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Income Tax Appellate Tribunal, LUCKNOW BENCH “A”, LUCKNOW
Before: SHRI ANADEE NATH MISSHRA & SHRI SUBHASH MALGURIA
This appeal has been filed by the assessee against the order of the ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi dated 19.12.2023 for the assessment year 2015-16, inter alia, on the following grounds:-
1. The Ld. C.I.T. (A) erred on facts and in law in dismissing the appeal on Ex-parte basis without appreciating Adjournment Application on Medical Ground of the Counsel being "Total Knee Replacement Surgery" with supporting medical documents submitted on 18.12.2023 which is also mentioned in the Order of the Ld. C.I.T. (A).
2. The Ld. C.I.T. (A) erred on facts and in law in not deciding the appeal on Merits by passing speaking order without appreciating that Ld. CIT(A) is not empowered to dismiss the appeal for non - prosecution.
Page 2 of 8 3. The Ld. C.I.T. (A) failed to appreciate that Ld. A. O. wrongly added Rs.26,32,067.00 being difference between Sale consideration and Stamp Value without appreciating that Flats sold during the year had been allotted at Agreed Rate to Flat Buyers in earlier year much before 01.04.2014 being date of amendment u/s 43CA and booking advance has also been received in earlier year through cheque, hence the Stamp Duty Value in respect of these sales should be date of Allotment / Agreement and receiving of Booking Advance through cheque in earlier year as specified in Clause- 3 and 4 of Section -43CA of I. T. Act.
The Ld. C.I.T. (A) upheld incorrect finding of Law by Ld. A. O. where he had wrongly held that Clause-3 & 4 of Section 43CA are applicable for 01.04.2014 and not considering that Clause 3 and 4 provides the effective date of Circle Rate where allotment / Agreement has been made in earlier year and payment has been made through cheque and same are squarely applicable assessee's case as relevant details has been furnished during Assessment Proceeding.
The Ld. C.I.T. (A) erred on facts and in law in upholding the finding of Ld. A. O. that Allotment Letter could not be treated as Agreement inspite of the fact as per Contract Act and as per settled case laws and CBDT Circular, the Allotment Letter is also binding contract between the Developer and Flat Buyer. Further the Ld. A. O. rejected the Allotment Letter on Technical Ground without appreciating that all the flats allotted had been sold in subsequent year i.e. A. Y.-2015-16 and details of payment made by the Flat buyers has also been stated in the Registered Sale Deed submitted during course of assessment proceeding.
6. The Ld. CIT(A) upheld the incorrect addition of Rs.26,32,067/- made by ld. A. O. who had made the addition on the basis of Chart reproduced in Assessment Order without considering each Registered Sale Deed, Date of allotment and Payments made through cheque before 01.04.2014 by the Flat Buyers towards the booking of Flat and Date of applicability of Circle Rate in the year of allotment.
Page 3 of 8 7. The Ld. C.I.T.(A) erred on facts and in law in upholding the addition of Rs.3,82,500.00, by disallowing excess Interest of 6% out of 18% paid on Unsecured Loans which were used solely and exclusively for the purpose of business as per business needs.
8. The Ld. CIT (A) erred on facts and in law in upholding the incorrect finding of Ld. A. O. that Unsecured Loan has been received from the related parties and not shown in Audit Report inspite of the fact there is no Lender is related party in the present case. Further the Rate of Interest 18% paid on Unsecured Loan is reasonable as per present market condition.
9. The Ld. C.I.T.(A) erred on facts and in law in upholding the incorrect finding of Ld. A. O. regarding assessee having sufficient working Capital as Ld. A. O. is not a Competent Authority to access the needs and business expediency of Business which assessee has to decide for the purpose of its business.
10. The Additions upheld by Ld. C.I.T. (A) are highly excessive, contrary to the facts, law and principle of natural justice and without providing sufficient time and opportunity to have its say on the reasons relied upon by Ld. A.O.
The brief facts of the case are that the assesse, a co- operative society, engaged in the construction and sale of residential houses/flats, e-filed its return of income on 28.09.2015 declaring a total income of Rs.24,55,240/-. The case was selected for scrutiny through CASS under ‘Limited Scrutiny Criteria’. The Assessing Officer finally completed the assessment, assessing the total income of the assessee at Rs.54,69,807/-, making additions of Rs.26,32,067/- under section 43CA of the Act and Rs.3,82,500/- on account of higher interest paid to relatives.
