CIT(A) dismisses Income tax Appeal on Technical Grounds rather than on Merits: ITAT directs to issues Speaking Order [Read Order]

In a recent ruling, the Income Tax Appellate Tribunal ( ITAT ), Kolkata Bench directed the Commissioner of Income Tax (Appeals) [CIT(A)] to issue a speaking order where the appellate authority dismissed the appeal on technical grounds rather than considering the merits.

An individual assessee, Upashan Debnath filed an income tax appeal challenging the ex parte order passed by the CIT(A) for the Assessment Year 2015-16. The delay of 266 days in filing the appeal before the ITAT was condoned after the Tribunal was satisfied with the assessee’s explanation for the delay.

The matter originated when the assessee filed his income tax return declaring total income of ₹2,59,440. The return was processed under section 143(1) of the Income Tax Act and subsequently picked up for scrutiny.

Comprehensive Guide of Law and Procedure for Filing of Income Tax Appeals, Click Here

Also read: Non-Payment of Advance Tax Makes S.249(4)(b) of Income Tax Act Inapplicable: ITAT [Read Order]

During the assessment proceedings, it was noticed by the Assessing Officer that the assessee had deposited over ₹1.12 crore in three separate bank accounts. As the total deposits exceeded ₹1 crore, the AO held that the assessee was liable to maintain books of accounts under section 44AB, which he had failed to do. Consequently, the AO treated ₹1.05 crore as gross receipts and applied an 8% presumptive rate, assessing a total income of ₹8.81 lakh under section 143(3).

Aggrieved by this, the assessee filed an appeal before the CIT(A). However, the appellate authority dismissed the appeal ex parte due to the assessee’s repeated non-compliance with hearing notices. The CIT(A) did not examine the merits of the case, and instead, sustained the assessment order solely on the ground of non-appearance.

Challenging this dismissal, the assessee approached the tribunal, submitting that he had not been given a fair opportunity to present his case.

Step by Step Guidance for Tax Audit & E-filing, Click Here

Also read: ITAT Dismisses Scan Ispat’s Appeal as Withdrawn Under Vivad Se Vishwas Scheme [Read Order]

Sonjoy Sarma, Judicial Member and Rakesh Mishra, Accountant member heard both parties. It was observed that the CIT(A) had erred in dismissing the appeal without dealing with the merits of the case. It noted that justice demands a fair opportunity to be given to the assessee, especially when substantial tax liability is involved.

The bench further held that appellate proceedings must culminate in a reasoned and "speaking order" that addresses the facts and legal contentions raised. Accordingly, the bench set aside the ex parte order of the CIT(A) and remanded the matter back for fresh adjudication.

The CIT(A) was directed to afford a reasonable opportunity of being heard and to pass a speaking order based on the merits of the case. The assessee was also instructed to fully cooperate during the remand proceedings and comply with notices issued.

Also read: Income Already Taxed cannot be Treated Again as Unexplained Cash Credit: ITAT [Read Order]

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscanpremium. Follow us on Telegram for quick updates