2023 (6) TMI 44 - AT - Income Tax

Dismissal of the appeal by the CIT(Appeals) for non-prosecution - assessee was selected for scrutiny assessment u/s. 143(2) - HELD THAT - 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. As per mandate of law the CIT(Appeals) is not vested with any power to summarily dismiss the appeal for non-prosecution. See case of CIT Vs. Premkumar Arjundas Luthra (HUF) 2016 (5) TMI 290 - BOMBAY HIGH COURT Unable to persuade to subscribe to the dismissal of the appeal by the CIT(Appeals) for non-prosecution. As is discernible from the order of the CIT(Appeals), he had not uttered a word about the merits of the case and had summarily dismissed the appeal holding a conviction that as the assessee appellant had failed to participate in the proceedings before him, therefore, it could be inferred that it was not interested in pursuing the appeal. Unable to fathom the approach adopted by the CIT(Appeals) for disposing off the assessee s appeal. Accordingly,set-aside the order of the CIT(Appeals), and restore the matter to his file for disposing off the same on merits - Appeal filed by the assessee is allowed for statistical purposes.

Summary

Issues involved:
The appeal filed by the assessee against the order passed by the Commissioner of Income-Tax (Appeals), National Faceless Appeal Center (NFAC), Delhi, dated 28.02.2023, arising from the order passed by the A.O. under Sec.143(3) of the Income-tax Act, 1961 for the assessment year 2013-14.

Comprehensive Details:

Grounds of Appeal:
The appellant challenged the Commissioner of Income tax (Appeals) order on the grounds that it was bad in law and facts, arbitrary, under presumption & surmises, and unjustified. The appellant argued that the Commissioner erred in disallowing a portion of land development expenditure despite producing documentary evidences during scrutiny. The appellant sought deletion of the addition of Rs.5,00,000/- confirmed by the CIT(Appeals).

Assessment Proceedings:
The assessee, engaged in real estate business, filed its income return for A.Y. 2013-14, declaring an income of Rs.1,10,890/-. The case was selected for scrutiny assessment, where discrepancies in claimed expenses related to property transactions were noted by the A.O. The A.O. found issues with the vouchers provided by the assessee, lack of supporting documents, and discrepancies in labor payment records.

Disallowed Deduction:
The A.O. disallowed Rs.5 lakh from the claimed development charges based on his observations regarding the nature of expenses, lack of verifiable vouchers, and inconsistencies in labor payment records. Consequently, the A.O. determined the income of the assessee at Rs.6,10,890/-.

Appeal and Dismissal:
The assessee appealed to the CIT(Appeals), but failed to participate in the proceedings despite multiple notices. The CIT(Appeals) dismissed the appeal for non-prosecution, without considering the merits of the case or the issues raised by the appellant.

Judgment and Conclusion:
The Judicial Member found the CIT(Appeals) dismissal for non-prosecution unjust, citing statutory obligations for the CIT(A) to consider all issues and dispose of appeals on merit. The judgment referenced a Bombay High Court case to support the obligation of the CIT(A) to decide appeals on merits. The order of the CIT(Appeals) was set aside, and the matter was restored for a de novo appellate proceeding with a reasonable opportunity for the assessee to be heard. The appeal was allowed for statistical purposes.

Separate Judgment:
The judgment was delivered by Shri Ravish Sood, Judicial Member, at the Appellate Tribunal ITAT Raipur, on 30th May 2023.