Facts of the Case

The assessment proceedings under Sections 147 read with 144 of the Income Tax Act were completed on 30.03.2015 determining the total income of the assessee at Rs. 17,00,000/-.

Aggrieved by the assessment order, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals), which was dismissed vide order dated 30.10.2019.

Thereafter, the assessee filed an appeal before the Income Tax Appellate Tribunal (ITAT). The ITAT, vide order dated 03.02.2021 in ITA No.16/ALLD/2020, set aside the orders of the Assessing Officer and CIT(A) and remitted the matter back to the file of the Assessing Officer with a direction to grant one more opportunity of hearing and to adjudicate the matter afresh after considering the explanation and evidences regarding the deposits made in the bank account.

Subsequently, the Assessing Officer again made additions. The assessee filed an appeal before the CIT(A). The CIT(A) issued various notices; however, there was no compliance from the assessee’s side. The CIT(A) ultimately passed an ex-parte order dated 25.04.2024 dismissing the appeal.

Issues Involved

  1. Whether the CIT(A) was justified in passing an ex-parte order without adjudicating the issues on merits.
  2. Whether the CIT(A) complied with the mandatory requirement under Section 250(6) of the Income Tax Act.
  3. Whether the addition of Rs. 19,00,000/- and levy of interest under Sections 234A, 234B, and 234C were sustainable.

 

Petitioner’s Arguments

The learned Counsel for the assessee submitted that the CIT(A) failed to decide the issues on merits and dismissed the appeal merely on the ground of non-compliance with notices of hearing.

It was contended that the CIT(A) is duty-bound to pass a speaking order on merits in accordance with Section 250(6) of the Act. Therefore, the matter should be restored to the file of the CIT(A) for fresh adjudication on merits.

 

Respondent’s Arguments

The learned Senior Departmental Representative did not object to the request for restoration of the matter to the file of the CIT(A) for adjudication on merits.

 

Court Order / Findings

The Tribunal observed that the CIT(A) passed the ex-parte order on the ground that none appeared on the scheduled hearing dates.

However, the Tribunal noted that the CIT(A) had not adjudicated the appeal on merits. It was held that under Section 250(6) of the Income Tax Act, the order of the Commissioner (Appeals) must:

  • Be in writing;
  • State the points for determination;
  • Contain the decision thereon; and
  • Provide reasons for such decision.

The Tribunal held that the CIT(A) is mandatorily required to decide the issues on merits and pass a speaking order.

Accordingly, the ITAT set aside the impugned appellate order dated 25.04.2024 and directed the CIT(A) to decide the appeal afresh by passing a de novo speaking order on merits after providing reasonable opportunity to the assessee and ensuring compliance with Section 250(6) of the Act.

The assessee was also directed to appear before the CIT(A) on the date fixed for hearing.

The appeal was allowed for statistical purposes.

 

Important Clarification

The ITAT did not adjudicate the merits of the addition of Rs. 19,00,000/- or the levy of interest under Sections 234A, 234B, and 234C. The matter has been restored solely for fresh adjudication by the CIT(A) in accordance with law and principles of natural justice.

The ruling reinforces the mandatory nature of Section 250(6) and the obligation of appellate authorities to pass reasoned and speaking orders even in cases of non-appearance.

Link to download the order -  https://www.mytaxexpert.co.in/uploads/1770885834_VEENASINGHKAUSHAMBIVS.ACITCIR.1ALLAHABAD2.pdf  

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