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2022 (9) TMI 649 - AT - Income TaxDismissal of the appeal by the CIT(A) for non-prosecution - HELD THAT - Once an appeal is preferred before the CIT(A), then, it is obligatory on his part to dispose off the same on merits. We are of a strong conviction that it is not open for the CIT(A) to summarily dismiss the appeal on account of non-prosecution of the same by the assessee. Rather, a perusal of Sec.251(1)(a) and (b), as well as the Explanation to Sec. 251(2) 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 the mandate of law the CIT(A) 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. Prem Kumar Arjundas Luthra 2016 (5) TMI 290 - BOMBAY HIGH COURT We, thus, not concurring with the dismissal of the appeal by the CIT(A) for non-prosecution, therefore, set-aside his order with a direction to dispose off the same on merits.
Issues:
1. Restriction of deduction claimed on account of cost of improvement after indexation. 2. Addition of long-term capital gain without incriminating material found post search. Issue 1: Restriction of deduction claimed on account of cost of improvement after indexation The appeal was filed against the order passed by the CIT(Appeals)-3, Bhopal, arising from the order passed by the A.O under Sec 153A r.w.s. 143(3) of the Income-tax Act, 1961 for assessment year 2015-16. The assessee challenged the restriction of the deduction claimed on account of cost of improvement after indexation. The A.O reworked the Long Term Capital Gain (LTCG) on the sale of land by the assessee and restricted the deduction claimed under Sec. 54F. The A.O disallowed 50% of the claimed expenditure as it remained unexplained. The A.O determined the income of the assessee from LTCG at Rs. 6,68,937. The CIT(A) upheld the A.O's decision. However, the ITAT Raipur found that the CIT(A) had erred in summarily dismissing the appeal for non-prosecution by the assessee. The ITAT set aside the CIT(A)'s order and directed a de novo appellate proceeding, emphasizing the necessity for the CIT(A) to decide the appeal on merits and provide a reasonable opportunity of being heard to the assessee. Issue 2: Addition of long-term capital gain without incriminating material found post search Search and seizure proceedings were conducted under Sec. 132 of the Act at the residential premises of the assessee. The return of income for A.Y. 2015-16 was filed after the search, declaring an income of Rs. 3,89,840. The A.O observed that the assessee disclosed LTCG on the sale of land and claimed deduction under Sec. 54. The A.O disallowed part of the claimed expenditure as unexplained, resulting in the addition of Rs. 6,68,937 as LTCG. The assessee raised an additional ground challenging the validity of the jurisdiction assumed by the A.O for framing the assessment under Sec. 153A/143(3). The ITAT admitted the additional ground and allowed the appeal for statistical purposes, directing a de novo appellate proceeding to be conducted by the CIT(A) with a reasonable opportunity of being heard to the assessee. This judgment highlights the importance of due process and the obligation of the CIT(A) to decide appeals on their merits, ensuring a fair opportunity for the assessee to present their case. The ITAT's decision emphasizes the need for proper consideration of all issues raised by the appellant and the requirement to provide a reasonable opportunity for the assessee to be heard during the appellate proceedings.
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