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Facts
The assessee's assessment was completed ex-parte by the AO under Section 144 of the Income Tax Act, leading to additions under Section 40(a)(i) for TDS default and Section 68 for unexplained cash credit and advances. The assessee's subsequent appeal before the NFAC/CIT(A) was dismissed ex-parte for non-prosecution. The assessee then filed an appeal to the ITAT challenging the ex-parte dismissal and the lack of a speaking order by the CIT(A), with a 98-day delay which was condoned.
Held
The ITAT held that the CIT(A)/NFAC's ex-parte dismissal and confirmation of additions without a speaking order or independent reasoning was irregular and in contravention of Section 250(6) and Section 251(1)(a) of the Act. The ITAT emphasized the statutory obligation of the first appellate authority to pass a reasoned, speaking order on merits, even if the assessee does not prosecute the appeal. Therefore, the ITAT set aside the CIT(A)'s order and remitted the matter back to the NFAC for fresh adjudication (de-novo) in accordance with the law and for passing a speaking order.
Key Issues
Whether the ex-parte dismissal of an appeal by CIT(A)/NFAC without a speaking order on merits is valid; and whether the CIT(A) is obligated to pass a reasoned order even if the appeal is not prosecuted by the assessee.
Sections Cited
253(1), 250(6), 250, 144, 40(a)(i), 68, 143(2), 251(1)(a), 246A
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
ORDER PER G. D. PADMAHSHALI; This assessee’s appeal is filed u/s 253(1) of the Income-tax Act, 1961 [‘the Act’] challenges DIN & Order No 1068425181(1) dt. 06/09/2024 passed by National Faceless Appeal Centre, Delhi [‘Ld. CIT(A)/NFAC’] u/s 250 of the Act which originated from order of assessment passed u/s 144 of the Act by Asstt. Commissioner of Income Tax, Circle-2(1), Panaji, Goa. [‘Ld. AO’]. ITAT-Panaji Page 1 of 8
Srithik Ispat Pvt. Ltd. Vs ACIT AY : 2016-17 2. The primary grievance in present appeals twirls around ex-parte dismissal of appeal in contravention of s/s (6) of 250 of the Act.
We have vouched sufficiency of reasons behind 98 days delay in filing present appeal and find them fit for condonation, hence condoned in view of ‘Vijay Vishin Meghani Vs. DCIT & Anr’ [2017, 398 ITR 250 (Bom)] and ‘Collector, Land Acquisition, Anantnag and Anr. Vs Ms Katiji and Others’ [1987, 167 ITR 5 (SC)].
As we note that, the assessee is limited company incorporated under the provisions of Companies Act and was engaged in the business of processing of sponge iron. For the year under consideration, the assessee company filed its return on 29/11/2016 returning/declaring a loss of ₹7,28,68,020/-. The case of the assessee was selected for scrutiny vide notice dt. 06/07/2017 issued u/s 143(2) of the Act. ITAT-Panaji Page 2 of 8
Srithik Ispat Pvt. Ltd. Vs ACIT AY : 2016-17 In the event of failure to attend proceeding & non- compliance from the assessee, the Ld. AO completed the assessment ex-parte u/s 144 of the Act to the best of his judgement by making three separate additions viz; (1) ₹5,76,516 addition u/s 40(a)(i) of the Act on account of failure to deduct TDS (2) ₹42,41,967- addition u/s 68 as unexplained cash credit upon assessee’s failure to substantiate closing cash balance (3) further addition of ₹98,54,509/- towards advances remained unexplained u/s 68 of the Act. Aggrieved by aforestated assessment the assessee filed an appeal before Ld. NFAC on 17/01/2019 which was dismissed ex-parte for non-prosecution.
Aggrieved assessee came in present appeal on as many as nine grounds, which are since inconsonance with rule 8 of ITAT Rules1963, hence reproduction thereof for adjudication in verbatim is dispensed with.
