2024 (6) TMI 24 - AT - Income Tax

Ex-parte order passed by CIT(A) - CIT(A) issued the hearing notices through ITBA portal and had proceeded to dismiss the appeal in limine for non-prosecution - addition made on account of TP adjustment - HELD THAT - We are of the considered opinion that the CIT(A) has not properly served the notice of hearing to the appellant company. We find the CIT(A) without discussing anything on merits of the controversy of the addition made on account of Transfer Pricing adjustment, simply dismissed the appeal in limine, which is contrary to settled position of law. It is a trite law that the CIT(A) should have dealt with the merits of the issue in appeal, even in the case of an ex-parte order. In this regard, reference is being made to a decision of Premkumar Arjundas Luthra (HUF) 2016 (5) TMI 290 - BOMBAY HIGH COURT wherein it was held that CIT(A) is not empowered to dismiss the appeal for non-prosecution. We deem it appropriate to remit the matter to the file of CIT(A) for de novo disposal of the issue in accordance with law. Ordered accordingly.

Summary

Issues:
Appeal against CIT(A) order for assessment year 2015-16 dismissed in limine for non-prosecution without discussing merits of Transfer Pricing adjustment.

Analysis:
The appeal was filed by the assessee against the CIT(A) order dated 28.11.2023 for the assessment year 2015-16. The appellant company, engaged in manufacturing and trading of automotive components, had filed a return of income declaring Nil income for the A.Y. 2015-16. The assessment was completed by the Assessing Officer after making a Transfer Pricing adjustment of Rs. 6,79,82,288. The CIT(A) dismissed the appeal in limine for non-prosecution without discussing the merits of the case.

The ITAT Pune found that the CIT(A) had not properly served the notice of hearing to the appellant company. Referring to a decision of the Hon'ble Punjab & Haryana High Court, it was established that service of notice through the ITBA portal was not a valid method under the provisions of section 282(1) of the Income-tax Act, 1961. The principles of natural justice require proper communication of notices, and the appellant was entitled to file a reply and have a fresh order passed after being served notice.

Moreover, the ITAT Pune noted that the CIT(A) failed to address the merits of the Transfer Pricing adjustment issue and dismissed the appeal in limine, which goes against the settled position of law. Citing a decision of the Hon'ble Bombay High Court, it was emphasized that the CIT(A) is not empowered to dismiss appeals for non-prosecution. Therefore, the ITAT Pune remitted the matter back to the CIT(A) for de novo disposal in accordance with the law.

Conclusively, the appeal filed by the assessee was partly allowed for statistical purposes, and the matter was ordered to be reconsidered by the CIT(A) in light of the legal principles discussed.