2021 (1) TMI 1272 - AT - Income Tax

Ex-parte order passed by CIT-A - Disallowance u/s 14A r.w.r. 8D - Since there was no appearance from the side of the assessee despite service of notice the Ld. CIT(A) dismissed the appeal filed by the assessee for non-prosecution - HELD THAT - It is an admitted fact that despite opportunities granted by the CIT(A) there was no appearance from the side of the assessee for which the CIT(A) was constrained to pass the ex-parte order dismissing the appeal of the assessee for non-prosecution. However he has not decided the appeal on merit which he is required to do. As per provisions of section 250(6) of the Act the order of the CIT(A) disposing the appeal shall be in writing and shall state the points for determination the decision thereon and the reason for the decision. Since the Ld.CIT(A) has not decided the appeal on merit which he is required to do therefore deem it appropriate to restore the issue to the file of Ld. CIT(A) with the direction to grant one last opportunity to the assessee to substantiate its case and decide the issue as per fact and law by passing a speaking order. The assessee is also hereby directed to appear before the CIT(A) and substantiate its case - Appeal of the assessee is allowed for statistical purposes.

Summary

Issues:
1. Ex-parte order by CIT(A) due to non-appearance of assessee.
2. Dismissal of appeal for non-prosecution.
3. Failure of CIT(A) to decide appeal on merit.
4. Restoration of issue to CIT(A) for proper adjudication.

Analysis:
1. The appeal was filed by the assessee against the ex-parte order of CIT(A) for assessment year 2010-11. Despite notice, the assessee did not appear, leading to the decision being based solely on available records and the arguments presented by the Senior DR.

2. The Assessing Officer had made additions to the income of the assessee, which the CIT(A) upheld due to non-prosecution by the assessee. The dismissal was in line with the decision of the Hon'ble Delhi High Court and other precedents. The appeal was thus rejected on procedural grounds.

3. The ITAT noted that the CIT(A) had failed to decide the appeal on its merits, as required by law. Section 250(6) mandates that the order disposing of the appeal should include points for determination, decision, and reasons. Since the CIT(A) did not fulfill this requirement, the ITAT deemed it necessary to send the issue back to the CIT(A) for proper consideration.

4. In the interest of justice, the ITAT directed the CIT(A) to provide the assessee with one last opportunity to present its case and make a decision based on facts and law. The assessee was instructed to appear before the CIT(A) for this purpose, with a warning that failure to do so may result in appropriate action by the CIT(A). The ITAT allowed the appeal for statistical purposes, emphasizing the need for a fair and thorough adjudication of the matter.

This judgment highlights the importance of due process in tax assessments and the obligation of appellate authorities to decide appeals on both procedural and substantive grounds. The ITAT's decision to remand the issue to the CIT(A) underscores the significance of a fair hearing and proper consideration of all aspects of a case before reaching a final decision.