2024 (7) TMI 966 - AT - Income Tax

Ex-parte order passed by CIT(A) - Denial of deduction u/s 54F - Non speaking order passed - as assessee argued not giving reasonable and sufficient opportunities of being heard to the assessee - HELD THAT - The assessee had requested for adjournment in response to the notice issued by CIT(A) on 30.12.2020. He has requested to grant a date in April, 2021. However, we find that subsequent notices were issued very late on 13.10.2022 and 29.01.2024 We also find that assessee had expired on 26.04.2021. Thus, we are of the considered view that assessee was not granted reasonable and sufficient opportunities of hearing by CIT(A). AO has made addition u/s 54F - CIT(A) has dismissed the appeal by passing a cryptic order without discussing the merits of the case. AR has stated that the appellant has all evidences and explanation in support of the claim of deduction u/s 54F of the Act. We find that impugned order passed by the Ld.CIT(A) is clearly violative of the express provisions of Section 250(6) of the Act, which provides that the appellate orders of the Ld.CIT(A) are to state the points arising in the appeal, the decision of the authority thereon and the reasons for such decisions. Speaking order would obviously enable a party to know precise points decided in his favour or against him. Considering the facts and circumstances of the case and the submission of Ld.AR for the assessee that the Assessing Office made addition for the want of evidence, which was confirmed by Ld.CIT(A) in ex parte order, we are of the considered view that the assessee deserves one more opportunity to contest his case on merit. Appeal filed by the assessee is allowed for statistical purposes.

Summary

Issues:
1. Ex-parte order passed by CIT(A) without granting reasonable opportunities of being heard to the assessee.
2. Disallowance of deduction u/s 54F by AO and confirmation of the same by CIT(A) in ex-parte order.
3. Violation of provisions of Section 250(6) of the Income-tax Act, 1961 by CIT(A).

Issue 1: Ex-parte order passed by CIT(A)
The appeal arose from an order by the Learned Commissioner of Income-tax(Appeals) /National Faceless Appeal Centre, Delhi, dated 23.02.2024, for the assessment year 2014-15. The assessee had filed an adjournment application on 11.02.2021, but the CIT(A) passed an ex-parte order dismissing the appeal. The CIT(A) observed that the assessee did not effectively pursue the appeal, did not provide explanations or documents, and did not avail the opportunities granted. The Tribunal found that the CIT(A) did not grant reasonable and sufficient opportunities of being heard to the assessee. The order was considered violative of Section 250(6) of the Act, which requires appellate orders to state the points, decisions, and reasons. The Tribunal set aside the CIT(A) order and remitted the matter back to the AO for a fresh assessment order, directing adequate hearing opportunities for the assessee.

Issue 2: Disallowance of deduction u/s 54F
The AO disallowed a deduction of Rs. 72,79,111 out of Rs. 1,06,78,991 claimed u/s 54F of the Act, as the assessee failed to provide relevant documents. The AO questioned the claim due to lack of evidence regarding construction of a new property after demolition, absence of proof of plan approval, and source of expenses. The AO also found the construction incomplete upon spot verification. The CIT(A) confirmed this disallowance in the ex-parte order. The Tribunal noted that the appellant had all evidences and explanations to support the deduction claim. Considering the lack of evidence as the reason for disallowance, the Tribunal remitted the matter back to the AO for fresh assessment, granting the assessee another opportunity to contest the case on merit.

Issue 3: Violation of Section 250(6) of the Act
The Tribunal found that the CIT(A)'s ex-parte order violated Section 250(6) of the Act, as it did not provide a speaking order stating the points, decisions, and reasons. This violation led to the setting aside of the CIT(A) order and the remittance of the matter back to the AO for a fresh assessment order with adequate hearing opportunities for the assessee. The Tribunal emphasized the importance of following procedural requirements to enable parties to understand the decisions and facilitate further appeals.

In conclusion, the Tribunal allowed the appeal filed by the assessee for statistical purposes, setting aside the CIT(A) order and directing a fresh assessment by the AO with proper hearing opportunities.