2015 (7) TMI 767 - AT - Income Tax

Dismissal of appeal for non-prosecution - whether the assessee cannot be allowed to suffer for the negligence of his counsel? - Held that - As decided in Rafiq and another Versus Munshilal and another 1981 (4) TMI 255 - SUPREME COURT innocent party should not suffer for the inaction, deliberate omission, or mis-demeanour of his counsel or when his chosen advocate defaulted. CIT(Appeals) has to dispose the appeals on merit on the basis of the material available on record and that may be produced by the assessees before him. Giving one more opportunity to the assessee to produce necessary material before the assessing officer would not prejudice the interest of revenue. This Tribunal is of the considered opinion that giving one more opportunity to the assessees to produce necessary material would definitely promote the cause of justice. Accordingly, the orders of the authorities below are set aside and the entire issue is remitted back to the file of the assessing officers. The assessing officer shall reconsider the issue afresh in the light of the material that may be filed by the assessees and thereafter decide the same in accordance with law after giving reasonable opportunity to the assessee. - Decided in favour of assessee for statistical purposes.

Issues:
Appeal dismissal due to non-appearance of assessee's representative before CIT(Appeals), CIT(Appeals) not considering merits, power of CIT(Appeals) to dismiss appeal for non-prosecution, obligation of CIT(Appeals) to decide on merit, relevance of material filed by assessees.

The judgment dealt with appeals by two independent assessees against orders of the Commissioner of Income Tax (Appeals)-19, Chennai. The main issue was the dismissal of the appeals by CIT(Appeals) due to the non-appearance of the assessee's representative. The counsel for the assessees argued that the appeals should be decided on merit regardless of representation, citing the obligation of the CIT(Appeals) to adjudicate based on material. The Departmental Representative contended that the assessees had not submitted any material. The Tribunal noted that the CIT(Appeals) should decide appeals on merit after obtaining records from the Assessing Officer, emphasizing the duty of the CIT(Appeals) to consider material before dismissing appeals.

The Tribunal referenced the decision of the Delhi Bench in CIT v. Multiplan (India) Pvt. Ltd. and other judgments to highlight that the CIT(Appeals) cannot dismiss appeals for non-prosecution. It emphasized that the CIT(Appeals) has the authority to decide on merit and cannot shirk responsibility by claiming lack of material. The Tribunal clarified that the CIT(Appeals) must treat appeals as statutory appeals and cannot dismiss them for non-prosecution, as doing so would undermine the purpose of the appellate process.

The judgment distinguished income tax proceedings from civil/criminal court proceedings, noting that the CIT(Appeals) has the power to assess total income and levy tax. It highlighted that the assessees have a right to expect a fair order from the CIT(Appeals) based on available material. The Tribunal stressed that the assessees should not suffer due to counsel negligence, citing the Madhya Pradesh High Court's observation on the role of advocates in legal proceedings. It concluded that giving assessees another opportunity to provide material would serve the interests of justice and remitted the issue back to the assessing officers for fresh consideration.

In conclusion, the Tribunal allowed the appeals of both assessees for statistical purposes, setting aside the orders of the lower authorities and directing the assessing officers to reconsider the issues based on any additional material submitted by the assessees. The judgment highlighted the importance of deciding appeals on merit, irrespective of representation, and ensuring that assessees are not penalized for counsel negligence.

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