2022 (5) TMI 1346 - AT - Income Tax

Powers of the Commissioner (Appeals) in dismissing the appeal - Disallowance u/s.54F - proportionate expenditure further incurred after purchase of new house to make it habitable - CIT(Appeals) dismissed the appeal for non-prosecution on the part of the assessee - HELD THAT - We are unable to persuade ourselves to accept the manner in which the appeal of the assessee has been disposed off by the CIT(Appeals). In our considered view, once an appeal is preferred before the CIT(Appeals), it becomes obligatory on his part to dispose off the same on merit and it is not open for him to summarily dismiss the appeal on account of non-prosecution of the same by the assessee. In fact, a perusal of Sec.251(1)(a) and (b), as well as the Explanation‟ to Sec.251(2) of the Act, reveals, that the CIT(A) remains under a statutory obligation to apply his mind to all the issues which arises from the impugned order before him. As per mandate of law, the CIT(Appeals) is not vested with any power to summarily dismiss the appeal for non-prosecution. Our aforesaid view is fortified by the judgment of the Hon'ble High Court of Bombay in the case of CIT Vs. Premkumar Arjundas (HUF) 2016 (5) TMI 290 - BOMBAY HIGH COURT We, thus, not being persuaded to subscribe to the dismissal of the appeal by the CIT(Appeals) for non-prosecution, therefore, set-aside his order with a direction to dispose off the same on merits. Assessee appeal allowed for statistical purposes.

Summary

Issues:
1. Disallowance of claim under Sec. 54F for proportionate expenditure.
2. Dismissal of appeal for non-prosecution by CIT(Appeals).

Analysis:

Issue 1: Disallowance of claim under Sec. 54F for proportionate expenditure:
The appellant contested the disallowance of the claim of Rs.6,01,692 under Sec. 54F, which was part of the expenditure of Rs.9,73,800 incurred after the purchase of a new house to make it habitable. The original assessment by the A.O reduced the deduction claimed under Sec. 54F, resulting in an increased income of Rs.1,07,18,940. The appellant challenged this decision before the CIT(Appeals) but faced dismissal due to non-prosecution.

Issue 2: Dismissal of appeal for non-prosecution by CIT(Appeals):
The CIT(Appeals) dismissed the appeal for non-prosecution, failing to address the issues raised by the appellant. The ITAT highlighted that the CIT(Appeals) has a statutory obligation to consider all issues arising from the impugned order and cannot summarily dismiss appeals. Referring to the judgment of the Hon'ble High Court of Bombay in a similar case, the ITAT emphasized that the CIT(Appeals) must conduct a thorough inquiry, state points for determination, and provide reasons for the decision. Therefore, the ITAT set aside the CIT(Appeals) order and directed a de novo disposal of the appeal on merits, ensuring the appellant's right to be heard.

In conclusion, the ITAT allowed the appeal for statistical purposes, emphasizing the importance of due process and the obligation of the CIT(Appeals) to address all issues raised in an appeal.