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Facts
The assessee's carry forward loss of Rs. 2,29,552/- for AY 2019-20 and 2020-21, which was set off in AY 2021-22, was disallowed by the CPC-AO. A rectification application filed by the assessee under section 154 was also rejected. The CIT(A) dismissed the assessee's appeal on procedural grounds, citing improper consolidation of grounds relating to orders under section 143(1) and section 154.
Held
The ITAT held that the CIT(A) should have adjudicated the appeal on merits, as the grounds raised, particularly concerning the non-credit of carry forward loss, were relevant to the order under section 143(1) and the issues were inter-related. The Tribunal directed the CIT(A) to ignore the ground related to section 154 and adjudicate the appeal on merits after considering the documents and evidences filed by the assessee.
Key Issues
Whether the CIT(A) was justified in dismissing an appeal on procedural grounds due to consolidation of grounds relating to orders under section 143(1) and section 154, instead of adjudicating the issues on merits, particularly regarding the non-allowance of carry forward losses.
Sections Cited
Income-tax Act, 1961, section 250, section 143(1), section 154, section 246A
AI-generated summary — verify with the full judgment below
सुनवाई क� तार�ख /Date of Hearing : 21/01/2025 घोषणा क� तार�ख /Date of Pronouncement : 23/01/2025 ORDER PER DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER: Captioned appeal filed by the assessee, pertaining to assessment year (AY) 2021-22 is directed against the order passed by the Learned Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre, Delhi[in short ‘Ld. CIT(A)/NFAC’], under section 250 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’), dated 16.10.2024, which in turn arises out of an assessment order passed by the Assessing Officer u/s 143(1) dated 23.09.2022.
Jasumatiben Lalitchandra Shah (AY : 2021-22) 2 2. At the outset, the ld. Counsel for the assessee submitted that the assessee had carry forward loss for Assessment Years 2019-20 and 2020-21 to the tune of Rs.2,29,552/-, which were set off by the assessee in the Assessment Years 2021-22. However, this set off of carry forward loss to the tune of Rs.2,29,552/- was not allowed by the CPC-AO in Assessment Year 2021-22 and disallowed the claims of the assessee.
During the proceedings before the CPC-AO, the assessee filed a rectification application under section 154 of the Act to rectify the mistake and the assessee has prayed the CPC-AO to allow the carry forward loss and set off of the same in the assessment year under consideration i.e. AY 2021-22. The ld. Counsel for the assessee stated that even the rectification application filed by the assessee under section 154 was rejected by the CPC-AO.
Aggrieved by the order of the CPC-AO passed, under section 143(1) of the Act, rejecting the assessee application under section 154 also, the assessee carried the matter in appeal before the ld. CIT(A), who has dismissed the appeal of the assessee observing as follows: “The appellant was provided various opportunities as narrated in the Table at Para 4 above. The appellant has time to time responded to the hearing notices issued u/s. 250 of the I.T. Act and furnished the details/evidences in support of his claim. The grounds of appeal
are adjudicated on merits, facts, on the basis of submissions made by the appellant and material available on record.
6. On verification of the Form 35, particularly column no.2 of the Form, it is found that the appellant has intended to file this appeal against the impugned order u/s.143(1) dated 07/10/2022, However, he incorporates various grounds related to adjustment made in the order u/s. 154, The appellant has presented several grounds of appeal within a single Form 35, encompassing issues arising from both the orders. 6.1 Upon receiving the appeal, it is observed that both orders were being challenged within a single appeal document, which raised concerns regarding the appropriate procedural compliance under the relevant rules governing appeals. As per section 246A of the Income-tax Act, 1961, it is explicitly stated that each appeal must clearly delineate the grounds arising from a single order. Consolidation of grounds of appeal from different orders can lead to confusion, inefficiency, and potential miscarriage of Jasumatiben Lalitchandra Shah (AY : 2021-22) 3 justice. Separate appeals must be filed for different orders to maintain clarity and ensure a fair hearing of each issue on its own merits. 6,2 Aftar careful consideration of the procedural framework, all the grounds of appeal are dismissed due to improper consolidation with the grounds related to two different orders, i.e. order u/s. 143(1) and order u/s.154. 6.3 The appellant is granted leave to file a separate appeal concerning order u/s.143(1) or order u/s. 154 within 30 days from receipts of this order, ensuring that all relevant grounds are clearly articulated and properly substantiated,
