2023 (1) TMI 1086 - AT - Income Tax

Tribunal sets aside CIT(A)'s order, directs fresh adjudication on all grounds

The Tribunal allowed the appeal for statistical purposes, setting aside the CIT(A)'s order and directing a fresh adjudication on all grounds, including ... Validity of Assessment as notice u/s.143(2) issued being beyond the prescribed time limit of 6 months from the end of the financial year - CIT-A dismissed the appeal of the assessee for non-prosecution - assessee had failed to put up an appearance in the course of hearing of the appeal, therefore, the same was disposed off on an ex-parte basis - HELD THAT:- CIT(Appeals) had disposed off the appeal on the basis of a non-speaking order. As it is not open for the CIT(A) to summarily dismiss appeal on account of non-prosecution of the same by the assessee. Rather a perusal of Sec.251(1)(a) and (b), as well as the “Explanation” to Sec. 251(2) reveals that the CIT(A) 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(A) is not vested with any power to summarily dismiss an appeal for non-prosecution - See PREMKUMAR ARJUNDAS LUTHRA (HUF) [2016 (5) TMI 290 - BOMBAY HIGH COURT] We are not being able to persuade to subscribe to the dismissal of the appeal by the CIT(A) for non-prosecution, therefore, “set-aside” the same to his file with a direction to dispose off the same on merits. CIT(A) shall afford a reasonable opportunity of being heard to the assessee in the course of the de- novo appellate proceedings. Additional ground of appeal raised by the assessee are allowed for statistical purpose. Issues Involved:1. Validity of the jurisdiction assumed by the A.O based on the notice issued under Section 143(2) of the Income-tax Act.2. Addition of Rs.50,11,781/- on account of Long Term Capital Gain (LTCG).3. Allowance of indexed cost of acquisition and indexed cost of development.Detailed Analysis:1. Validity of Jurisdiction Assumed by the A.O:The assessee raised an additional ground challenging the validity of the jurisdiction assumed by the A.O based on the notice issued under Section 143(2) of the Income-tax Act. The Tribunal admitted this ground, noting that it involved a pure question of law requiring no further verification of facts. The assessee argued that the jurisdictional A.O (ITO-3(1), Raipur) issued the notice u/s 143(2) beyond the prescribed time limit, rendering the assessment order invalid. The Tribunal referenced the Supreme Court judgments in National Thermal Power Company Ltd. Vs. CIT and ACIT & Anr. Vs. Hotel Blue Moon, which support the necessity of a valid notice u/s 143(2) for a valid assessment. The Tribunal directed the CIT(A) to address this issue during the set-aside proceedings.2. Addition of Rs.50,11,781/- on Account of LTCG:The assessee contested the addition of Rs.50,11,781/- made by the A.O on account of LTCG, arguing that the CIT(A) confirmed the addition without proper opportunity of hearing and issued a non-speaking order. The Tribunal noted that the CIT(A) disposed of the appeal ex-parte and failed to address the specific ground of appeal regarding the reworking of LTCG. The Tribunal emphasized that the CIT(A) is obligated to dispose of appeals on merits and cannot summarily dismiss them for non-prosecution. Citing the Bombay High Court judgment in CIT Vs. Prem Kumar Arjundas Luthra (HUF), the Tribunal set aside the CIT(A)'s order and directed a fresh adjudication on merits, ensuring a reasonable opportunity of being heard is provided to the assessee.3. Allowance of Indexed Cost of Acquisition and Indexed Cost of Development:The assessee argued that the CIT(A) failed to adjudicate the ground regarding the allowance of indexed cost of acquisition and development, resulting in an addition of Rs.7,97,401/-. The Tribunal, having already set aside the CIT(A)'s order for a fresh adjudication on merits, included this issue in the directions for the set-aside proceedings. The Tribunal refrained from dealing with this ground separately, as it was part of the broader issue to be addressed by the CIT(A).Conclusion:The Tribunal allowed the appeal for statistical purposes, setting aside the CIT(A)'s order and directing a fresh adjudication on all grounds, including the validity of the jurisdiction assumed by the A.O and the reworking of LTCG. The CIT(A) is instructed to provide a reasonable opportunity of being heard to the assessee and to address all issues on merits in the de-novo appellate proceedings. Ground of appeal No.3 was dismissed as not pressed. The order was pronounced in open court on January 24, 2023.