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Facts
The assessee's appeal was dismissed by the CIT(A) primarily on grounds of non-prosecution due to a transition from a face-to-face to a faceless regime, leading to confusion and non-appearance. The assessee claims they were unaware of the appeal status. The CIT(A) did not adjudicate on the merits of the case but reproduced the assessment order and discussed non-compliance with notices.
Held
The Tribunal held that the CIT(A) is legally obliged to dispose of appeals on their merits and cannot dismiss an appeal for non-prosecution. The CIT(A) must pass a speaking order stating the points for determination, the decision, and the reasons for the decision, as per Section 250(6) of the Income Tax Act.
Key Issues
Whether the CIT(A) was justified in dismissing the appeal for non-prosecution without adjudicating the merits, and whether the CIT(A) failed to pass a speaking order as required by law.
Sections Cited
250(6), 143(3), 246A, 251(1)(a), 251(1)(b), 251(2)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PATNA BENCH AT KOLKATA
Before: SHRI SONJOY SARMA & SHRI RAKESH MISHRA
PER RAKESH MISHRA, ACCOUNTANT MEMBER:
This appeal filed by the assessee is against the order of the ADDL/JCIT(A)-1, Guwahati. [hereinafter referred to as Ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as I.T.A. No.: 612/PAT/2024 Assessment Year: 2015-16 Alka Kumari. ‘the Act’) for AY 2015-16 dated 12.08.2024, which has been passed against the assessment order u/s 143(3) of the Act, dated 21.12.2017. 2. The assessee is in appeal before the Tribunal raising the following grounds of appeal:
“1. As to whether Commissioner appeal (faceless) was justified to dismiss appeal only for non appearance?
As to whether Commissioner (Appeal faceless) was justified in dismissing the appeal without considering merit and the evidences adduced for his kind consideration?
As the whether Commissioner appeal was justified in dismissing the appeal mechanically?
As the whether Commissioner appeal was justified in not counting the exact meaning of limited scrutiny?
AS to whether Learned ITO is entitled to raise a lot of questionnaire extemporaneously from assessee in case LIMITED SCRUTINY
As to whether Learned ITO is entitled to first demand documentary evidence with regard to justification of agricultural income and after receiving in toto ignore all the evidences fictitiously?
As to whether Learned ITO i.e. empowered to deny the certificate issued by the competent authority i.e. by C O in support of agricultural income?
As to whether Learned ITO is empowered to convert agricultural income into taxable income if so under which provision of the act?
As to whether learned ITO is entitled to give definition of agricultural income in his own way?
As to Whether learned ITO Is entitled call the income as undisclosed which has been disclosed in toto?
As to whether learned ITO is empowered to deny the existence of land?
As to whether learned ITO is entitled to ignore the provision of Hindu law of inheritance of the property of intestate?”
Brief facts of the case are that the return of income was e-filed showing total income of Rs. 1,536/- and agricultural income of Rs. I.T.A. No.: 612/PAT/2024 Assessment Year: 2015-16 Alka Kumari. 21,75,958/- and the case was picked up for limited scrutiny for examination of the claim of agricultural income. In response to the notices issued, the assessee filed the reply through the authorized representative. The Ld. AO noted certain discrepancies in the reply and the document filed, specifically relating to the partition deed relating to the land and the document submitted by the assessee and required further reply to be furnished and since the reply filed was not found to be satisfactory, a sum of Rs. 21,75,958/- was treated as income from undisclosed sources and the total income was assessed at Rs. 23,43,960/-. Aggrieved with the assessment order, the assessee preferred an appeal before the Ld. CIT(A), who vide order dated 12.08.2024 dismissed the appeal primarily on account of non- prosecution. While the questions raised by the assessee relating to the powers of the ITO have been addressed by the Ld. CIT(A) however, the Ld. CIT(A) has reproduced the assessment order of the Ld. AO, discussed non-compliance to the notices issued and failure to make submission by the assessee but has not adjudicated upon the merits of the addition. Before us, the assessee has made written submission in Form No. 36 and has also mentioned that the case was selected for the limited scrutiny therefore, instead of long list of questions, the issues relating to limited scrutiny should have been examined. As regards the non-compliance before the Ld. CIT(A), it is stated that the assessee appeared several times while the appeal was being conducted in face- to-face manner and in between the faceless scheme was launched and the entire proceeding of appeal filed face-to-face was converted into faceless manner. When the authorized representative of the assessee attempted to know the status of the appeal, he was informed that there I.T.A. No.: 612/PAT/2024 Assessment Year: 2015-16 Alka Kumari. was no record and everything was changed to faceless manner. Neither any physical notice was given to the assessee nor any telephonic information was received by the Ld. AR and both the assessee as well as the Ld. AR were not aware about the status of the case which led to non-appearance and dismissal of appeal by the Ld. CIT(A). Hence, the assessee has filed this appeal before the Tribunal. It is requested that the relief as claimed in paragraph 1 i.e. setting aside of the assessment order as well as the appeal order of the Ld. CIT(A) may be granted.
