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Income Tax Appellate Tribunal, DELHI BENCH: ‘C’: NEW DELHI
Before: SHRI PRADIP KUMAR KEDIA & SHRI SUDHIR PAREEK
This appeal is filed by the assessee against the order dated 26.04.2023 of National Faceless Appeal Centre (NFAC), Delhi, [hereinafter referred to as Ld. CIT(A)] pertaining to Assessment Year 2016-17, on the following grounds:
ITA No.- 3462-2024 IL and FS Energy Development Company Ltd. “1. On the facts and in the circumstances of the case, and in law, the assessment completed vide order issued by the Asst. Commissioner of Income Tax- Circle 12(1) ('Ld AO') dated 30 December 2018 passed under section 143(3) of the Income Tax Act, 1961 ('the Act') and the subsequent appeal order passed under section 250 by the passed by National Faceless Appeal Centre ('NFAC') dated 26 April 2023 is void ab initio and bad in law.
The Appellant prays before Your Honour that the impugned orders which are passed in the name of the non- existent entity, should be quashed as bad in law.
Without prejudice to Ground no. 1 above, on the facts and in the circumstances of the case, and in law, the NFAC has erred in summarily dismissing the appeal of the Appellant without considering the factual and legal objections as mentioned in the Statement of Facts filed by the Appellant and is contrary to the mandate of Section 250(6) of the Act.
The Appellant prays before Your Honour that the impugned order passed by the NFAC be set aside with a direction to re-adjudicate as per the mandate of Faceless Appeal Scheme, 2021 and Section 251.
Without prejudice to Ground no. 1 & 2 above, on the facts and in the circumstances of the case and in law, the NFAC has erred in upholding the order of Ld AO disallowing professional fees paid to IL&FS Financial Services Limited amounting to Rs 2,86,25,000.
The Appellant prays before Your Honour that the Ld. AO be directed to delete the disallowance of professional expense of Rs. 2,86,25,000.
4. Without prejudice to Ground no. 1 & 2 above, On the facts and in the circumstances of the case and in law, the NFAC has erred in upholding the order of Ld AO disallowing interest expenditure of Rs. 65,00,29,445 under section 36(1)(iii) of the Act.
The Appellant prays before Your Honour that the Ld. AO be directed to delete the disallowance of interest expenditure of Rs. 65,00,29,445.
5. Without prejudice to Ground no. 1 & 2 above, on the facts and in the circumstances of the case and in law, the NFAC erred in Page 2 of 8
ITA No.- 3462-2024 IL and FS Energy Development Company Ltd. upholding the order of Ld AO disallowing other borrowing costs of Rs. 4,52,75,345.
The Appellant prays before Your Honour that the Ld. AO be directed to delete the disallowance of borrowing costs of Rs. 4,52,75,345.
6. Without prejudice to Ground no. 1 & 2 above, on the facts and in the circumstances of the case and in law, the NFAC erred in upholding the order of Ld AD making disallowance under section 144 of Rs. 29,40,23,207
The Appellant prays before Your Honour that the Ld. AO be directed to delete the disallowance, under section 144 of Rs. 29,04,23,207.
7. Without prejudice to Ground no. 1 & 2 above, on the facts and circumstances of the case and in law, the NFAC erred in confirming the disallowance of capital work in progress written off of Rs. 7,68,11,914.
The Appellant prays before Your Honour that the Ld. AO be directed to delete the disallowance of capital work in progress written off of Rs. 7,68,11,914.
Without prejudice to Ground no. 1 & 2 above, on the facts and circumstances of the case and in law, NFAC erred in not allowing the carry forward of entire business loss of Rs. 25,29,35,413 and Rs. 78,17,65,962 as claimed in the return of income pertaining to AY 2014-15 and AY 2015-16.
The Appellant prays before Your Honour for allowance to carry forward the business loss.
The above grounds of appeal are without prejudice to each other. The Appellant craves leave to add, alter, amend, substitute and/or modify in any manner whatsoever all or any of the foregoing grounds of appeal at or before the hearing of the appeal.”
