CIT(A) Is Not a Dismissal Counter: ITAT Says Appeals Must Be Decided on Merits, Not Closed for Non-Compliance

Paresh Prashant Bhide Vs Ward-12(1) (ITAT Pune)

“CIT(A) Is Not a Dismissal Counter” – ITAT Says Appeals Must Be Decided on Merits, Not Closed for Non-Compliance

The Pune ITAT strongly reiterated that the CIT(A) cannot dismiss an appeal merely because the assessee failed to appear or respond to notices. Once an appeal is filed, the appellate authority is legally obligated to examine the issues raised and pass a reasoned order on merits.

The assessee had argued that the original return was incorrectly filed by a mediator showing higher business income than actually earned, resulting in excess tax liability. Since the statutory time limit for revising the return had expired, the assessee approached the appellate authority seeking correction through appeal proceedings.

However, the CIT(A) dismissed the appeal solely on the ground that no replies or documents were furnished in response to notices issued through the ITBA portal. The Tribunal observed that the CIT(A) had failed to adjudicate even a single ground on merits and had simply confirmed the intimation u/s 143(1) mechanically.

Relying on the Bombay High Court judgment in Pr.CIT vs Premkumar Arjundas Luthra (HUF), the ITAT emphasized that the powers of the CIT(A) are coterminous with those of the Assessing Officer, and therefore the appellate authority cannot dismiss appeals for “non-prosecution.” The law requires the CIT(A) to independently apply his mind and decide all issues arising from the assessment order.

Accordingly, the ITAT set aside the impugned order and restored the matter back to the CIT(A) for fresh adjudication after granting proper opportunity to the assessee.

FULL TEXT OF THE ORDER OF ITAT PUNE

This is an appeal filed by the Assessee against the order of ld.Commissioner of Income Tax(Appeal)[NFAC], passed under section 250 of the Income Tax Act, 1961 for the A.Y.2022-23 dated 14.10.2025 emanating from the Assessment Order passed under section 143(1) of the I.T.Act, dated 22.12.2022. The Assessee has raised the following grounds of appeal :

“1. Incorrect Business Income:

Section 144 Incorrect Business Income shown in Original Return The original return has been filed by mediator and he has filed return without showing actual income. The income shown is higher than actual income. Because of which the tax calculated has also gone up. The tax on it was not even paid earlier. Actual tax has been paid on 09-01­2023, after receiving order under section 143 subsection 1. But I am unable to revise the return since the due date of revision has gone past. Till last year the due date of revision was 31st March which was made to be 31st December this year. I have also reached out to Income Tax Officer to revise return from his side through offline mode. But he guided me that the same option is unavailable right now. If my income is not shown correctly in original tax return then I would like to correct it through this appeal.

2. No chance given to rectify the return

CIT (Appeal) has not given me the chance to rectify the return as said in the grounds of appeal filed before them. I have asked for the extension of time due to delay in collecting the information, but the same is also not taken into consideration.

3. Delay in hearing the appeal

Appeal before Commissioner of Income Tax (Appeal) has been filed on 20 January 2022, while the appeal is heard in September 2025. Because of this delay, my demand was pending as well as interest portion on the demand got extended.”

Findings & Analysis :

2. At the outset of hearing, no one attended for hearing on behalf of the assessee. No adjournment application filed.

Submission of ld.Departmental Representative(ld.DR) :

3. The ld.DR for the Revenue relied on the order of Assessing Officer(AO) and ld.CIT(A)[NFAC].

Findings & Analysis :

4. We have heard ld.DR for the Revenue and perused the records. In this case, ld.CIT(A) has dismissed the appeal of the assessee as assessee failed to file any reply to notices issued by ld.CIT(A). Ld.CIT(A) has not adjudicated the grounds raised by the Assessee.

The relevant paragraph of ld.CIT(A) is reproduced here as under : “4. Decision

I have carefully gone through the facts of the case and grounds of appeal submitted by the appellant. Moreover, all notices were duly served upon the appellant through email. The appellant opted not to respond the above notices for the reason best known to him. No documents were produced before me on ITBA in support of his grounds of appeal or to rebut the intimation u/s 143(1) despite given sufficient opportunities.

In view of the above facts, it is clear that the appellant is not interested in pursuing the present appeal on merits and therefore in absence of any evidence to rebut the intimation u/s 143(1), the intimation is CONFIRMED and accordingly the appeal is dismissed. Hence, all grounds of appeal raised by the appellant are dismissed.

5. In the result, the appeal is dismissed.”

5. It is observed from the order of the ld.CIT(A) that the ld.CIT(A) did not decide the grounds of appeal on merit but merely dismissed the appeal of the assessee for non-compliance.

6. The Hon’ble Bombay High Court has held in the case of Pr.CIT(Central) Premkumar Arjundas Luthra (HUF) (Bombay)/[2017] 297 CTR 614 (Bombay) as under :

Quote, “8.From the aforesaid provisions, it is very clear once an appeal is preferred before the CIT(A), then in disposing of the appeal, he is obliged to make such further inquiry that he thinks fit or direct the Assessing Officer to make further inquiry and report the result of the same to him as found in Section 250(4) of the Act.

Further Section 250(6) of the Act obliges the CIT(A) to dispose of an appeal in writing after stating the points for determination and then render a decision on each of the points which arise for consideration with reasons in support. Section 251(1)(a) and (b) of the Act provide that while disposing of appeal the CIT(A) would have the power to confirm, reduce, enhance or annul an assessment and/or penalty. Besides Explanation to sub-section (2) of Section 251 of the Act also makes it clear that while considering the appeal, the CIT(A) would be entitled to consider and decide any issue arising in the proceedings before him in appeal filed for its consideration, even if the issue is not raised by the appellant in its appeal before the CIT(A). Thus once an assessee files an appeal under Section 246A of the Act, it is not open to him as of right to withdraw or not press the appeal. In fact the CIT(A) is obliged to dispose of the appeal on merits. In fact with effect from 1st June, 2001 the power of the CIT(A) to set aside the order of the Assessing Officer and restore it to the Assessing Officer for passing a fresh order stands withdrawn.

Therefore, it would be noticed that the powers of the CIT(A) is coterminous with that of the Assessing Officer i.e. he can do all that Assessing Officer could do. Therefore just as it is not open to the Assessing Officer to not complete the assessment by allowing the assessee to withdraw its return of income, it is not open to the assessee in appeal to withdraw and/or the CIT(A) to dismiss the appeal on account of non-prosecution of the appeal by the assessee. This is amply clear from the Section 251(1)(a) and (b) and Explanation to Section 251(2) of the Act which requires the CIT(A) to apply his mind to all the issues which arise from the impugned order before him whether or not the same has been raised by the appellant before him. Accordingly, the law does not empower the CIT(A) to dismiss the appeal for non-prosecution as is evident from the provisions of the Act.” Unquote.

6.1 Thus, the Hon’ble Bombay High Court has categorically held that ld.CIT(A) has to decide the appeal on merit and ld.CIT(A) does not have any power to dismiss appeal for non-prosecution.

7. In view of the above, in the interest of justice, we set-aside the order of the ld.CIT(A) to ld.CIT(A) for denovo adjudication. Ld.CIT(A) shall provide opportunity to the assessee. Assessee shall file all the necessary documents before the ld.CIT(A). Accordingly, grounds of appeal raised by the assessee are allowed for statistical purpose.

8. In the result, appeal of the assessee is allowed for statistical purpose.

Order pronounced in the open Court on 16 February, 2026.