Aggrieved, the assessee preferred an appeal before the ld. CIT(A). The ld. CIT(A), NFAC dismissed the appeal of the assessee ex-parte qua the assessee. For the sake of ready
Page 4 of 8 reference, the findings recorded by the ld. CIT(A), NFAC at para 4 of his order are reproduced as under:
“4. Findings:- The appellant were issued notices on 09.02.2021, and 29.11.2023 to 21.11.2023, submit its response, only adjournments was requested on 28.11.2023 and 08.12.2023. Further on 10.12.2023 notice was again issued to the appellant [vide DIN No. ITBA/NFAC/F/APL_1/ 202324/1058620493(1)] to submit its response by 18.12.2023, in which it was specifically mentioned that "Please refer to this office notice dated 09.02.2021, 21.11.2023 and 29.11.2023. It is observed that, compliance was to be made to this office notice by you on 08.12.2023, but however the same was ignored and another long adjournment has been asked by you. Hence, please consider this as a last opportunity to file your details by or before 18.12.2023, failing which the undersigned shall have little choice than to dismiss the appeal. But the appellant again requested for adjournment on 18.12.2023 without any cogent or valid reasons. The aforesaid mentioned circumstances shows that, either the appellant is not interested in pursuing this appeal or that he does not have reasons / proof enough even to defend it. These un-necessary adjournments from the side of the appellant are only prolonging the appeal pendency with no positive outcome. The maxim 'vigilantibus non-dormientibus jura subvenuntice’ i.e. the law assists those who are vigilant and not those who sleep over their right, is applicable in this case. Hon'ble ITAT in for the AY 2002-03 in the case of M/s Chhabra Land & Housing Ltd. after following the decision of Hon'ble Supreme Court in the case of B.N. Bhattacharjee & other 118 ITR 461 [SC] held that the appeal does not mean merely filing of the appeal but effectively pursuing the same. Considering the above facts and material on record, it is held that the then assessing officer has made the addition on Page 5 of 8 merits considering facts of the case and no infirmity is noticed in the order of the Assessing officer, Hence the appeal of the assesse is dismissed. In the result, appeal of the assessee is dismissed.” 4. Aggrieved with the order of the ld. CIT(A), NFAC, the assessee is further appeal before us.
5. During the course of hearing, the ld. A.R. of the assessee has invited our attention to the order of the ld. CIT(A) with the contention that the ld. CIT(A) has passed ex-parte order without affording proper opportunity of being heard to the assessee. He has further contended that on the last date of hearing before the ld. CIT(A), NFAC, i.e., on 18.12.2023, the ld. counsel for the assessee had moved an application for short adjournment on medical ground, with supporting medical documents. However, the ld. CIT(A), NFAC rejected the application for adjournment and dismissed the appeal of the assessee ex-parte qua the assessee. The ld. counsel for the assesse, placing reliance on the order of the ITAT Delhi Bench ‘G’ in the case of Ms. Swati Pawa vs. DCIT, New Delhi, reported in [2019] 103 taxmann.com 300 (Delhi- Trib.), has submitted that when an appeal is filed, the Commissioner (Appeals) is duty bound to dispose of the appeal through a speaking order on merits on all the points which arose for determination in the appellate proceedings, including on all grounds of appeal; and that the Commissioner (Appeals) is not empowered to dismiss the appeal for non-prosecution and is obliged to dispose of appeal on merits. He accordingly prayed that the matter may be restored back to the file of the ld. CIT(A), NFAC for re-adjudication of the appeal on merits.
The ld. D.R. has placed reliance upon the order of the ld. CIT(A), NFAC.
Page 6 of 8 7. We have heard both the parties and perused the material placed on record. We find that the CIT(A), NFAC, Delhi has dismissed the appeal without providing proper opportunity to the assessee. We also find that the ld. CIT(A), without considering the adjournment application dated 18.12.2023 moved on behalf of the assesse, passed the order on 19.12.2023 in undue haste. The order so passed by the ld. CIT(A), NFAC is patently non- speaking and has not adjudicated on merits of the additions made by Assessing Officer. Moreover, he has not decided the appeal after discussing in detail, his reasons for agreeing with the assessment order.
As per provisions of section 250(6) of the Act, the Commissioner (Appeals) was obliged to dispose of the appeal in writing after stating the points for determination and to then pass an order on each of the points which arose for consideration; and the Commissioner (Appeals) was further obliged to state the reason for his/her decision on each such points which arose for determination. The Commissioner (Appeals) is duty-bound to dispose of the appeal through a speaking order on merits, on all the points which arose for determination in the appellate proceedings, including on all the grounds of appeal. Moreover, the perusal of section 251(1)(a) and (b) and further the perusal of Explanation of section 251(2) shows that the Commissioner (Appeals) is required to apply his/her mind to all the issues which arise from the impugned order before him/her, whether or not these issues have been raised by the assessee before him/her. If the order of the Commissioner (Appeals) on merits is a summary order, it amounts to non-application of mind. This non-application of mind is a contravention of statutory role of the Commissioner (Appeals) under section 251(2) of I.T. Act. Also, section 251(1)(a)
Page 7 of 8 provides that while disposing of an appeal against assessment order, Commissioner (Appeals) shall have the power to confirm, reduce, enhance or annul the assessment. Similarly, the section 251(1) (b) provides that in disposing of an appeal against an order imposing a penalty, the Commissioner (Appeals) may confirm or cancel such orders or vary it so as to either to enhance or to reduce the penalty. On cumulative consideration of the provisions of section 250(6) read with sections 250(4), 250(5), 251(1)(a), 251(1)(b) and Explanation of section 251(2), it is concluded that the Commissioner (Appeals) is not empowered to dismiss the appeal for non-prosecution of appeal and is obliged to dispose of the appeal on merits. In this view of the matter, another opportunity of hearing requires to be given to the assessee to represent its case fully before the ld. CIT(A).
In view of the above, the matter is remitted to the file of the ld. CIT(A), to be decided afresh on merit, in accordance with law, on affording due and adequate opportunity of hearing to the assessee, preferably within two months from the date of receipt of this order. The assessee, no doubt, shall cooperate in the fresh proceedings before the ld. CIT(A). All pleas available under the law shall remain so available to the assessee.
In the result, the appeal of the assessee is treated as allowed for statistical purposes.
Order pronounced in the open Court on 18.04.2024.