The Mumbai Bench of the Income Tax Appellate Tribunal examined the legality of an ex-parte order passed by the Commissioner of Income Tax (Appeals) dismissing the assessee’s appeal for non-prosecution, without adjudicating the issues on merits.

The assessee had filed a return of income for Assessment Year 2013-14, which was processed under Section 143(1) and subsequently taken up for scrutiny under Section 143(3). The assessment was completed by making an addition of ₹20,03,990 under Section 68 of the Income Tax Act, 1961. Aggrieved by the assessment order, the assessee preferred an appeal before the Commissioner (Appeals). However, due to non-appearance and non-compliance, the appeal was dismissed in limine for non-prosecution.

Before the Tribunal, the assessee contended that the order of the Commissioner (Appeals) was passed in violation of the principles of natural justice, as no findings were recorded on the merits of the addition made by the Assessing Officer. It was submitted that the Commissioner (Appeals) merely reiterated the assessment order without undertaking any independent examination of the issues as mandated by law.

The Tribunal observed that the Commissioner (Appeals) had not rendered any finding on the merits of the case and had failed to discharge the statutory obligations imposed under Sections 250(4) and 250(6) of the Act, which require the appellate authority to frame points for determination and pass a reasoned order on each issue arising in appeal.

Relying on the binding decision of the Bombay High Court in CIT v. Premkumar Arjundas Luthra (HUF), the Tribunal reiterated that the Commissioner (Appeals) does not have the power to dismiss an appeal for non-prosecution. Once an appeal is filed, the appellate authority is duty-bound to decide the appeal on merits, irrespective of the participation of the assessee.

Accordingly, the Tribunal set aside the ex-parte order passed by the Commissioner (Appeals) and restored the matter to his file for fresh adjudication on merits, after granting the assessee one final opportunity of being heard. The appeal was allowed for statistical purposes.

Source Link - https://itat.gov.in/public/files/upload/1768289044-apCC9c-1-TO.pdf

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