VMK IMAGE, PUNE vs. THE INCOME TAX OFFICER, WARD-8(3), PUNE

PER DR.MANISH BORAD, ACCOUNTANT MEMBER:

“1. That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in treating Rs.2,16,00,000/- as unexplained investment under section 69. 2. The appellant craves leave to add/delete/modify amend all or any of the grounds of appeal

.”

3. When the matter was called for, none appeared on behalf of the assessee despite due service of notice of hearing. We therefore proceed to dispose of this appeal exparte qua the assessee after hearing the ld. Departmental Representative.

4. Tersely stated, the facts of the case are that the assessee for the year under consideration has not filed return of income under the provisions of section 139(1) of the Act. Based on the information available with the Income Tax Department that the assessee has purchased an immovable property amounting to Rs.2,16,00,000/-, the case of assessee was reopened by way of issuance of notice u/s.148 of the Act. Subsequently notice u/s.142(1) was also issued calling upon the assessee to furnish certain information. The assessee neither complied with notice u/s.148 nor complied with notice u/s.142(1). Responding to a notice issued, the assessee once sought adjournment. Thereafter, the assessee did not furnish any information. In absence of any compliance forthcoming from the side of assessee substantiating the sources for the investment, the Assessing Officer vide order dated 22.03.2022 completed the assessment u/s.147 r.w.s.144B of the Act. While doing so, the AO made addition of Rs.2,16,00,000/- as unexplained investment invoking the provisions of section 69 of the Act.

“8. From the aforesaid provisions, it is very clear once an appeal is preferred before the CIT(A), then in disposing of the appeal, he is obliged to make such further inquiry that he thinks fit or direct the Assessing Officer to make further inquiry and report the result of the same to him as found in Section 250(4) of the Act.

Further Section 250(6) of the Act obliges the CIT(A) to dispose of an appeal in writing after stating the points for determination and then render a decision on each of the points which arise for consideration with reasons in support. Section 251(1)(a) and (b)of the Act provide that while disposing of appeal the CIT(A)would have the power to confirm, reduce, enhance or annul an assessment and/or penalty. Besides Explanation to sub-section (2)of Section 251 of the Act also makes it clear that while considering the appeal, the CIT(A) would be entitled to consider and decide any issue arising in the proceedings before him in appeal filed for its consideration, even if the issue is not raised by the appellant in its appeal before the CIT(A). Thus once an assessee files an appeal under Section 246A of the Act, it is not open to him as of right to withdraw or not press the appeal. Infact the CIT(A) is obliged to dispose of the appeal on merits. Infact with effect from 1st June, 2001 the power of the CIT(A) to set aside the order of the Assessing Officer and restore it to the Assessing Officer for passing a fresh order stands withdrawn.

Therefore, it would be noticed that the powers of the CIT(A) is coterminous with that of the Assessing Officer i.e. he can do all that Assessing Officer could do. Therefore just as it is not open to the Assessing Officer to not complete the assessment by allowing the assessee to withdraw its return of income, it is not open to the assessee in appeal to withdraw and/or the CIT(A) to dismiss the appeal on account of non-prosecution of the appeal by the assessee. This is amply clear from the Section 251(1)(a) and (b)and Explanation to Section 251(2) of the Act which requires the CIT(A) to apply his mind to all the issues which arise from the impugned order before him whether or not the same has been raised by the appellant before him. Accordingly, the law does not empower the CIT(A) to dismiss the appeal for non-prosecution as is evident from the provisions of the Act.”

Thus, the Jurisdictional High Court has categorically held that CIT(A) has to decide the appeal on merit and CIT(A) does not have any power to dismiss appeal for non-prosecution.

Order pronounced on this 12th day of November, 2024.