2. As per the grounds of appeals, the assessee has inter alia challenged the ex parte order of CIT(A) in limine on the ground of violation of principles of natural justice.
ITA No.- 3462-2024 IL and FS Energy Development Company Ltd. 3. When the matter was called for hearing, the Ld. Counsel for the assessee submitted at the outset that there was a delay of 397 days in filing the appeal before the Tribunal. In this regard, the Ld.
Counsel pleaded for condonation of the delay on the ground that the assessee was not aware of the First Appellate Order so passed an application dated 18.07.2024 was referred to seek condonation for such delay. The Ld. Counsel pointed out that it is only of the time of reviewing the status of tax matter that the assessee learnt about the disposal of the first appeal ex parte.
3.1 The Ld. Counsel further pointed out that the delay occurred is not deliberate and, in fact, the assessee runs a serious risk by filing appeal belatedly. The Ld. Counsel urged that substantial justice deserves to be carried out in preference to denial of admission of the appeal on technical considerations. Keeping in view the application supported by affidavit, the small delay which does not appear to cause serious prejudice to the interest of the revenue stands condoned.
3.2 The Ld. Counsel, thereafter adverted to appeal memo filed before the CIT(A) and pointed out that it was made specifically clear
ITA No.- 3462-2024 IL and FS Energy Development Company Ltd. in Form-35 that the notice of hearing should not be served through e-mail but should be served physically. However, no such physical notice was served upon the assessee and therefore the assessee shall not aware of the ongoing proceedings before the CIT(A). The non-service of notice has led to ex-parte order.
3.4 The Ld. Counsel thereafter pointed out that the CIT(A) has dismissed the appeal in limine without adjudicating the issue on merits, as incumbent under Section 250(6) of the Act. The Ld. Counsel thus sought for a suitable relief in the matter.
The Ld. CIT (DR) for the Revenue supported the action of the CIT(A).
We have carefully considered the rival submissions. As pointed out on behalf of the assessee, we observe that the CIT(A) while passing the order U/s 250(6) of the Act, the CIT(A) omitted to discuss the grievance of the assessee ground wise and instead passed the order summarily without discussion on merits.
6. We straightway refer to Section 250(6) of the Act which enjoins that the CIT(A) shall state the points for determination before it and Page 5 of 8
ITA No.- 3462-2024 IL and FS Energy Development Company Ltd. the decision shall be rendered on such points along with reasons for the decision. Thus, it is incumbent upon the CIT(A) to deal with the grounds on merits even in ex parte order. In view of Section 250(6) of the Act, the CIT(A) has no power to dismiss an appeal on account of non-prosecution. This view is also taken by the Hon'ble Bombay High Court in case of CIT vs. Premkumar Arjundas Luthra HUF, (2017) 291 CTR 614 (Bom.). A bare glance of the order of the CIT(A) shows that CIT(A) has not addressed itself on various points placed for its determination at all and dismissed the appeal of assessee for default in non appearance. Needless to say, the CIT(A) plays role of both adjudicating authority as well as appellate authority. Thus, the CIT(A) could not have shunned the appeal for non- compliance without addressing the issue on merits.
In the totality of the circumstances, we consider it just and expedient to restore the matter back to the CIT(A) in the larger interest of justice with a view to enable the assessee to avail proper opportunity for disposal of appeal by the CIT(A) on various points.
The assessee is cautioned to extend full co-operation to the CIT(A) without any demur, failing which, the CIT(A) shall be at liberty to Page 6 of 8
ITA No.- 3462-2024 IL and FS Energy Development Company Ltd. conclude the appellate proceedings in accordance with law. Hence, the order of the CIT(A) appealed against, is set aside and all the issues raised in the impugned appeal are restored back to the file of the CIT(A) for fresh adjudication in accordance with law after giving reasonable opportunity of hearing to the assessee.
In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 11/11/2024.