ITAT-Panaji Page 3 of 8
Srithik Ispat Pvt. Ltd. Vs ACIT AY : 2016-17 6. Without going into legal & meritorious grounds of appeal
, we have heard rival party’s submissions on ground concerning (ground number 1) for not passing a speaking order by the Ld. NFAC and subject to rule
18. (supra) perused material placed on record and considered facts in the light of settled position of law, which are forewarned to the parties for their rebuttal. We note that, by the impugned order the Ld. NFAC countenanced the impugned additions in its entirety and dismissed the appeal ex-parte by holding that, the appellant assessee did not controvert the factual findings noted by the Ld. AO in the body of assessment order. Insofar as the adjudication on merits of additions are concerned, we also observed that, in absence of evidence & satisfactory explanation from the appellant assessee coupled with non-compliance, the Ld. NFAC after reiterating the observations & findings of tax authority below has ITAT-Panaji Page 4 of 8
Srithik Ispat Pvt. Ltd. Vs ACIT AY : 2016-17 also held the ‘assessment order appears to be reasonable & as per law’. However, the first appellate records prima-facie suggests that while coming to such perfunctory conclusion vis-a-vis decision, the Ld. NFAC did neither appreciate the facts of the appellant’s case independently nor he could lay any reasoning in support decision so arrived by him.
We are heedful to the restriction placed by clause (a) of sub-section (1) of section 251 of the Act which obligates the Ld. CIT(A) to adjudicate issue either by confirming or annulling an addition or reducing or enhancing such addition made by assessing officer without a blanket right to remand. However, while exercising such jurisdiction u/s 251(1)(a) of the Act, it is prerequisite for the Ld. CIT(A) to clearly state point of determination, its decision thereon and clear reasons therefore as stipulated in section ITAT-Panaji Page 5 of 8
Srithik Ispat Pvt. Ltd. Vs ACIT AY : 2016-17 250(6) of the Act. Any order to be regular & legal, it must comply with former threefold dictates.
An order passed in first appeal without adhering to former threefold stipulations de-facto, in our considered view sufferers from compliance of s/s (6) of section 250 of the Act, therefore in limine deserves to be set-aside without going into merits.
The Hon’ble Jurisdictional High Court in the case of ‘CIT Vs Premkumar Arjundas Luthra (HUF)’ [2016, 240 Taxman 133 (Bom)] had dealt with an issue of non-speaking ex-parte order, wherein it was held that; it shall be obligatory on first appellate authority to deal with merits in a manner provided in statute strictly even if not prosecuted.
Thus while adjudicating an issue an obligation is fastened on first appellate authority to; (i) identify ITAT-Panaji Page 6 of 8
Srithik Ispat Pvt. Ltd. Vs ACIT AY : 2016-17 issue assailed, (ii) draw a conclusion based on material and (iii) underline clear reasons for conclusion so drawn thereon.
It is a trite law as laid down by Hon’ble Supreme Court in Chandra Kishore Jha Vs Mahavir Prasad’ [1999, 8 SCC 266 (SC)], 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’.
We now also note that, by virtue of insertion of proviso to section 251(1) of the Act which came into effect from 01/10/2024, the Ld. NFAC/CIT(A) is now empowered to set-aside the ex-parte order passed u/s 144 of the Act for making fresh assessment. Therefore while dealing with appeal instituted u/s 246A of the Act, the first appellate authority is expected to give thoughtful consideration to exercise the empowerment embedded in proviso (supra). ITAT-Panaji Page 7 of 8
Srithik Ispat Pvt. Ltd. Vs ACIT AY : 2016-17 13. In the present case, since the impugned order not dealt in a manner provided in s/s (6) (supra) r.w.s.
251(1) of the Act, therefore rendered itself irregular.
For the reasons in the light of former judicial precedents, we set-aside the impugned order for its remittance to the file of Ld. NFAC with a direction to deal therewith de-novo in accordance with law and pass a speaking order in consonance with s/s (6) of section 250 of the Act.
The appeal is allowed for statistical purposes. In terms of rule 34 of ITAT Rules, 1963 the order pronounced in the open court on date mentioned hereinbefore.
-S/d- -S/d- PAVAN KUMAR GADALE G. D. PADMAHSHALI JUDICIAL MEMBER ACCOUNTANT MEMBER Panaji/Dt: 31st July 2025. Copy of the Order forwarded to :
1. 1. The Appellant.
2. The Respondent.