7. In the result, the appeal of the Appellant for AY 2021-22 stands DISMISSED.
The ld. Counsel for the assessee stated that the ld.CIT(A) has merely stated that due to improper consolidation with the grounds related two orders i.e. order under section 143(1) and the order under section 154 of the Act, and therefore, directed the assessee to file separate appeal concerning the order under section 143(1) or order under section 154 of the Act, within 30 days from the receipt of order, and this way, the appeal was dismissed. The ld. Counsel for the assessee contended that the assessee has a prerogative right to either file the appeal against the order under section 143(1) of the Act or against the order under section 154 of the Act. Since the assessee has filed the appeal against the order under section 143(1) of the Act, before the ld. CIT(A) which includes rejection of the rectification application also, and therefore it includes the matter relating to section 154 also, therefore, the ld. CIT(A) should not have rejected the assessee’s appeal. Therefore, the ld. Counsel for the assessee contended that the matter may be remitted back to the file of the ld. CIT(A) with direction to adjudicate the issue on merit, as the assessee has raised the grounds pertaining to section 143(1) of the Act also.
The ld. DR for the Revenue did not have any objection if the matter is remitted back to the file of the ld. CIT(A) for fresh adjudication.
Jasumatiben Lalitchandra Shah (AY : 2021-22) 4 7. We have heard both the Parties. We find that the ld. CIT(A) has dismissed the assessee’s appeal, stating that there was improperly consolidated by the assessee with the grounds related to different orders i.e. order under section 143(1) and the order under section 154 of the Act. We find that the ld.CIT(A) should have decided the assessee’s appeal, rather than to make comparison of two sections, that is section 143(1) and the section 154 of the Act. The assessee has raised relevant grounds before the ld.CIT(A) that the AO did not rectify the order and other relevant ground and that the AO was erred in not giving credit to the carry forward loss of Rs.2,29,552/-. Therefore, we find that the ground raised by the assessee is a relevant ground under section 143(1) and therefore the assessee has filed right appeal before the ld.CIT(A) i.e. against the order under section 143(1) of the Act, and in that circumstances in our view, the ld.CIT(A) should have adjudicated the issue on merit. Therefore, we direct the ld.CIT(A) to ignore the ground no.1 raised by the assessee which pertains to section 154 of the Act. We note that issue raised by the assessee before the Ld. CIT(A) is mixed and interrelated, therefore, assessee raised the ground to the effect that assessing officer was erred in rejecting to rectify the order u/s. 154 of the Act. However, the ld.CIT(A) should adjudicate the assessee’s appeal on merit by taking the base of ground No. 2 raised by the assessee, therefore, we direct the ld.CIT(A) to adjudicate the issue on merit.
We also make it clear that the ground no.1 raised by the assessee before the ld.CIT(A) is against the order under section 154 of the Act and ground no.2 raised by the assessee, stating that the AO was erred in not giving credit for the carry forward of losses of Rs.2,29,552/-. Both these grounds are inter-related and mixed. Therefore, the ld.CIT(A) ought to have adjudicated the issue on merit, rather than to dismiss the assessee’s appeal and directing to file separate appeals before him. Therefore, the assessee need not file separate appeals before the ld.CIT(A), and we direct the assessee to file relevant documents and Jasumatiben Lalitchandra Shah (AY : 2021-22) 5 evidences to substantiate its claim regarding carry forward and set off of losses before the ld.CIT(A), and Ld. CIT(A) should adjudicate the issue in accordance with law. Therefore, the appeal of the assessee is treated to be allowed for statistical purpose.
In the result, the appeal of the assessee is allowed for statistical purpose.
Order is pronounced in the open court on 23/01/2025