A S Housing Company Vs DCIT (ITAT Raipur)
CIT(A) Cannot Dismiss Appeal for Non-Prosecution: ITAT Raipur Restores Section 68 Addition on Partners’ Capital for Fresh Adjudication
The Raipur Bench of the ITAT allowed the assessee-firm’s appeal for AY 2018-19 for statistical purposes, holding that the CIT(A) acted contrary to law in dismissing the appeal ex-parte for non-prosecution, without adjudicating the issues on merits, in violation of section 250(6) of the Income-tax Act.
The assessee, a builder-developer partnership firm, faced an addition of ₹3.39 crore under section 68 read with section 115BBE in proceedings completed pursuant to revision under section 263, treating partners’ capital contributions as unexplained. Although the assessee had raised detailed grounds—contending that identity, creditworthiness, genuineness, and even source of source were proved, and that capital introduced by partners cannot be taxed in the firm’s hands—the CIT(A), NFAC dismissed the appeal solely for non-compliance, relying on inherent powers to dismiss for default.
The ITAT categorically held that CIT(A) has no power to dismiss an appeal for non-prosecution and is statutorily bound to decide every ground on merits, irrespective of assessee’s appearance. Failure to do so renders the appellate order unsustainable in law. Noting that the CIT(A) had not examined any issue arising from the assessment or the section 263 directions, the Tribunal set aside the impugned order in entirety.
Accordingly, the matter was remanded to the CIT(A) for de-novo adjudication on merits, with a direction to grant adequate opportunity to the assessee, while cautioning the assessee to ensure proper compliance during remand proceedings.
FULL TEXT OF THE ORDER OF ITAT RAIPUR
