ITAT sets aside CIT(A)'s ex-parte dismissal, finds reasonable cause despite non-compliance with notices under Section 92BA

The ITAT PUNE set aside the CIT(A)'s ex-parte dismissal of the assessee's appeal. Despite non-compliance with notices, the tribunal found reasonable cause existed. The CIT(A) failed to discuss merits regarding exclusion of Specified Domestic Transactions under Section 92BA by Finance Act 2017. Citing precedent, the tribunal held CIT(A) cannot dismiss appeals for non-prosecution and must examine all issues from the impugned order. The matter was remanded for fresh adjudication with proper hearing opportunity.

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Issues:
Appeals against orders of Commissioner of Income Tax(Appeal) for A.Y. 2013-14 and 2014-15, non-compliance with notices, Transfer Pricing addition, exclusion of Specified Domestic Transactions u/sec.92BA by Finance Act 2017, dismissal of appeal for non-prosecution, denovo adjudication by CIT(A).

Analysis:
The Assessee filed two appeals against separate orders of the Commissioner of Income Tax(Appeal) for A.Y. 2013-14 and 2014-15. The appeals were consolidated due to a common issue. The Assessee raised various grounds of appeal, including non-compliance with notices issued by the CIT(A) and Transfer Pricing additions. The Assessee contended that they did not receive the notices as the business had closed down, and there was no malafide intention in non-compliance. The Assessee requested an opportunity to present their case. The Departmental Representative agreed that the CIT(A) did not discuss the merits of the additions.

The Tribunal noted the non-compliance before the CIT(A) but found a reasonable cause for it. The CIT(A) failed to discuss the merits of the case, as required by Section 250(6) of the Act. The Assessee argued that Specified Domestic Transactions were excluded by the Finance Act 2017, which was not considered by the CIT(A). Citing a Bombay High Court case, the Tribunal emphasized that the CIT(A) must decide appeals on merit and cannot dismiss appeals for non-prosecution. Therefore, the Tribunal set aside the CIT(A)'s order for denovo adjudication, directing a fresh hearing and consideration of the Assessee's case.

Consequently, the Tribunal allowed the Assessee's appeals for statistical purposes, granting relief in both cases. The Tribunal applied the decision from the lead case to a related appeal, allowing the grounds raised by the Assessee. The orders were pronounced in open court on 22nd October 2024, providing a comprehensive resolution to the issues raised in the appeals.

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