Income Tax Appeal cannot be rejected solely on Non-Appearance of Assessee: Kerala HC [Read Order]

The Kerala High Court stated that there is no provision of rejecting the appeal merely on non-appearance of assessee and the appellate authority must decide an appeal by strictly following the mandate contemplated under Section 250(6) of the Income Tax Act, 1961.

Anandan N, the petitioner/assessee, was an employee of ICICI Bank who voluntarily retired during the 2004-05 assessment year and received Rs. 4,52,814 in compensation as part of the retirement scheme. He then filed a return of income for the same assessment year, claiming relief under Section 89(1) of Rs. 24,353. He then filed a rectification application, seeking exemption under Section 10(10C) on retirement compensation, which was denied by the assessing officer.

A revision petition was submitted by the assessee before the Principal Commissioner of Income Tax, which was rejected. After that the assessee submitted an appeal before the Commissioner of IncomeTax (Appeals) which was dismissed. The assessee submitted that the impugned order does not conform to the statutory requirements contemplated under the provisions of the Income Tax Act.

The department submitted with specific reference to the contents of impugned order that, what prompted the department to reject the appeal, was the nonappearance of the assessee despite repeated opportunities.

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The bench noted that although the reasons for dismissing the appeal are stated in the contested decision, they pertain to the assessee's failure to present for hearings on several days.

"Evidently, going by Subsection 6 of Section 250, no other meaning can be assigned to the words "points for decision" as it obviously leads to the question that arises for consideration based on the contentions raised in the appeal," noted the division bench of Justice Ziyad Rahman A.A. As a result, the appellate authority was required to consider the issues brought up in the appeal and make a decision while providing justification.

According to Section 250(6) of the Income Tax Act of 1961, the Commissioner (Appeals) must produce a written order that explains the points for determination, the judgment, and the reasoning behind the decision when dismissing an appeal.

The judgment noted after reviewing Section 250 of the Act that "the provision deals with the procedure in appeal and there is no provision for rejecting an appeal for non-appearance of the assessee." Therefore, in the absence of such a provision, the appellate authority must strictly adhere to the mandate contemplated under Section 250(6) of the Income Tax Act, 1961, which can only be a decision that addresses the points raised in the appeal, regardless of whether the assessee had appeared or not. As a result, the contested order needs to be reconsidered because it cannot be regarded as having been issued in accordance with the statutory requirements.

In light of the aforementioned, the bench granted the petition and instructed the department to give the assessee a fair chance to be heard before reconsidering the appeal.

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