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Facts
The assessee filed an ITR for AY 2020-21 declaring an income of ₹16.06 lakhs. A scrutiny assessment under section 143(3) led to an assessed income of ₹71.79 lakhs due to the assessee's non-response. The assessee's first appeal to the National Faceless Appeal Centre (NFAC) was dismissed ex-parte for non-prosecution, leading to the present appeal before the ITAT, which condoned a 207-day delay.
Held
The Tribunal, relying on precedent from the Bombay High Court, held that the NFAC, as an appellate authority, does not possess the power to dismiss an appeal for non-prosecution. It emphasized that appeals must be decided on their merits, even in ex-parte adjudications. Consequently, the Tribunal set aside the NFAC's order and remitted the case back for a de-novo decision on merits under section 250(6) of the Act.
Key Issues
Whether an appellate authority (NFAC/CIT(A)) can dismiss an appeal ex-parte for non-prosecution without adjudicating it on merits.
Sections Cited
Section 250, Section 143(3), Section 143(1), Section 144B, Section 253(3), Section 250(6), Section 251(1)(a), Section 251(1)(b), Section 251(2)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PANAJI BENCH, PANAJI
Before: HON’BLE SHRI PAVAN KUMAR GADALE & SHRI G. D. PADMAHSHALI
ORDER PER G. D. PADMAHSHALI; The captioned appeal of the assessee impugns DIN & Order 1065516948(1) dt. 10/06/2024 passed by the National Faceless Appeal Centre, Delhi [‘Ld. NFAC’ hereinafter] u/s 250 of the Income-tax Act, 1961 [‘the Act’ hereinafter] which in turn arisen out of order of assessment dt. 26/09/2022 passed u/s 143(3) of the Act by the National Faceless e-Asstt. Centre, Delhi [‘Ld. NFeAC’ hereinafter] anent to assessment year 2020-21 [‘AY’ hereinafter].
The appeal is time barred by 207 days. From the reasons stated in the affidavit we are of the considered view that, the assessee for a ITAT-Panaji Page 1 of 4
Priya Prasad Shirodkar Vs ITO AY: 2020-21 sufficient reasons was prevented from filing the present appeal within the prescribed limit terms of section 253(3) of the Act. Consequently, applying the test laid in ‘CIT Vs KSP Shanmugavel Nadai Ors’ [1985, 153 ITR 596 (Mad)] we condone the aforestated delay and admit the same for adjudication on merit
Tersely stated facts of the case are that; the assessee is an individual who filed her return of income on 13/03/2021 declaring therein total income of ₹16,06,900/-. The said return of income without variation in first placed processed summarily u/s 143(1) of the Act. Subsequently the case of the assessee selected for scrutiny and consequential assessment was completed u/s 143(3) of the Act wherein owning to assessee’s failure to respond to the notices & substantiate true nature & source various additions were made and total income vide an order dt. 26/09/2022 framed u/s 143(3) r.w.s. 144B was assessed to tax at ₹71,79,030/- as against the returned income of ₹16,06,900/-.
Aggrieved assessee attempted to resolve the dispute in first appeal before the Ld. NFAC, who in the event of non-prosecution by the assessee dismissed the ex-parte in limine. Thus aggrieved by impugned order, the assessee came in present appeals on as many as nine grounds ITAT-Panaji Page 2 of 4
Priya Prasad Shirodkar Vs ITO AY: 2020-21 which are inconsonance with rule 8 of ITAT-Rules, hence reproduction thereof is dispensed with.
Without touching grounds and merits of the case; we heard the respondent on limited issue and subject to rule 18 of ITAT-Rules 1963 perused material placed on record and we note that, in the event of non- prosecution, the Ld. NFAC came to dismiss the appeal ex-parte in limine without adjudicating the issues/ground raised
in Form No.
35. While doing so, the Ld. NFAC placed its reliance on ‘CIT Vs B N Bhattacharya’ [1977, 118 ITR 461 (SC)], ‘Estate of Late Tukoji Rao Holkar Vs CWT’ [1997, 223 ITR 480 (MP)] and ‘CIT Vs Multiplan India Pvt. Ltd.’ [1991, 38 ITD 320 (Del)]. We note that, while dealing with the appeal for passing an order u/s 250(6) of the Act, the Ld. NFAC in view of prescription of Section 251(1)(a) and (b) and Explanation to Section 251(2) of the Act was required to apply his mind to all the issues which arise from the impugned order before him whether or not the same has been raised in form no 35. Thus, the law does not empower the Ld. NFAC to dismiss the appeal for non-prosecution in limine.
We note that, the issue of ex-parte dismissal of appeal by the first appellate authority came for consideration before the Hon’ble ITAT-Panaji Page 3 of 4
Priya Prasad Shirodkar Vs ITO AY: 2020-21 Jurisdictional Bombay High Court in the case of ‘CIT Vs Premkumar Arjundas Luthra HUF’ [2016, 240 Taxman 133 (Bom)] wherein their Hon’ble lordship vide para 8 have categorically held that, the first appellate authority [CIT(A)] does not have the power to dismiss an appeal for non-prosecution and even in the case of ex-parte adjudication the CIT(A) must decide with the appeal on merits, considering all the relevant facts and evidence.
Respectfully following the former judicial precedent (supra), we set-aside the impugned ex-parte order passed by the Ld. NFAC without dealing with the issues/merits of the case as assailed and remit & restore the appeal to the file of Ld. NFAC at the stage of its institution with a direction to deal therewith de-novo on merits and pass a speaking order in terms of section 250(6) of the Act. Order Accordingly.
The appeal in result stands allowed for statistical purposes. In terms of rule 34 of ITAT Rules, 1963 the order pronounced in the open court on date mentioned herein before.