CIT(A) Cannot Dismiss Appeals Mechanically: ITAT Raipur Restores Penalty Appeal

Shree Hanuman Pulses Pvt. Ltd. Vs ITO (ITAT Raipur)

Penalty u/s 271B Dispute Reopened – Appeal Restored for Fresh Adjudication- CIT(A) Cannot Summarily Dismiss Appeal; ITAT Raipur  restored the appeal to CIT(A) after finding that it was dismissed ex parte in violation of natural justice.

Assessee had filed appeal against penalty order passed u/s 271B. CIT(A) issued several notices between June 2020 & May 2025, but no response was received from  Assessee, leading to ex parte dismissal on 27.05.2025.

Before Tribunal,  Assessee was unrepresented, though an adjournment application was filed. Tribunal observed that once an appeal is filed, CIT(A) is duty-bound u/s 250(6) & 251 to dispose it on merits by passing a reasoned order, & cannot summarily dismiss for non-prosecution. It relied on Bombay HC in CIT Vs. Premkumar Arjundas Luthra (HUF) (297 CTR 614), which held that CIT(A)’s powers are co-terminus with those of AO & dismissal without adjudication is impermissible. Tribunal emphasised that natural justice requires giving Assessee one final opportunity to present its case.

Accordingly, Tribunal set aside the order of CIT(A)/NFAC & remanded matter for de novo adjudication on merits, cautioning Assessee to cooperate with notices as this was the final opportunity. The appeal was allowed for statistical purposes.

This ruling reaffirms that appeals cannot be dismissed mechanically for non-compliance & that appellate authorities are bound to adjudicate on merits by passing speaking orders.

FULL TEXT OF THE ORDER OF ITAT RAIPUR

The present appeal preferred by the assessee emanates from the order of the Ld.CIT (Appeals)/NFAC, Delhi dated 27.05.2025 for the assessment year 2015-16 as per the grounds of appeal on record.

2. At the time of hearing none appeared for the assessee. However, an adjournment application has been filed which is rejected. The matter is heard after recording the submissions of the Ld. Sr. DR and on careful perusal of the material available on record.

3. At the very outset, it is noted that as per Para 4.1 & 4.2 of the impugned order, the Ld.CIT(Appeals)/NFAC vide an ex-parte order had dismissed the appeal of the assessee due to non-compliance by the assessee. For the sake of clarity, the Para 4.1 & 4.2 of the Ld.CIT(Appeals)/NFAC’s order are culled out as follows:

“4.1 The appeal was filed by the appellant on 09/08/2019 against the order u/s. 271B of the Act. In connection to the appeal, opportunities were provided by the Ld. CIT(A), NFAC to the appellant to substantiate his grounds of appeal on following dates:

4.2 Against all these notices by CIT(A), NFAC there was no response from the appellant as has been brought out above, it is evident that the appellant is not interested in filing any details during the appellate proceedings and avail the opportunity under the principles of natural justice. In response to the notices issued even adjournment was not sought. In such situation, the only conclusion which can be drawn is that the appellant is not interested in pursuing the appeal.”

4. The Ld. Sr. DR has fairly conceded that the matter may be adjudicated denovo on merits before the first appellate authority providing one final opportunity to the assessee.

5. We have carefully considered the contents in the documents/material available on record. As per the aforesaid examination of the entire spectrum of the matter in the interest of natural justice, we deem it fit and proper to provide one final opportunity to the assessee to represent his case on merits before the Ld. CIT(Appeals)/NFAC.

6. On a perusal of the order of the Ld.CIT(Appeals)/NFAC, it is observed that the Ld.CIT(Appeals)/NFAC dismissed the appeal of the assessee in limine for non-compliance without dealing with the merits of the case. In our considered view, once an appeal is preferred before the CIT(Appeals), it becomes obligatory on his part to dispose off the same on merit and it is not open for him to summarily dismiss the appeal on account of non-prosecution of the same by the assessee. In fact, a perusal of Sec.251(1)(a) and (b), as well as the “Explanation” to Sec.251(2) of the Act reveals that the CIT(Appeals)/NFAC remains under a statutory obligation to apply his mind to all the issues which arises from the impugned order before him. As per the mandate of law the CIT(Appeals)/NFAC is not vested with any power to summarily dismiss the appeal for non-prosecution. The aforesaid view is fortified by the judgment of the Hon’ble High Court of Bombay in the case of CIT Vs. Premkumar Arjundas Luthra (HUF) (2017) 297 CTR 614 (Bom). In the aforementioned case the Hon’ble High Court had observed as under:

“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 AO to make further inquiry and report the result of the same to him as found in Sec. 250 of the Act. Further, Sec. 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. Sec. 251(1)(a) and (h) 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-s. (2) of s. 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 s. 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 w.e.f. 1st June, 2001 the power of the CIT(A) to set aside the order of the AO and restore it to the AO for passing a fresh order stands withdrawn. Therefore, it would be noticed that the powers of the CIT(A) are co-terminus with that of the AO i.e. he can do all that A.O could do. Therefore, just as it is not open to the AO 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  s. 251(1)(a) and (b) and Explanation to Sec. 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.”

7. Respectfully following the aforesaid order, we set-aside the order of the Ld. CIT(Appeals)/NFAC and remand the matter back to its file for denovo adjudication while complying with the principles of natural justice as per similar terms. At the same time, it is directed that this being the final opportunity, the assessee shall duly comply with the hearing notices from the Ld.CIT(Appeals)/NFAC. The Ld.CIT(Appeal)/NFAC shall accordingly pass order in terms with Section 250(4) & (6) of the Act.

8. As per the aforesaid terms, the grounds of appeal raised by the assessee stands allowed for statistical purposes.

9. In the result, the appeal of the assessee is allowed for statistical purposes.

Order pronounced in the open court on 18th day of September, 2025.