2012 (7) TMI 339 - AT - Income Tax

Disposing of the appeal ex-parte by CIT(A) - Held that - As none of the notice dated notice dated 20th October, 2011, 27th January, 2012 and 14th February, 2012 issued by the CIT(A) appear to have been served upon the assessee nor the DR placed any material regarding service of any of these notices. In these circumstances, the CIT(A) dismissed the appeal without even analyzing the issues or recording his specific findings on the said issues raised in the grounds of appeal before him - that the order passed by the CIT(A) is cryptic and grossly violative of facets of the rules of natural justice which should reflect application of mind by the concerned authority to the issues/points raised before it - Section 250(6) of the Act mandates that the order of the CIT(A) while disposing of the appeal shall be in writing and shall state the points for determination, the decision thereon and the reasons for the decision - it fair and appropriate to set aside the order of the CIT(A) and restore the matter to his file for deciding it afresh.

Summary

Issues Involved:
1. Disposal of appeal ex-parte by CIT(A) without proper service of notice.
2. Requirement for CIT(A) to dispose of the appeal on merits despite non-appearance.
3. Obligation under Section 250(6) of the Income Tax Act to pass a speaking order.
4. Assessment of income based on audited accounts.
5. Fair opportunity of being heard by the Assessing Officer.
6. Applicability of judgments cited by CIT(A).

Detailed Analysis:

1. Disposal of Appeal Ex-Parte by CIT(A) Without Proper Service of Notice:
The assessee contended that the CIT(A) erred both on facts and in law by disposing of the appeal ex-parte due to non-compliance with notices, which were allegedly never served on the assessee. The assessee, an AOP dissolved on 31.03.2008, argued that notices should have been served to the members or the authorized representative.

2. Requirement for CIT(A) to Dispose of the Appeal on Merits Despite Non-Appearance:
The assessee argued that the CIT(A) should have disposed of the appeal on merits of the additions made, despite the non-appearance. The CIT(A) was obliged by law to consider the merits of the case and not merely dismiss the appeal for non-prosecution.

3. Obligation Under Section 250(6) of the Income Tax Act to Pass a Speaking Order:
The assessee highlighted that the CIT(A) failed to adhere to Section 250(6) of the Income Tax Act, which mandates a speaking order stating points raised in the appeal, the decision thereon, and the reasons for the decision. The CIT(A) simply dismissed the appeal without addressing the grounds raised.

4. Assessment of Income Based on Audited Accounts:
The assessee argued that the income declared in its annual return, supported by annual audited accounts, should have been accepted by the Assessing Officer. The computed income of Rs. 1,80,05,606/- by the AO was claimed to be unsustainable.

5. Fair Opportunity of Being Heard by the Assessing Officer:
The assessee contended that the AO did not grant a fair and proper opportunity of being heard, thereby vitiating the assessment made.

6. Applicability of Judgments Cited by CIT(A):
The assessee argued that the judgments cited by CIT(A) in the order, namely CIT vs. B.N. Bhattachargee and CIT vs. Multiplan India Pvt. Ltd., were not applicable to the appeal filed under Section 246A of the Income Tax Act.

Tribunal's Observations and Decision:

Service of Notice:
The Tribunal observed that none of the notices issued by the CIT(A) appeared to have been served upon the assessee. The CIT(A) dismissed the appeal without analyzing the issues or recording specific findings on the grounds raised, which was not in accordance with law.

Requirement for Speaking Order:
The Tribunal emphasized that Section 250(6) mandates that the CIT(A) must pass a reasoned order reflecting application of mind to the issues raised. The absence of a speaking order violates the principles of natural justice.

Case Law Reference:
The Tribunal referred to the case of Gujarat Themis Biosyn Ltd. vs. Jt. CIT, where it was held that the CIT(A) must state the points arising in the appeal, the decision thereon, and the reasons for such decision. The Tribunal found the CIT(A)'s reliance on Multiplan India Ltd. misplaced.

Remand for Fresh Consideration:
The Tribunal set aside the order of the CIT(A) and remanded the matter for fresh consideration. The CIT(A) was directed to pass a speaking order on the issues raised, in compliance with Section 250(6). The assessee was advised to approach the CIT(A) within three months for expeditious disposal and to avoid seeking adjournments without valid reasons.

Conclusion:
The appeal was allowed for statistical purposes, with the matter remanded to the CIT(A) for a fresh decision on merits, ensuring compliance with legal requirements and principles of natural justice.