Capital Fortunes Pvt. Ltd. Vs DCIT (ITAT Hyderabad)
ITAT Hyderabad remanded the matter to AO for de novo adjudication after holding that dismissal of appeal by First Appellate Authority on mere technical ground was not justified.
Assessee filed its return on 15.02.2021 declaring income of Rs.4,07,82,230/-. CPC processed return u/s 143(1) on 24.12.2021 determining income at Rs.5,53,67,690/- by denying set-off of brought forward loss of Rs.1,42,70,219/-, disallowing exemption of Rs.2,58,564/- on dividend & making addition of Rs.56,673/- towards employees’ contribution to PF. Assessee filed appeal before CIT(A) & also sought rectification u/s 154, which was rejected. CIT(A) dismissed the appeal holding that order u/s 143(1) merged with rectification order.
Tribunal observed that the approach of CIT(A) was contrary to principles of substantial justice. Issues such as set-off of brought forward losses, dividend exemption & employees’ contribution disallowance required factual verification & could not be denied merely on technicalities. Tribunal held that genuine claims must be adjudicated on merits. Accordingly, it set aside CIT(A)’s order & remitted matter to AO with direction to verify claims & decide afresh after affording opportunity of hearing. Thus, the appeal was allowed for statistical purposes.
This ruling emphasizes that genuine tax claims cannot be rejected on technical grounds like “merger” & that appeals must be decided on merits after due verification.
