2024 (6) TMI 980 - AT - Income Tax

Dismissal of appeal by CIT(A) on Ex-parte basis - Denial of natural justice - Additions u/s 43CA on higher interest paid to relatives - HELD THAT - 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. 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) 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). 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. Appeal of the assessee is treated as allowed for statistical purposes.

Summary

Issues:
1. Dismissal of appeal by CIT(A) on ex-parte basis without considering medical grounds for adjournment.
2. Failure of CIT(A) to decide the appeal on merits.
3. Addition of Rs. 26,32,067 under section 43CA and Rs. 3,82,500 for higher interest paid to relatives.
4. Proper opportunity of being heard not afforded to the assessee by CIT(A).
5. Legal obligation of CIT(A) to dispose of appeal on merits and not dismiss for non-prosecution.

Analysis:

1. The appeal was filed against the order of the CIT(A) dismissing the appeal on an ex-parte basis without considering the medical grounds for adjournment. The appellant argued that the CIT(A) erred in not appreciating the adjournment application based on medical reasons. The Tribunal found that the CIT(A) dismissed the appeal hastily without proper consideration of the adjournment request, violating the appellant's right to be heard.

2. The CIT(A) failed to decide the appeal on merits, which was a key contention raised by the appellant. The Tribunal noted that the CIT(A) did not provide a speaking order or discuss the grounds of appeal in detail. This failure to address the merits of the case was a significant procedural flaw.

3. The additions made by the Assessing Officer, amounting to Rs. 26,32,067 under section 43CA and Rs. 3,82,500 for higher interest paid to relatives, were challenged in the appeal. The Tribunal observed that the CIT(A) did not adequately address these additions and did not provide reasons for agreeing with the assessment order. The matter was remitted back to the CIT(A) for a fresh decision on merit.

4. The Tribunal highlighted that the CIT(A) did not afford proper opportunity to the assessee to present its case. The failure to consider the adjournment application and the hasty dismissal of the appeal were deemed as violations of the appellant's right to be heard.

5. It was emphasized that the CIT(A) is duty-bound to dispose of appeals through speaking orders on merits, as per the statutory provisions. The Tribunal clarified that the CIT(A) is not empowered to dismiss appeals for non-prosecution and must adjudicate on all points raised in the appeal. The decision to remit the matter back to the CIT(A) was based on the legal obligation to provide a fair hearing and decide on merits.

This detailed analysis of the judgment highlights the procedural irregularities and legal obligations concerning the dismissal of the appeal and the need for a fresh decision on merits by the CIT(A).