None appeared on behalf of the assessee and the appeal was heard with the assistance of Ld. DR and perusal of record. On perusal of the appellate order, it is noticed that while the Ld. CIT(A) has discussed non-compliance on the part of the assessee as the notices sent were not complied with but he has not adjudicated the appeal on merit. In this respect, it is relevant to examine the provisions of section 250(6) which are reproduced as under: “250(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.”
Thus, section 250(6) of the Act casts a duty on the Ld. CIT(A) to pass an order in appeal which should state the points for determination and the decision as well as the reason for arriving at such decision. In the present case before us, the Ld. CIT(A) has not mentioned the reasons after examining the records while disposing of the appeal. The Ld. CIT(A) has neither adjudicated upon various grounds of appeal nor has passed a reasoned order for arriving at the decision, as is required u/s 250(6) of the Act. We further note that in Ajji Basha Vs. CIT (2019) 111 taxmann.com 348 (Madras) it has been held that a speaking order on I.T.A. No.: 612/PAT/2024 Assessment Year: 2015-16 Alka Kumari. merits with reasons and findings is to be passed by Commissioner (Appeals) on basis of ground raised in assessee's appeal; he cannot dispose the assessee's appeal merely by holding that Assessing Officer's order is a self-speaking order which requires no interference. The relevant extract from the order is as under:
“6. … The first respondent is the appellate authority. Needless to state that the Appellate Authority is also a fact finding authority and therefore, he has to consider the order of assessment on the grounds raised in the appeal and thereafter, pass a speaking order on merits and in accordance with law by giving his own reasons and findings as to whether the order of assessment can be sustained or not. In other words, the order passed by the Appellate Authority should explicitly exhibit his application of mind to the facts and circumstances and the objections raised in the grounds of appeal, also by expressing his reasons and findings in support of his conclusion.
In this case, the Appellate Authority, after extracting the order of the Assessing Officer in full, has not given any other reason or finding to dismiss the appeal except by stating that he is of the considered view that the Assessing Officer's order is a self speaking order and does not call for any interference. In my considered view, such single line finding of the Appellate Authority, cannot be sustained as a proper exercise of the Appellate Authority, while disposing the appeal. Therefore, it is apparent that the order impugned in this writ petition is an outcome of total non-application of mind. Consequently, the impugned order cannot be sustained. It is further contended that before passing the order, the petitioner was not heard.”
It has also been held in the case of Commissioner of Income-tax (Central) Nagpur v. Premkumar Arjundas Luthra (HUF) [2016] 69 taxmann.com 407 (Bombay) that the law does not empower the CIT(A) to dismiss the appeal for non-prosecution as is evident from the provisions of the Act. The relevant extract is as under:
“7. An appeal is filed with the CIT(A) from appealable orders listed in Section 246A of the Act. We find that the procedure in appeal before the CIT(A) and the powers of the CIT(A) are governed by Sections 250 and 251 of the Act respectively. The relevant provisions for consideration are as under:— 'Procedure in appeal I.T.A. No.: 612/PAT/2024 Assessment Year: 2015-16 Alka Kumari. 250 (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). . . . (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. . . . Powers of the Commissioner (Appeals) "Section 251(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. . . . (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." . . . (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.'
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 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 I.T.A. No.: 612/PAT/2024 Assessment Year: 2015-16 Alka Kumari. 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.”
We have further noted that while the Ld. CIT(A) has reproduced the assessment order from page 6 to 16, giving the details of notices not complied with on pages 16 & 17 (the name of the notice issuing authority not being mentioned in the details on page 16), cited several judicial pronouncements but has not given any finding on the merits of the addition made by the Ld. AO. After examining the facts of the case and considering the reasons mentioned for non-compliance to the notices issued by the Ld. CIT(A) as the appeal was transferred from face- to-face to faceless regime leading to non-compliance by the assessee in the absence of the details of the appeal, we deem it appropriate to set aside the order of the Ld. CIT(A) and remit the matter back to the Ld. CIT(A) for disposal of the grounds taken by the assessee on merit, by passing a speaking order. Needless to say, the assessee shall be given I.T.A. No.: 612/PAT/2024 Assessment Year: 2015-16 Alka Kumari. a reasonable opportunity of being heard to make any further submission it wants to make in support of its grounds of appeal and shall not seek unnecessary adjournments and rule 46A of the I.T. Rules, 1962 shall also be followed, if required. Accordingly, the grounds taken by the assessee in this appeal are allowed for statistical purposes.
In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open Court on 24th February, 2025. [Sonjoy Sarma] [Rakesh Mishra] Judicial Member Accountant Member Dated: 24.02.2025 Bidhan (P.S.) I.T.A. No.: 612/PAT/2024 Assessment Year: 2015-16 Alka Kumari. Copy of the order forwarded to:
Alka Kumari, 733, 7th Cross 11th Main Road, Bengaluru, Karnataka, 560076. 2. ITO, Ward-4(1), Patna.
ADDL/JCIT(A)-1, Guwahati.
CIT-
CIT(DR), Patna Bench, Patna.
Guard File. //// By order