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Facts
The assessee, a Multipurpose Cooperative Society, filed a NIL income return, but the Assessing Officer completed an assessment under section 144 of the Income-tax Act, assessing the income at ₹1,54,93,137/-. The assessee's first appeal before the National Faceless Appeal Centre (NFAC) was dismissed ex-parte due to non-compliance with notices, leading to the present appeal before the ITAT.
Held
The Tribunal condoned the 43-day delay in filing the appeal, finding 'sufficient cause'. It held that the NFAC erred in dismissing the appeal ex-parte, as the newly inserted proviso to section 251(1) of the Act mandates setting aside a section 144 assessment for de-novo assessment by the AO. Therefore, the Tribunal set aside the NFAC's order and remanded the case back to the NFAC for fresh adjudication and to pass a speaking order as per section 250(6) of the Act.
Key Issues
Whether there was sufficient cause to condone the delay in filing the appeal to the ITAT; and whether the NFAC was justified in dismissing an appeal ex-parte against an assessment framed under section 144, in light of the amended provisions of section 251(1) of the Income-tax Act.
Sections Cited
Section 250, Section 144, Section 253(1), Section 251, Section 251(1), Section 250(6)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PANAJI BENCH, GOA
Before: HON’BLE SHRI PAVAN KUMAR GADALE & SHRI G. D. PADMAHSHALI
Appearances Assessee by : Mr Shivanand Halbhavi [‘Ld. AR’] Revenue by : Mr Ish Gupta [‘Ld. DR’] Date of conclusive Hearing : 26/11/2025 Date of Pronouncement : 27/11/2025 ORDER PER G. D. PADMAHSHALI, AM; The present appeal is filed by the assessee against DIN & Order No. ITBA/NFAC/S/250/2024-25/1073766443(1) dt. 27/02/2025 passed u/s 250 of the Income-tax Act, 1961 [for short ‘the Act’] by the National Faceless Appeal Centre [for short ‘NFAC’] which in turn ascended out of order of assessment passed u/s 144 by the National Faceless e-Asstt. Centre, New Delhi [for short ‘AO’] in relation to assessment year 2022-23 [for short ‘AY’] ITAT-Panaji Page 1 of 5 Shri Jyoti Multipurpose Souharda Sangh Niyamit Vs. ITO AY: 2022-23 2. Admittedly, the present appeal is filed with a delay of 43 days. The petition for condonation of delay is supported by an affidavit dt. 10/06/2025, wherein the cause for the said delay is explained. The reasons stated therein and explained during the course of physical hearing establishes ‘sufficient cause’ and thus finds merits for condonation in view of the parameters laid in ‘Vijay Vishin Meghani Vs. DCIT & Anr’ reported 398 ITR 250 (Bom) and ‘Collector, Land Acquisition, Anantnag and Anr. Vs Ms Katiji and Others’ reported at 167 ITR 5 (SC). In view thereof in the larger interest of judice we deem it fit to condone ordinary delay caused in instituting the present appeal u/s 253(1) of the Act and proceed to adjudicate the limited issue of ex-parte dismissal of first appeal by the Ld. NFAC. Recording the same, advanced accordingly.
Briefly stated facts of the case are that; the assessee is a Multipurpose Cooperative Society established under the provisions of State Co-operative Societies Act. The assessee filed its return of income on 23/09/2022 declaring NIL income. The case of the assessee selected for scrutiny and consequential assessment was completed by an order dt. 20/03/2024 passed u/s 144 of the Act wherein total income of the assessee for the year under consideration was assessed at ₹1,54,93,137/- as against returned NIL income. ITAT-Panaji Page 2 of 5 Shri Jyoti Multipurpose Souharda Sangh Niyamit Vs. ITO AY: 2022-23 4. Aggrieved assessee approached the Ld. NFAC. The Ld. NFAC issued notice on 12/08/2024, 11/02/205 & 19/02/2025 to the assessee through ITBA portal to which there was no compliance by the assessee. In the event of assessee’s failure to respond to such notices, adduce documentary evidence in support of claims/grounds etc., the Ld. NFAC countenanced the additions made by Ld. AO, thereby dismissed the appeal ex-parte for non-prosecution. Further aggrieved, the assessee came in present appeal before the Tribunal.
Without touching merits & grounds of appeal we have heard the rival parties and subject to rule 18 of ITAT-Rules, 1963 perused the material placed on records and considered the facts in the light of settled position of law.
6. We noted that, during the course of first appellate proceedings the Ld. NFAC issued three notices which remained unattended. In the event of failure on the part of appellant to respond other such notices coupled with absence of evidence in support of grounds raised in Form No 35 etc., the Ld. NFAC was constrained to proceed ex-parte and culminate the proceedings without going into the merits. However, while doing so, the Ld. NFAC in our considered view lost sight to the amended provision of section 251(1) of the Act.
ITAT-Panaji Page 3 of 5 Shri Jyoti Multipurpose Souharda Sangh Niyamit Vs. ITO AY: 2022-23 7. We say so because, w.e.f. 1st October, 2024 by virtue of this newly inserted proviso to section 251 of the Act, the first appellate authority is empowered to set-aside an assessment which is passed u/s 144 of the Act. Without re-producing loose stock & barrel of such provision, it shall suffice to state that, this newly inserted proviso is of two-facet, it is on one hand empowers the first appellate authority and on the other hand mandates it to set-aside the best-judgement assessment passed u/s 144 of the Act for its remand to the assessing officer who framed the assessment for literally redoing the assessment de-novo. This by very means the statute in clear terms has provided a particular manner to deal with the first appeal in relation to best judgment assessment. Therefore dealing the first appeal arising out of best-judgement assessment passed u/s 144 of the Act in any manner otherwise than a manner explicitly provided under the statute suffers from such provision therefore is unacceptable in law. This view of the bench finds strength in the landmark judgement of the Hon’ble Supreme Court rendered in ‘Chandra Kishore Jha Vs Mahavir Prasad’ [1999, 8 SCC 266 (SC)], wherein their Hon’ble Lordships have categorically held that ‘if a statute provides for a thing to be done in a particular manner, then it has to be done in that manner and in no other manner’.
ITAT-Panaji Page 4 of 5 Shri Jyoti Multipurpose Souharda Sangh Niyamit Vs. ITO AY: 2022-23 8. Indisputably, in the present case the assessment assailed before the Ld. NFAC was framed u/s 144 of the Act, therefore in view of the proviso to section 251(1) of the Act, the Ld. NFAC was under mandate to set-aside the assessment order for remand to the Ld. AO for de- novo assessment. Per contra, the Ld. NFAC culminated the proceedings and dismissed the appeal of the appellant in limine for non-prosecution. This action in view of the aforestated discussion and judicial precedents amounted to outdoing the provisions of section 251 of the Act, thus has also suffered from compliance of s/s (6) of section 250 of the Act. Therefore for the reasons the impugned order cannot be continued to stand. In view thereof, without offering any comments on merits, we set-aside the impugned order and remand it to the stage of its institution before Ld. NFAC with a direction deal therewith de-novo in accordance with provision of law and pass speaking order in terms of section 250(6) of the Act.
In result, the appeal is allowed for statistical purposes. In terms of rule 34 of ITAT Rules, the order pronounced in the open court on the date mentioned hereinbefore.