Decision of CIT (A) without Considering Merits of Case is Violative of Provisions of Section 250(6) of Income Tax Act: ITAT [Read Order]

The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) observed that decision of Commissioner of Income Tax ( Appeals ) [ CIT (A) ] without considering merits of case was violative of provisions of Section 250(6) of the Income Tax Act, 1961

The assesse who filed their income tax return on October 31, 2018, declaring a total income of Rs. 5,225,180/-. On February 13, 2019, the return was processed. Subsequently, the case underwent limited scrutiny to verify an investment in a property, initiated through a notice issued under Section 143 (2) of the Income Tax Act, 1961, on September 22, 2019. The focus of scrutiny was on the purchase of immovable property, where the purchase value was reported to be less than the stamp value determined by the authority. A necessary notice under Section 142 (1) of the Income Tax Act, 1961, was subsequently issued to the assessee.

The assessee has purchased the property for Rs. 3,620,000 values of which for stamp duty purposes Rs. 17,718,500 and therefore there is a difference of Rs. 14,098,500/-which was required to be taxed in the hands of the assessee.

The counsel for the revenue Mahita Nair, argued that the assessee had neglected to respond to any of the notices issued by the Commissioner of Income Tax ( Appeals ) [ CIT-A ]. Consequently, the CIT-A had no alternative but to adjudicate the matter based on the merits of the case. In doing so, the CIT-A affirmed the actions of the assessing officer, leading to the conclusion that there are no defects in the CIT-A's order.

The Section 250 (6) of the Income Tax Act, 1961, stated thatthe Commissioner ( Appeals ) must provide a written decision in the event of dismissal of an appeal. The decision should give the reasons for dismissal along with the underlying rationale and conclusion. 

The two member bench of the tribunal comprising Rahul Choudari ( Judicial member ) and Prashant Maharishi ( Accountant member ) observed that the order of the CIT-A does not align with the provisions of Section 250(6) of the Income Tax Act, 1961, particularly given that a specific ground concerning the addition of Rs. 14,098,500 was raised in the appeal. In the interest of natural justice, the appeal of the assessee was reinstated to the CIT-A with the directive that once the window for submission of detailed information was available, the assessee must comply within the prescribed time frame.

The CIT-A was instructed to consider this information and decide on the merits of the case after providing a proper opportunity for a hearing if requested. Accordingly, the solitary ground of appeal raised by the assessee was granted with the aforementioned directive.

In the result, appeal filed by the assessee was allowed for statistical purposes.

To Read the full text of the Order CLICK HERE

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