PALLAVI CONSTRUCTIONS ,PARBHANI vs. INCOME TAX OFFICER, WARD 1, JALNA

This is an appeal filed by the assessee directed against the order of the National Faceless Appeal Centre, Delhi [‘NFAC’] dated 12.02.2024 for the assessment year 2018-19.

Briefly, the facts of the case are that the assessee is a firm engaged in the business of Civil Construction work relating to Construction of Roads, Bridges and other Civil Construction works. The Return of Income for the A.Y. 2018-19 was filed on 25.10.2018 declaring total income of Rs.1,32,86,330/-. The case was selected for Complete Scrutiny under the E-assessment Scheme, 2019 for verification of ‘Contract Receipts or Fees’. During the course of proceedings, the assessee submitted Audited Balance Sheet, Profit and Loss account and other details called for. The assessee claimed expenses towards labour payment to the tune of Rs.3,12,65,985/-. The assessee was called upon to submit ledger account of labour payment vide show cause notice dated 20.02.2021. The assessee had furnished reply along with the ledger account. However, the submission of the assessee was not found to be acceptable by the AO on account of high volume of business and the expenses were shown below Rs.10,000/- without any narration. In the circumstances, the AO vide order dated 16.03.2021 completed the assessment u/s.143(3) disallowing 10% of labour payment which comes to Rs.31,26,598/-. Thereafter, the NFAC initiated penalty proceedings u/s.270A(1) r.w.s.270A(9) of the Act.

Being aggrieved by the above assessment order, an appeal was filed before the CIT(A)/NFAC who vide impugned order dismissed the appeal in limine for non-prosecution.

Being aggrieved, the appellant is in appeal before this Tribunal in the present appeal.

When the matter was called on, there was none to represent the case of the assessee despite due service of notice of hearing. Therefore, we proceed to dispose of the appeal ex parte qua the assessee.

The ld. Departmental Representative placing reliance on the orders of the authorities submits that no interference by this Tribunal is called for

We heard the ld. DR and perused the material on record. Undisputedly, the CIT(A)/NFAC had dismissed the appeal of the appellant ex parte without going into the merits of the issues. It is a trite law that the CIT(A)/NFAC should have dealt with the merits of the issue in appeal, even in the case of ex-parte order. From the perusal of the impugned order, it would reveal that the CIT(A)/NFAC had not gone into the merits of the issue in appeal, merely dismissed the appeal for non-prosecution, which is contrary to the settled position of law. The Hon’ble Bombay High Court in the case of Pr.CIT(Central) Vs.Premkumar Arjundas Luthra (HUF) Bombay)/[2017] 297 CTR 614 (Bombay) has held as under : Quote, “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.” Unquote.

In the result, the appeal filed by the assessee stands partly allowed. Order pronounced on this 23rd day of July, 2024.