Scrap Dealer Gets Second Chance: ITAT Orders Fresh Hearing After ₹3.84 Crore Tax Dispute Dismissed Without Merit Review [Read Order]

The Income Tax Appellate Tribunal (ITAT), Pune bench, has granted relief to a Maharashtra-based scrap dealer by directing a fresh hearing in his ₹3.84 crore tax dispute case. The tribunal ruled that the appellate authority's dismissal of his case without examining the merits was improper, giving the assessee another opportunity to present his arguments.

The case involves Gaffar Ebrahim Shaikh, proprietor of Shah Traders in Nanded, who faced tax additions of ₹2.14 crore for AY 2013-14 and ₹1.70 crore for AY 2016-17. The additions were made under Section 69A of the Income Tax Act, 1961, treating cash deposits in a cooperative society's account as unexplained income. The assessments were completed ex-parte after Shaikh failed to respond to notices, and the first appeals were dismissed without merit consideration by the National Faceless Appeal Centre.

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Shaikh's counsel argued before ITAT that the earlier dismissal was unjust as the appellate commissioner didn't examine the case merits as required under Section 250(6) of the Act. The tribunal noted that while there was initial non-compliance by the assessee, the appellate authority was still obligated to decide the case on merits, referencing the Bombay High Court's decision in Pr.CIT vs Premkumar Arjundas Luthra (2017).

The bench, comprising Accountant Member Dr. Manish Borad and Judicial Member Vinay Bhamore, condoned a five-day delay in filing the appeal, accepting the assessee's explanation of family health issues. The tribunal emphasized that technicalities shouldn't override substantial justice, citing the Supreme Court's ruling in Collector Land Acquisition vs MST Katiji (1987).

While not commenting on the case merits, the ITAT set aside the earlier orders and remanded the matter back to the Commissioner of Income Tax(Appeals) for fresh consideration. The tribunal directed Shaikh to provide proper email for communication and warned against unnecessary adjournments.

In Conclusion, the appeals were allowed for statistical purposes, meaning the case returns to the appellate authority but isn't technically won yet.

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