In a recent ruling, the Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ) held that the Commissioner of Income Tax (Appeals) [CIT(A)] erred in dismissing an appeal for non-compliance without addressing its merits.
The assessee is Shreenath Developers, a partnership firm, which filed its return for FY 2016-17, declaring “NIL” income. The return was selected for scrutiny due to large capital introductions and significant property investments.
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During the scrutiny, the Assessing Officer ( AO ) found discrepancies, including an unexplained cash credit of ₹4,50,000, a cash deposit of ₹1,16,000, and an investment of ₹68,00,000 in property, none of which were adequately explained. The amounts were added to the Assessee’s income under Sections 68, 69A, and 69 of the Income Tax Act 1961 ( ITA ), respectively.
The Assessee appealed to the CIT(A), but failed to attend hearings, leading to a dismissal based on non-appearance. The CIT(A) cited the principle that the law aids the vigilant, not those who neglect their rights.
Aggrieved, the Assessee approached the ITAT, arguing that the CIT(A) should have addressed the case on its merits despite the non-appearance.
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After examining the facts of the case, the division bench of Mr Ramit Kochar and Mr Siddhartha Nautiyal observed that although the Assessee had failed to attend the hearings, the CIT(A) was still obligated to examine the grounds of appeal in detail.
The bench highlighted that according to Sections 250(4) and 250(6) of the tax legislature, it is the CIT(A)’s duty to dispose of an appeal by making a reasoned order, discussing the points of contention and rendering a decision on each point. The tribunal further stressed that the appeals cannot be dismissed solely for non-prosecution without evaluating the issues at hand.
In light of these observations, the ITAT set aside the CIT(A)’s order and remanded the case for fresh adjudication, directing the CIT(A) to consider the merits of the case and to provide the Assessee with an opportunity to present its arguments.Thus, the appeal was allowed for statistical purposes.
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