In a recent case, the Ahmedabad Bench of the Income Tax Appellate Tribunal ( ITAT ) set aside an order passed by the Commissioner of Income Tax (Appeals) [ CIT(A) ], National Faceless Appeal Centre ( NFAC ) in the case of Amjay Medimax India, for the assessment year (AY) 2017-18.
The assessee, Amjay Medimax India Pvt Ltd, declared an income of ₹60 Lakhs. Still, on further assessment following scrutiny by the assessing officer (AO), it was found that it had a total income of ₹7.9Cr. The AO, on this finding, made an addition of ₹2 Cr under Section 68 of the Income Tax Act for unexplained cash deposits. The AO made a disallowance of ₹25 lakhs under Section 14A for expenses found
Aggrieved by the additions and disallowances made by the AO, the assessee filed an appeal before the CIT(A) under Section 250 of the Act, but no other submissions were made on this regard by the assessee despite multiple notices. Due to such non-compliance, the CIT(A) dismissed the appeal ex parte and upheld the AO’s findings.
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Aggrieved by the order of the CIT(A), the assessee filed for an appeal with the ITAT, where the authorised representative (AR) of the assessee stated that the CIT(A) has not decided the issue on merit and has simply dismissed the appeal. The AR prayed for the case to be remanded back to CIT(A) for reassessment. The departmental representative (DR) asserted the continuance of non-compliance by the assessee and, therefore, prayed to impose the cost on the assessee. The DR agreed that the issue is required to be decided on merit.
On hearing both parties, the ITAT observed that the CIT(A) erred in dismissing the appeal for non-procecution without examining the grounds on their merits. The court observed it to violate natural justice principles. The tribunal further observed that the company lacked due diligence in monitoring its e-filing portal and responding to notices, which led to procedural lapses.
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The ITAT held that while the revenue authorities must ensure due process, taxpayers are equally obligated to participate actively in proceedings. The Tribunal further held that such negligence on the part of taxpayers disrupts judicial efficiency and will burden the appellate system.
The two-member bench consisting of Siddhartha Nautiyal (Judicial member) and Makarand V. Mahadeokar (Accountant Member) remanded the case back to the CIT(A) for fresh adjudication with explicit instructions to provide a fair hearing and decide on the issues on merit. The tribunal imposed a cost of ₹5000 for the assessee’s lack of diligence, payable to the government within 30 days of receiving this order, and the proof of payment is to be submitted to the CIT(A). As a result, the tribunal allowed the appeal.
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