2019 (8) TMI 304 - HC - Income Tax

High Court overturns Tribunal's decision for remand, emphasizes fair hearing, criticizes delays

THE COMMISSIONER OF INCOME TAX (EXCEPTIONS) Versus SHREE NIRMAN FOUNDATION CHARITABLE TRUST

THE COMMISSIONER OF INCOME TAX (EXCEPTIONS) Versus SHREE NIRMAN FOUNDATION CHARITABLE TRUST - TMI Issues Involved:1. Whether the Income Tax Appellate Tribunal was justified in setting aside the matter to the Commissioner of Income Tax (Appeals) for fresh adjudication.Detailed Analysis:Issue 1: Justification of Setting Aside the Matter to the CIT(A) for Fresh AdjudicationBackground:- The revenue filed a tax appeal under Section 260A of the Income Tax Act, 1961, against the order passed by the Income Tax Appellate Tribunal, Ahmedabad 'B' Bench dated 15th June, 2018, for the assessment year 2011-12.- The substantial question of law was whether the Tribunal was justified in remanding the matter to the CIT(A) for fresh adjudication.Assessing Officer’s Findings:- The assessee-trust collected admission fees of Rs. 1,52,00,000/- and credited it directly to the balance sheet as a corpus donation without routing it through the income and expenditure account.- The Assessing Officer treated these receipts as revenue receipts instead of capital and disallowed the deduction under Section 11(1)(d) of the Act.- The registration under Section 12AA of the Act was cancelled by the DIT(E), Ahmedabad, on 16th March 2011.CIT(A)’s Decision:- The CIT(A) dismissed the appeal filed by the assessee, confirming the addition made by the Assessing Officer.- The appeal was decided ex-parte as the assessee failed to appear despite multiple notices.Appellate Tribunal’s Decision:- The Tribunal remanded the matter to the CIT(A) for fresh adjudication, noting that the proceedings before the CIT(A) were ex-parte and the assessee had no opportunity to present his case.- The Tribunal observed that the Chartered Accountant did not handle the matter properly, and the assessee assured to present his case if given another opportunity.Revenue’s Argument:- The revenue contended that the Tribunal erred in remanding the matter, asserting that the CIT(A) followed the principles of natural justice by issuing multiple notices.- The revenue argued that the Tribunal should have decided the appeal on its own merits instead of remanding it.Assessee’s Argument:- The assessee argued that the Tribunal acted within its discretion to provide an opportunity for a fair hearing and that no substantial question of law was involved.High Court’s Analysis:- The High Court noted that the CIT(A) made a decision on merits after issuing multiple notices to the assessee.- The Court emphasized that the order passed by the CIT(A) could not be termed ex-parte as the assessee was given ample opportunity to present his case.- The High Court criticized the Tribunal for remitting the matter without good reason, leading to unnecessary delays and prejudice to the revenue.Precedent:- The High Court referred to a Coordinate Bench’s decision in Principal Commissioner of Income Tax-3 vs. Ashokji Chanduji Thakor, highlighting that remand orders should not be passed casually and without cogent reasons.- The Supreme Court’s observation in Ashwinkumar K. Patel vs. Upendra J. Patel was cited, emphasizing that remand orders should be avoided if the appellate authority can decide the matter on its own merits.Conclusion:- The High Court concluded that the Tribunal's order to remand the matter was not sustainable in law.- The appeal was allowed, and the Tribunal was directed to hear the appeal afresh and decide it on its own merits after giving an opportunity of hearing to both parties.Final Order:- The High Court quashed the Tribunal’s order and directed the Tribunal to restore the appeal to its original file and decide it on its own merits.