CIT(A) Can’t dismiss Appeal for Non-Appearance Without Addressing issues on Merits

MARC Laboratories Ltd. Vs DCIT (ITAT Delhi)

The case of MARC Laboratories Ltd. vs. DCIT before the ITAT Delhi revolves around the authority of the Commissioner of Income Tax (Appeals) to dismiss appeals on grounds of non-prosecution. This article delves into the detailed analysis of the case, shedding light on the key arguments and the tribunal’s ruling.

The appeals in question stemmed from assessment orders passed by the Assessing Officer, which were challenged before the Commissioner of Income Tax (Appeals)-29, New Delhi. Despite notice of hearing being served upon the assessee, there was a failure to appear, leading to the proceedings being conducted ex-parte.

Upon examination of the first appellate orders, it was observed that the CIT(A) had dismissed the appeals on the basis of non-prosecution, without engaging in substantive discussion on the merits of the case. This raised questions regarding the CIT(A)’s adherence to the principles of natural justice and the statutory provisions governing appellate proceedings.

Section 250(6) of the Income Tax Act mandates that the CIT(A) must state the points for determination and provide reasons for the decision. Therefore, dismissing an appeal solely due to non-prosecution is not within the purview of the CIT(A)’s authority. This stance finds support in legal precedents, such as the decision of the Hon’ble Bombay High Court in CIT vs. Premkumar Arjundas Luthra HUF.

The ITAT Delhi emphasized that the CIT(A) functions both as an adjudicating and appellate authority, thereby necessitating a comprehensive examination of the grounds raised by the appellant. Consequently, the tribunal deemed it appropriate to set aside the CIT(A)’s order and remand the matter for fresh adjudication, ensuring the appellant’s right to a fair hearing.

In conclusion, the ITAT Delhi’s ruling in the case of MARC Laboratories Ltd. vs. DCIT reaffirms the principle that the CIT(A) cannot dismiss appeals solely on grounds of non-prosecution. The decision underscores the importance of procedural fairness and the need for substantive deliberation on the merits of each case. This serves as a significant precedent in safeguarding the rights of taxpayers and upholding the integrity of the appellate process within the realm of income tax jurisprudence.

FULL TEXT OF THE ORDER OF ITAT DELHI

The captioned appeals arise from the order of the Commissioner of Income Tax (Appeals)-29, New Delhi in respective assessment orders passed by the Assessing Officer tabulated hereunder:

2. It is seen from the record that notice of hearing was duly served upon the assessee. As per the case records, none appeared from the assessee despite service of notice on several occasions. Accordingly, the matter was proceeded ex-parte.

3. As per the grounds of appeal, the assessee has taken various grounds seeking to assail the additions/disallowances of expenses made by the AO. As per the grounds of appeal, the asses see contends that the first appellate order has been passed without any opportunity to the assessee based on un-communicated notice to the assessee and therefore, passed in breach of principles of natural justice.

4. On perusal of the respective first appellate orders, we notice that the CIT(A) has dismissed the appeal in limine on the grounds of non-prosecution of appeal by the assessee before him. The CIT(A) has passed a cryptic order without any cogent discussion on merit.

5. We straightway refer to Section 250(6) of the Act which enjoins that the CIT(A) shall state the points for determination before it and the decision shall be rendered on such points along with reasons for the decision. Thus, it is incumbent upon the CIT(A) to deal with the grounds on merits even in ex parte In view of Section 250(6) of the Act, the CIT(A) has no power to dismiss an appeal on account of non-prosecution. This view is also taken by the Hon’ble Bombay High Court in case of CIT vs. Premkumar Arjundas Luthra HUF, (2017) 291 CTR 614 (Bom.). A bare glance of the order of the CIT(A) shows that CIT(A) has not addressed itself on various points placed for its determination at all and dismissed the appeal of assessee for default in non appearance. Needless to say, the CIT(A) plays role of both adjudicating authority as well as appellate authority. Thus, the CIT(A) could not have shunned the appeal for non- compliance without addressing the issue on merits.

6. In the totality of the circumstances, we consider it just and expedient to restore the matter back to the CIT(A) in the larger interest of justice with a view to enable the assessee to avail proper opportunity for disposal of appeal by the CIT(A) on various points. The assessee is cautioned to extend full co-operation to the CIT(A) without any demur, failing which, the CIT(A) shall be at liberty to conclude the appellate proceedings in accordance with law. Hence, the order of the CIT(A) appealed against, is set aside and all the issues raised in the impugned appeal are restored back to the file of the CIT(A) for fresh adjudication in accordance with law after giving reasonable opportunity of hearing to the assessee.

7. In the result, all the captioned appeals of the assessee are allowed for statistical purposes.

Order pronounced in the open Court on 21/03/2024