c. Pass such other order as this Hon'ble Income Tax Appellate Tribunal may deem fit. Brief facts of the case :
3. The appellant is an individual deriving income from the carrying on the business. The return of income for the Assessment Year 2018-19 was filed on 8th December, 2018 disclosing total income of Rs. 5,26,060/- . Against the said return of income, the assessment was completed by National e-Assessment Centre of the department (herein after referred to ‘AO’) vide order dated 5th March, 2021 passed u/s 143(3) r.w.s 143(3A) & 143(3B) of the Act at a total income of Rs.10,31,666/-. While doing so, the Assessing Officer disallowed 50% expenditure claimed on travelling vehicle maintenance and other expenses for the failure of the assessee to furnish documentary evidence in support of such expenditure.
Being aggrieved by the above assessment order, an appeal was preferred before ld. CIT(A), who vide impugned order confirmed the disallowance for non-prosecution.
Being aggrieved by the above order, the appellant is in appeal before us in the present appeal. At the outset, we find that there is a delay of 23 days in filing the present appeal before us. The appellant filed an affidavit seeking condonation of delay on the grounds that the delay 4 -: occurred on account of the fact that the notices and order issued by the Department went to the e-mail id and mobile number of erstwhile Accountant, who had failed to communicate, bring to the knowledge of the present Accountant. Thus, it was pleaded that appellant had no knowledge of the impugned order passed u/s 250 of Act.
The above averments made by the appellant remained on controverted by the ld. Sr. Departmental Representative, therefore, we are considered opinion that it is a fit case to condone of delay of 23 days.
Accordingly, we condone the delay of 23 days and admit and appeal for adjudication on merits.
At the outset, we find that the ld. CIT(A) dismissed the appeal in limine for non-prosecution without entering into the merits of additions made by the Assessing Officer.
As contemplated u/s. 250(6) of the Act the CIT(A) is required to frame points of determination followed by a detailed discussion thereupon before passing the order. It is the settled position of law that the CIT(A), even while disposing of the appeal exparte, is duty bound to dispose of the appeal on merits. Reliance in this regard can be placed on the decision of the Hon'ble Bombay High Court in the case of PCIT vs. Premkumar Arjundas Luthra 279 CTR 614. Therefore, in the light of 5 -: the above legal position, we are of the considered view that the matter requires to be remanded to the file of the ld.CIT(A) with the direction to dispose of the appeal de novo on merits after affording reasonable opportunity of hearing to the assessee. Accordingly, grounds of appeal raised by the Assessee are allowed for statistical purpose.
In the result, appeal filed by the assessee is allowed for statistical purposes. Order pronounced on the 10th day of March, 2026 in Chennai.