Non-Prosecution not Grounds to Dismiss Income Tax Appeal: ITAT Quashes Ex-Parte CIT(A) Order [Read Order]

The Raipur Bench of the Income Tax Appellate Tribunal (ITAT) recently clarified that failure by an assessee to appear following the institution of prosecution is not a valid ground for the Commissioner of Income Tax (Appeals) ( CIT(A) ) to dismiss an income tax appeal.

The subject-matter issue pertains to reassessment and search assessments conducted against the financials of the appellant-assessee Sarthak Ispat Pvt. Ltd. for assessment years (A.Y.) 2011-12 to 2013-14.

Sarthak group were issued notices under Section 153A, after which returns were filed and assessment orders were passed; subsequent appeals were preferred before the CIT(A) challenging the additions and procedural aspects of the same. The CIT(A) passed an ex-parte order dismissing the appeal due to non-appearance by the assessee.

Before the ITAT, the assessee was represented by Subhash Agrawal and urged that the CIT(A) had merely dismissed the appeal on the basis of non-appearance and had not considered the material already on record, which included challenges to the validity of reopening the assessment under Section 147; it was thus contended that the appellate order was unsustainable.

Departmental Representative S. L. Anuragi countered that repeated opportunities had been afforded to the assessee which were met with evasive conduct, thus justifying the decision of the CIT(A).

The two-member Bench of Ravish Sood (Judicial Member) and Arun Khodpia (Accountant Member) examined the statutory duties imparted on the CIT(A) under Sections 250 and 251 and relied on the principle that the appellate authority is obliged to apply its mind and decide issues on merits rather than merely dismissing appeals for non-prosecution.

The Tribunal further observed that the order of the CIT(A) was centrally premised on absence rather than on a reasoned appraisal of the record and therefore set aside the ex-parte order relying on the decision of the Bombay High Court in the case of CIT vs. Premkumar Arjundas Luthra (HUF) (2016).

Accordingly, the ITAT remitted the appeals to the CIT(A) for de novo, speaking adjudication order after providing the assessee a reasonable opportunity of hearing. At the same time, ITAT also cautioned the assessee to remain vigilant in the hearing.

In result, the ITAT partly allowed the lead appeal for statistical purposes and directed fresh adjudication on the remitted points in accordance with law.

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