2024 (8) TMI 546 - AT - Income Tax

Tribunal Emphasizes Fair Hearing, Remits Case for Fresh Adjudication, Ensuring Procedural Fairness and Assessee Rights.

West Coast Paper Mills Ltd. Versus DCIT, CIR-1 (3) (1), Mumbai

The Tribunal allowed the appeal, setting aside the impugned order by CIT(A) and remitting the case for fresh adjudication on merit. It emphasized the need ... Validity of order passed by CIT(A) u/s. 250 wherein dismissed assessee’s appeal on the ground that the jurisdictional AO has granted relief by issuing rectification order u/s. 154 - validity of Rectification order u/s. 154 HELD THAT:- As noticed that during the pendency of first appeal assessee filed a clarification letter dated 09.11.2023 before CIT(A), wherein it was submitted that on the condition of grant of relief of rectification of mistakes by JAO u/s. 154, the issues which were part of the rectification proceedings would only be treated infructuous if decided by JAO. As without waiting for the rectification order and without considering the remaining grounds on merit, CIT(A) has dismissed assessee’s appeal as infructuous under a belief that JAO has passed rectification order in respect of all the issues. Assessee has a legal right under para 5(i)(ii) of the faceless appeal scheme 2021 for having a notice for submitting its response in support of the grounds before the first appellate authority/NFAC. In the circumstances, we deem it appropriate to remit the matter back to the file of learned CIT(A) for denovo adjudication on merit after taking assessee’s aforesaid details into consideration. We further direct the assessee to be diligent and cooperative in attending the hearings and making submissions before the first appellate authority for the expeditious and effective disposal of the appeal. Issues:Appeal against dismissal of appeal by CIT(A) based on rectification order u/s. 154 of the Income-tax Act, 1961 for A.Y. 2020-21.Analysis:The appeal was filed against the order passed by the Commissioner of Income-tax (Appeals)/ National Faceless Appeal Centre (NFAC) dismissing the assessee's appeal on the grounds that the jurisdictional Assessing Officer (AO) had granted relief through a rectification order u/s. 154 of the Income-tax Act, 1961. The assessee had e-filed the return of income for the relevant assessment year, which was subsequently processed and selected for scrutiny. The AO made additions and assessed the total income. The assessee then filed an appeal before the CIT(A) challenging the assessment order. During the pendency of the first appeal, the assessee moved a rectification petition before the AO for certain issues. The CIT(A) dismissed the appeal as infructuous without considering the remaining grounds on merit. The assessee contended that the CIT(A) misunderstood the information submitted and erred in dismissing the appeal prematurely. The Tribunal noted that the CIT(A) did not decide the issues outside the scope of rectification on merit. The Tribunal remitted the matter back to the CIT(A) for fresh adjudication on merit, emphasizing the assessee's right to present its case and cooperate during the proceedings. The Tribunal directed the CIT(A) to ensure the principles of natural justice are observed and clarified that no observation on the merits of the case was made. Consequently, the appeal was allowed, the impugned order was set aside, and the case was restored to the CIT(A) for statistical purposes.This judgment highlights the importance of considering all grounds raised by the assessee in an appeal and ensuring that issues outside the scope of rectification are decided on merit. It underscores the need for procedural fairness, diligent participation, and cooperation from the parties involved in the appellate process. The Tribunal's decision to remit the matter back to the CIT(A) for denovo adjudication serves the interest of justice and upholds the principles of natural justice. The judgment reiterates the significance of adhering to legal procedures and providing parties with a fair opportunity to present their case before the appellate authority.