2019 (8) TMI 304 - HC - Income Tax

Power of tribunal to remand - exemption u/s 11 - AO held the receipts of admission fees as the revenue receipts instead of capital - ex-parte order of CIT(A) - HELD THAT - If an order is passed by the CIT (A) on merits despite the fact that the assessee failed to appear before the CIT (A) at the time of the final hearing of the appeal, the order passed by the CIT(A) cannot be termed as ex-parte. An order having been passed by the CIT(A) after service of notices on the assessee, there is no question of failure of natural justice. It cannot be said that the assessee was not given an opportunity of hearing. The order of the CIT(A) is more than clear. On more than one occasion, the assessee remained absent before the CIT (A), and in such circumstances, the CIT (A) had no option but to look into the records and decide the appeal on its own merit. CIT(A) took into consideration three relevant aspects. First, it took into consideration the fact that the assessee had collected fees from the students at the time of their admission and the amount was credited to the balance-sheet treating it as corpus donation, whereas the said amount was not reflected in the income and expenditure account. Secondly, it took notice of the fact that the activities were commercial in nature, and thirdly, and more importantly, it took into consideration the fact that the registration granted u/s 12AA came to be cancelled vide order passed by the DIT (E), Ahmedabad dated 16th March, 2011. With such evidence on record, the Appellate Tribunal could have decided the appeal on merits after hearing the assessee. There was no good reason for the Appellate Tribunal to remit the matter to the CIT (A) so as to give an opportunity of hearing to the assessee. As noticed in many matters that the Appellate Tribunal has been remitting the matters to the CIT (A) for no good reason, more particularly, when the Appellate Tribunal is able to decide the matter on its own merits. There is one another valid reason for us to say that ordinarily the matter should not be remitted by the Appellate Tribunal to the CIT(A) if the Appellate Tribunal is in a position to decide the appeal on its own merits having regard to the evidence on record. Such remand orders lead to unnecessary delays and cause prejudice to the revenue. - Decided in favour of the revenue

Summary

Issues Involved:
1. Whether the Income Tax Appellate Tribunal was justified in setting aside the matter to the Commissioner of Income Tax (Appeals) for fresh adjudication.

Detailed Analysis:

Issue 1: Justification of Setting Aside the Matter to the CIT(A) for Fresh Adjudication

Background:
- The revenue filed a tax appeal under Section 260A of the Income Tax Act, 1961, against the order passed by the Income Tax Appellate Tribunal, Ahmedabad 'B' Bench dated 15th June, 2018, for the assessment year 2011-12.
- The substantial question of law was whether the Tribunal was justified in remanding the matter to the CIT(A) for fresh adjudication.

Assessing Officer’s Findings:
- The assessee-trust collected admission fees of ?1,52,00,000/- and credited it directly to the balance sheet as a corpus donation without routing it through the income and expenditure account.
- The Assessing Officer treated these receipts as revenue receipts instead of capital and disallowed the deduction under Section 11(1)(d) of the Act.
- The registration under Section 12AA of the Act was cancelled by the DIT(E), Ahmedabad, on 16th March 2011.

CIT(A)’s Decision:
- The CIT(A) dismissed the appeal filed by the assessee, confirming the addition made by the Assessing Officer.
- The appeal was decided ex-parte as the assessee failed to appear despite multiple notices.

Appellate Tribunal’s Decision:
- The Tribunal remanded the matter to the CIT(A) for fresh adjudication, noting that the proceedings before the CIT(A) were ex-parte and the assessee had no opportunity to present his case.
- The Tribunal observed that the Chartered Accountant did not handle the matter properly, and the assessee assured to present his case if given another opportunity.

Revenue’s Argument:
- The revenue contended that the Tribunal erred in remanding the matter, asserting that the CIT(A) followed the principles of natural justice by issuing multiple notices.
- The revenue argued that the Tribunal should have decided the appeal on its own merits instead of remanding it.

Assessee’s Argument:
- The assessee argued that the Tribunal acted within its discretion to provide an opportunity for a fair hearing and that no substantial question of law was involved.

High Court’s Analysis:
- The High Court noted that the CIT(A) made a decision on merits after issuing multiple notices to the assessee.
- The Court emphasized that the order passed by the CIT(A) could not be termed ex-parte as the assessee was given ample opportunity to present his case.
- The High Court criticized the Tribunal for remitting the matter without good reason, leading to unnecessary delays and prejudice to the revenue.

Precedent:
- The High Court referred to a Coordinate Bench’s decision in Principal Commissioner of Income Tax-3 vs. Ashokji Chanduji Thakor, highlighting that remand orders should not be passed casually and without cogent reasons.
- The Supreme Court’s observation in Ashwinkumar K. Patel vs. Upendra J. Patel was cited, emphasizing that remand orders should be avoided if the appellate authority can decide the matter on its own merits.

Conclusion:
- The High Court concluded that the Tribunal's order to remand the matter was not sustainable in law.
- The appeal was allowed, and the Tribunal was directed to hear the appeal afresh and decide it on its own merits after giving an opportunity of hearing to both parties.

Final Order:
- The High Court quashed the Tribunal’s order and directed the Tribunal to restore the appeal to its original file and decide it on its own merits.