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Facts
The assessee appealed against an ex-parte order passed by the CIT(A) that upheld the Assessing Officer's decision to treat enhanced compensation as taxable income and agricultural land as a capital asset under Section 2(14) of the Act. The assessee contended that the CIT(A) erred by not considering the facts and circumstances of the case and passing an ex-parte order without deciding on merits.
Held
The Tribunal held that the CIT(A) failed to comply with Section 250(6) of the Income Tax Act by passing an ex-parte order without addressing the issues on merit. Consequently, the case was restored to the file of the CIT(A) for fresh adjudication, ensuring the assessee receives a reasonable opportunity of being heard.
Key Issues
1. Whether the CIT(A) was justified in passing an ex-parte order without deciding the issues on merit. 2. Whether enhanced compensation should be treated as taxable income without interest. 3. Whether agricultural land was correctly classified as a capital asset under Section 2(14) of the Act.
Sections Cited
Section 2(14), Section 250(6)
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Income Tax Appellate Tribunal, DELHI ‘E’ BENCH,
Before: SHRI SAKTIJIT DEY, & SHRI NAVEEN CHANDRA
PER NAVEEN CHANDRA, ACCOUNTANT MEMBER :
This appeal by the assessee is preferred against the order of the Commissioner of Income Tax (Appeals), Delhidated 16.08.2023framed u/s 250 of the Act pertaining to assessment year 2016-17.
The grievance of the assessee read as under:
1.0 That on the facts and in the circumstances of the case, the Learned Commissioner of Income Tax (Appeals) [here-in-after referred to as Ld. CIT-(Appeals)] was not justified and grossly erred in passing the ex-parte order against the appellant without considering the facts and circumstances of the case.
2.0 That on the facts and in the circumstances of the case, the Ld. CIT-(A) has erred in upholding the order of Ld. A.O. treating the enhanced compensation as taxable income without appreciating that no interest was received and only enhanced compensation was received.
3.0 That on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in upholding the order of Ld. A.O. treating the agriculture land as capital asset u/s 2(14) of the Act.
4.0 That in view of the judgment of Hon’ble Bombay High Court in the case of Pruthvi Brokers and Shareholders Private Limited (2012) 253 CTR 0151 and other judicial pronouncements, the appellant is entitled to raise the grounds of appeal before the appellate authorities to consider the issue since the appellate authorities have the jurisdiction to consider new and/or additional claims/deductions subsequently which by way of an inadvertent error was not claimed in the return of income or before the Ld. AO.
5.0 That the appellant craves leave, to add, to a mend, to modify, to rescind, supplement or alter any ground stated herein above either whether there is any delay in filing of appeal (if yes please attach application seeking condonation of delay.
The sum and substance of the grievance of the assessee is that the ld. CIT(A) was not justified and grossly erred in passing the ex parte order against the appellant without considering the facts and circumstances of the case.
At the very outset, the ld. counsel for the assessee submitted that CIT(A) has passed an ex-parte order without deciding the issue on merits.
Learned counsel for the assessee further relied upon the Judgment of Hon’ble Bombay High Court in the case of Pruthvi Brokers and Shareholders Pvt. Ltd. (2012) 253 CTR 0151.
It is the prayer of the ld. counsel for the assessee that in the interest of justice one more opportunity be given to the assessee to submit the necessary details and he further assured that assessee will Co-operate by furnishing all the required details.
Per contra, the ld. DR vehemently stated that both the lower authorities had given sufficient opportunities of being heard to the assessee, but the assessee chose not to attend the proceedings.
Therefore, no second innings should be given to the assessee.
We have carefully considered the orders of the authorities below.
The perusal of CIT(A) order reveals that CIT(A) has passed an ex parte order without deciding the issues on merit. Sub-section (6) of Section 250 of I. T. Act mandate the CIT(A) to state the points in dispute and thereafter assign the reasons in support of his decision. We are of the view that by dismissing the appeal without considering the issue on merit, the ld. CIT(A) has failed to follow the mandate required in Sub Section (6) of Section 250 of the Act.
Therefore, by following the Judgment of Hon’ble Bombay High Court and in the interest of justice and fair play, we deem it fit to restore the issues to the file of the ld. CIT(A). The assessee is directed to attend the appeal proceedings and comply with the queries raised by the ld. CIT(A) and the ld. CIT(A) is directed to decide the issues afresh after affording reasonable and sufficient opportunity of being heard to the assessee as per law.
In the result, the appeal of the assessee in is treated as allowed for statistical purposes.
The order is pronounced in the open court on 25.04.2024.