2024 (5) TMI 766 - AT - Income Tax

Ex parte order passed by CIT(A) w/o deciding the issue on merits - HELD THAT - Sub Section (6) of Section 250 of I. T. Act mandate the CIT(A) to state the points in dispute and thereafter assign the reasons in support of his conclusion. We are of the view that by dismissing the appeal without considering the issue on merits, learned CIT(A) has failed to follow the mandate required in Sub Section (6) of Section 250 of the Act. As also a well settled principle of natural justice that sufficient opportunity of hearing should be offered to the parties and no parties should be condemned unheard. We set aside the impugned order of CIT(A) and restore the issue to the file of CIT(A) for re-adjudication of the issues after granting sufficient opportunity of hearing to the assessee. We restore the issue to CIT(A), we are not adjudicating on merits the grounds raised by the assessee. Thus the grounds of assessee are allowed for statistical purposes.

Summary

Issues:
The appeal against the National Faceless Appeal Centre (NFAC) order dated 07.09.2023 of the Commissioner of Income Tax (Appeals), New Delhi under section 144 of the Income Tax Act, 1961.

Facts:
The assessee, a private limited company, filed its return of income for A.Y. 2018-19 declaring an income of Rs. 1,42,380. The case was selected for scrutiny under CASS due to substantial purchases from suppliers with discrepancies. The assessment was framed under section 144 r.w.s 143(3A) & 143(3B) determining total income at Rs. 23,19,78,721.

Grounds Raised by Assessee:
1. Disagreement with the order determining total income and consequential demand.
2. Issue with CIT(A) dismissing the appeal due to non-prosecution.
3. Inability to reply to notices during appeal proceedings due to reasons beyond control.
4. Allegation of AO not following due provisions of law in making additions.
5. Disagreement with addition made by AO on account of bogus expenditures.

Judgment:
The assessee did not appear for the hearing despite notice issuance, leading to an ex-parte disposal of the appeal. The Learned DR supported the AO's order and CIT(A)'s decision. However, the Tribunal found that CIT(A) had dismissed the appeal without deciding on merits, contrary to the requirements of Section 250 of the Act and principles of natural justice. The order of CIT(A) was set aside, and the issue was restored to CIT(A) for re-adjudication after granting sufficient hearing to the assessee. The assessee was directed to provide the necessary details. The Tribunal did not adjudicate on the merits of the grounds raised by the assessee, allowing them for statistical purposes. Consequently, the appeal of the assessee was allowed for statistical purposes.

Conclusion:
The Tribunal's decision highlighted the importance of considering issues on merits and providing adequate hearing opportunities to parties, emphasizing the principles of natural justice in tax appeal proceedings.