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

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 on four occasions, the tribunal ruled that CIT(A) has statutory obligation under Sec.251(1)(a) and (b) to apply mind to all issues arising from the impugned order. The tribunal emphasized that CIT(A) lacks power to summarily dismiss appeals for non-prosecution and must dispose appeals on merit. The order was set aside with direction to decide on merits. Appeal 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.

---