2024 (3) TMI 528 - AT - Income Tax

CIT(A) cannot dismiss appeals for non-prosecution without considering merits under Section 251(1)(a) and (b)

Gramin Sewa Sahakari Samiti Versus The Income Tax Officer, Ward-2 (1), Bhilai (C.G.)

The ITAT Raipur held that CIT(A) erred in dismissing the appeal for non-prosecution without considering merits. Despite the assessee's failure to appear ... Dismissal of the appeal by CIT(Appeals) for non-prosecution - assessee despite having been afforded sufficient opportunity on four occasions had failed to put up an appearance before him, therefore, the CIT(Appeals) dismissed the appeal of the assessee without adverting to the merits of the case - HELD THAT:- CIT(A) had failed to apply his mind to the issues which did arise from the impugned order and was assailed by the assessee before him. We are unable to persuade to accept the manner in which the appeal of the assessee society has been disposed off by the CIT(Appeals). 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. 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) remains under a statutory obligation to apply his mind to all the issues which arises from the impugned order before him. As per mandate of law the CIT(Appeals) is not vested with any power to summarily dismiss the appeal for non-prosecution. The aforesaid view is fortified by the judgment of Premkumar Arjundas Luthra (HUF) (2016 (5) TMI 290 - BOMBAY HIGH COURT]. As we set-aside this order with a direction to dispose off the same on merits - Appeal filed by the assessee society is allowed for statistical purposes. Issues:The judgment involves the following Issues:1. Disallowance of interest income and deduction under Sec. 80P.2. Completion of appellate proceedings without providing sufficient opportunity.3. Dismissal of appeal by CIT(Appeals) for non-prosecution.Issue 1: Disallowance of Interest Income and Deduction under Sec. 80P:The appellant, a cooperative society engaged in the purchase of agricultural implements, seeds, livestock, etc., filed its return for A.Y. 2020-21 declaring income of Nil after claiming deduction under Sec. 80P. The AO, in the original assessment, disallowed the deduction under Sec. 80P, resulting in the determination of the society's income at Rs. 28,32,939. The CIT(Appeals) upheld this decision due to the appellant's failure to provide details or submissions, leading to dismissal of the appeal without considering the merits of the case. The order passed by the AO disallowing the deduction was upheld based on the appellant's non-pursuance of the appeal and lack of response to notices, resulting in no substantiation against the addition made by the AO.Issue 2: Completion of Appellate Proceedings without Providing Sufficient Opportunity:The appellant was granted multiple opportunities for hearings by the CIT(Appeals) but failed to respond or provide submissions. Despite the notices issued and served via e-mail, the appellant did not participate in the proceedings, leading to the dismissal of the appeal by the CIT(Appeals) for non-prosecution. Various judicial pronouncements were cited to support the authority's power to dismiss cases for default in the absence of the party concerned. The CIT(Appeals) justified the dismissal based on the appellant's persistent absence and lack of interest in prosecuting the appeal.Issue 3: Dismissal of Appeal by CIT(Appeals) for Non-Prosecution:Upon review, the judicial member found the CIT(Appeals)'s decision to dismiss the appeal for non-prosecution unacceptable. It was noted that the CIT(Appeals) failed to apply his mind to the issues raised by the appellant and summarily dismissed the appeal without considering the merits. Citing relevant sections of the Act and a judgment of the Hon'ble High Court of Bombay, it was emphasized that the CIT(Appeals) is obligated to dispose of appeals on merit and cannot dismiss them for non-prosecution. Therefore, the order of the CIT(Appeals) was set aside, directing a de novo disposal of the appeal on merits with a reasonable opportunity for the appellant to be heard.The appeal filed by the assessee society was allowed for statistical purposes, overturning the dismissal by the CIT(Appeals) and directing a fresh consideration of the case on its merits.