2026 (2) TMI 858 - AT - Income Tax

Obligation to decide appeals on merits - appellate authority cannot dismiss as withdrawn; appeal restored and delay condoned.

Where an appeal is filed under Section 246A the first appellate authority is obliged under Section 251(1)(a) to decide the appeal on merits and may not ... Powers of the Commissioner (Appeals) u/s 251 - CIT(A)'s duty to decide appeals on merits - dismissing assessee's appeal in limine without deciding on merit - assessee has filed an application seeking withdrawal of the appeal - HELD THAT:- As decided in Deekay Gears [2019 (2) TMI 1063 - ITAT MUMBAI] the assessee has filed an application seeking withdrawal of the appeal, is obliged and duty bound under the Act to decide the appeal on merits within the parameters of section 251(1)(a) of the Act. Thus, following the ratio laid down in the aforesaid decision, I have to hold that while dismissing assessee's appeal in limine without deciding on merit. learned Commissioner (Appeals) has not exercised his power in consonance with the provisions of section 251(1)(a) of the Act. Accordingly, inclined to set-aside the impugned order of the learned Commissioner (Appeals). However, since, the issues raised in the said appeal have not been decided on merit, I restore all the issues raised in the present appeal to the learned Commissioner (Appeals) for de novo adjudication Consequently, the appeal filed by the assessee before the learned Commissioner (Appeals) is restored back to its original position. Thus, we set-aside the order of CIT(A) to CIT(A) for denovo adjudication. CIT(A) shall decide the appeal on merits. CIT(A) shall provide opportunity to the Assessee. Appeal of the Assessee is allowed for statistical purpose. Issues: (i) Whether the Commissioner of Income-tax (Appeals) could dismiss the appeal as withdrawn and refuse to decide the appeal on merits; (ii) Whether the delay in filing the appeal before the Tribunal should be condoned.Issue (i): Whether the first appellate authority could dismiss the appeal as withdrawn and thereby avoid adjudication on merits.Analysis: The Tribunal examined Section 251 and related provisions of the Income-tax Act, 1961 together with binding judicial precedent. The authoritative decisions of the Bombay High Court and coordinate benches establish that once an appeal is preferred under Section 246A the CIT(A) has the statutory duty and power under Section 251(1)(a) to decide the appeal by confirming, reducing, enhancing or annulling the assessment and must apply his mind to issues arising from the impugned order; consequently the CIT(A) is not empowered to dismiss an appeal in limine for withdrawal or non-prosecution without deciding on merits. The Tribunal followed these precedents and applied them to the facts, noting the affidavit and absence of clarity on the purported withdrawal.Conclusion: The order of the CIT(A) dismissing the appeal as withdrawn and not deciding on merits is set aside; the appeal is restored to the CIT(A) for de novo adjudication and the assessee is to be afforded an opportunity of being heard (decision in favour of the assessee).Issue (ii): Whether the delay in filing the appeal before the Tribunal is excusable and should be condoned.Analysis: The Tribunal considered the affidavit explaining delay, change of consultants, lack of notice of the earlier order, and related bona fide circumstances. On the facts presented the Tribunal found sufficient and reasonable cause for the delay and exercised its discretion to condone the delay.Conclusion: The delay in filing the appeal before the Tribunal is condoned (decision in favour of the assessee).Final Conclusion: The Tribunal set aside the CIT(A)'s order and restored the matters to the CIT(A) for fresh adjudication on merits, condoned the delay in filing the appeal before the Tribunal, and allowed the grounds raised for statistical purposes.Ratio Decidendi: Where an appeal is filed under Section 246A of the Income-tax Act, 1961 the first appellate authority is obliged under Section 251(1)(a) to decide the appeal on merits and cannot dismiss it in limine for withdrawal or non-prosecution.