2024 (10) TMI 256 - AT - Income Tax

Ex-parte dismissal of appeal by the Ld. NFAC for non-prosecution - HELD THAT - We are heedful to the restriction placed by clause (a) of sub-section (1) of section 251 of the Act which obligates the CIT(A) to adjudicate the issue either by confirming or annulling the addition or reducing or enhancing the addition made by the assessing officer without the right to remand the matter back. However, while exercising the jurisdiction u/s 251(1)(a) CIT(A) is mandated to state point of determination, its decision thereon and clear reasons therefore in terms of section 250(6) of the Act. It is a trite law as laid down by Hon ble Supreme Court in case Chandra Kishore Jha Vs Mahavir Prasad 1999 (9) TMI 948 - SUPREME COURT that if a statute provides for a thing to be done in a particular manner, then it has to be done in that manner and in no other manner . Therefore, in the absence of clear authorisation in the statue permitting the Ld. NFAC to culminate proceedings without touching merits is inconsonance with sub-section (6) of section 250 of the Act, hence the impugned order on very terms qualifies to be set-aside on this score too. For the aforestated two reasoning, without touching merits of the case, we set aside the impugned order and remand it back to the Ld. NFAC with a direction to deal therewith de-novo in accordance with law on merits after according not less than three effective opportunities of hearing to the assessee and pass a speaking order in terms of section 250(6) of the Act. The grounds accordingly stands partly allowed.

Summary

Issues:
Challenging ex-parte dismissal of appeal by Ld. NFAC for non-prosecution.

Detailed Analysis:

1. The appeal challenged the National Faceless Appeal Centre's (NFAC) decision arising from an assessment under the Income-tax Act, 1961. The appellant, an individual running a loan recovery agency, faced scrutiny for substantial expenditures against earnings. Despite multiple notices and opportunities, the appellant failed to provide adequate documentation, leading to disallowances and additions to the assessment.

2. The NFAC dismissed the appeal ex-parte for non-prosecution due to the appellant's lack of response. The appellant contested this dismissal on four grounds related to non-prosecution. The Appellate Tribunal invoked Rule 24 of ITAT-Rules and examined the sufficiency of the opportunities granted to the appellant during the appeal process.

3. The Tribunal found that the NFAC had not provided the appellant with a reasonable and effective opportunity to present necessary evidence and comply with requirements. Citing legal precedents, the Tribunal emphasized the importance of real, reasonable, and effective opportunities for being heard, highlighting the principle of natural justice and fair play.

4. Relying on a judgment from the High Court of Patna, the Tribunal concluded that the NFAC's adjudication lacked justification as the appellant was deprived of adequate time to substantiate claims and present relevant documents. The Tribunal deemed it necessary to remand the case to the NFAC for a fair hearing, emphasizing the principle of 'Audi alteram partem'.

5. The Tribunal also noted that the NFAC's dismissal of the appeal did not address the merits of the case based on the available record. Highlighting the statutory obligations under the Income-tax Act, the Tribunal emphasized the need for the NFAC to adjudicate issues on their merits and provide clear reasons for their decisions.

6. Based on the above reasoning, the Tribunal set aside the NFAC's order and remanded the case for a fresh hearing, directing the NFAC to provide the appellant with at least three effective opportunities to present their case. The Tribunal emphasized the importance of passing a speaking order in accordance with the law.

7. Ultimately, the Tribunal partly allowed the appeal for statistical purposes, setting the stage for a renewed hearing before the NFAC with a focus on ensuring a fair and thorough adjudication of the case.

This detailed analysis outlines the key legal issues, procedural aspects, and the Tribunal's decision regarding the ex-parte dismissal of the appeal by the NFAC for non-prosecution.