2021 (11) TMI 775 - AT - Income Tax

Revision u/s 263 - Deduction u/s 54F disallowed - Case has been subsequently selected for scrutiny and notice u/s. 143(2) was issued calling for various details - assessee preferred an appeal before the CIT(A), but could not appear therefore, the CIT(A) disposed off appeal filed by the assessee ex-parte - assessee submitted that the learned CIT(A) has erred in dismissing appeal filed by the assessee without providing reasonable opportunity of hearing in violation of principles of natural justice - HELD THAT - No doubt, appellate authority has no option, but to dispose off appeal filed by the assessee, in case appellant does not appear before the appellate authority, despite various opportunity of hearing was provided, but such appeal should be disposed off on merits on the basis of material available on record. But, before disposal of appeal, reasonable opportunity of hearing must be given to explain his case. In this case, the learned A.R submitted that the learned CIT(A) has not disposed off the appeal on merits by passing reasoned order. Therefore, considering facts and circumstances of this case, we are of the considered view that issue needs to go back to the file of learned CIT(A) to give one more opportunity of hearing to the assessee to file necessary evidences and explain his case. Appeal filed by the assessee is treated as allowed for statistical purposes.

Summary

Issues:
1. Disallowance of exemption claimed under section 54F of the Income Tax Act, 1961.
2. Dismissal of appeal by the CIT(A) without providing a reasonable opportunity of hearing to the assessee.

Analysis:

Issue 1: Disallowance of exemption claimed under section 54F:
The case involved the disallowance of exemption claimed by the assessee under section 54F of the Income Tax Act, 1961. The assessee, engaged in trading in textile and fabrics, had declared total income for the assessment year 2011-12, including capital gain after claiming exemption under section 54F. The Assessing Officer completed the assessment under section 143(3) of the Act, making certain additions to the income. Subsequently, the Principal CIT, Chennai, referred the case for revision under section 263, as the assessment order was considered prejudicial to the interests of the Revenue. The Principal CIT directed the Assessing Officer to revise the assessment, leading to the disallowance of the claimed exemption under section 54F. The assessee appealed against this order before the CIT(A).

Issue 2: Dismissal of appeal without providing a reasonable opportunity of hearing:
The assessee, aggrieved by the order of the CIT(A) dismissing the appeal, contended that the CIT(A) erred in not providing a reasonable opportunity of hearing and disposing of the appeal ex-parte. The CIT(A) had cited the non-appearance of the assessee despite multiple hearing opportunities and relied on judicial precedents to dismiss the appeal. The assessee argued that the order was vague and cryptic, requesting another chance to present necessary evidence. The Departmental Representative supported the CIT(A)'s decision, emphasizing the lack of appearance and submission of details by the assessee.

In the final judgment, the Appellate Tribunal acknowledged the necessity of providing a reasonable opportunity of hearing before disposing of an appeal. While recognizing the failure of the assessee to appear before the CIT(A), the Tribunal directed the case back to the CIT(A) for reconsideration, emphasizing the importance of a reasoned order based on merits and material on record. The Tribunal instructed the CIT(A) to allow the assessee to present necessary evidence and explain the case, without unnecessary adjournments. Consequently, the appeal filed by the assessee was treated as allowed for statistical purposes, with the order pronounced on 3rd November 2021.