KANWAR UDAY SINGH,SHIMLA V. INCOME TAX OFFICER, SHIMLA WARD

ITA 910/CHANDI/2025

AI Insights

The case involves an appeal by Kanwar Uday Singh Hotel Woodville Palace against the order of the Commissioner of Income Tax (Appeals), which upheld various disallowances and additions made by the Income Tax Officer, Shimla, for the assessment year 2014-15. The Tribunal found that the CIT(A) had dismissed the appeal ex-parte without examining the merits, solely based on the non-appearance of the assessee. The Tribunal emphasized the need for the CIT(A) to decide issues on merits and not merely for procedural lapses, citing principles of natural justice and judicial precedents.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 787189 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-11-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 14-07-2025
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MOATENLA
• Assessee Lawyers: VISHAL MOHAN
• Keywords: Set aside; Opportunity of being heard; Business expenditure; Corroborative evidences; Principle of natural justice
• Section: 143(3)

Judgement Text

"आयकर अपीलीय अिधकरण,चǷीगढ़ Ɋायपीठ “बी” , चǷीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “B”, CHANDIGARH HEARING THROUGH: HYBRID MODE ŵी लिलत क ुमार, Ɋाियक सद˟ एवं ŵी मनोज क ुमार अŤवाल, लेखा सद˟ BEFORE: SHRI. LALIET KUMAR, JM & SHRI. MANOJ KUMAR AGGARWAL, AM आयकर अपील सं./ ITA No. 910 /Chd/2025 िनधाŊरण वषŊ / Assessment Year : 2014-15 Kanwar Uday Singh Hotel Woodville Palace, Raj Bhawan Road, Chotta Shimla, H.P. Shimla, Himachal Pradesh-171002 बनाम The ITO Shimla ˕ायी लेखा सं./PAN NO: AULPS3550Q अपीलाथŎ/Appellant ŮȑथŎ/Respondent िनधाŊįरती की ओर से/Assessee by : Shri Vishal Mohan, Sr. Advocate with Shri Parveen Sharma, Advocate (Virtual Mode) राजˢ की ओर से/ Revenue by : Smt. Moatenla, Sr. DR सुनवाई की तारीख/Date of Hearing : 19/11/2025 उदघोषणा की तारीख/Date of Pronouncement : 19/11/2025 आदेश/Order PER LALIET KUMAR, J.M: This appeal is filed by the assessee against the order dated 18.07.2024 passed by the Ld. Commissioner of Income Tax (Appeals), NFAC, Delhi, under section 250 of the Income-tax Act, 1961, for the assessment year 2014-15. The said appellate order confirms the assessment passed u/s 143(3) dated 14.12.2016 by the ITO Ward-1, Shimla. 2. At the outset the Registry has pointed out that the present appeal is barred by limitation by 287 days for which the Ld. Counsel for the assessee filed an application alongwith affidavit for condonation of delay. 3. Ld. Sr. DR opposed the condonation of delay. 4. After considering the condonation application and affidavit filed by the assessee in the present appeal, we condone the delay for which sufficient cause is shown, and admit the appeals for adjudication. Printed from counselvise.com 2 (i) That in the facts and circumstances of the case, the learned Commissioner of Income Tax (Appeals) was not justified in passing an ex parte order without considering the detailed paper book which had been submitted during the course of personal hearing before the learned Commission of Income Tax (Appeals), Shimla camp at Solan. The order has been passed without affording a reasonable opportunity of being heard to the appellant and as such the same is not sustainable in the eyes of law. (ii) That in the facts and circumstances of the case, the learned Commissioner of Income Tax (Appeals) is not justified in upholding the disallowance of Rs.5,66,000/- by assessing the personal expenses of the appellant at Rs.9,26,000/-out of the expenses booked in respect of the hotel business of the assessee/appellant. The said addition is absolutely illegal and not sustainable in the eyes of law. iii) That in the facts and circumstances of the case, the learned Commissioner of (Appeals) is not justified in upholding the estimation of agricultural income of the appellant at Rs. 40,00,000/- out of the agricultural income of Rs. 64,98,375/- and upholding the rest of the agricultural income as income from other sources. iv) That in the facts and circumstances of the case, learned Commissioner of Income Tax (Appeals) is not justified in upholding the estimation of income from Stone Crusher at Rs. 6,00,000/- and thereby upholding the addition of Rs.3,28,000/- made to the taxable income of the assessee/appellant. v) That order of the learned Commissioner of Income Tax (Appeal) is bad in law and facts. 5. Brief facts of the case are that the assessee filed a return declaring income of Rs.15,84,810 and agricultural income of Rs.64,98,375. According to the record, the Assessing Officer made the following adjustments in the scrutiny assessment order dated 14.12.2016:  Disallowance of personal expenditure : Rs.5,66,000  Addition by treating agricultural income as income from other sources : Rs.24,98,375  Estimation of income from stone-crusher business : Rs.3,28,000 6. Aggrieved, the assessee filed an appeal before the CIT(A). However, despite multiple notices issued on 02.02.2020, 12.02.2020, 23.12.2020, 01.03.2024 and 02.07.2024, the assessee did not make any compliance. The CIT(A) therefore dismissed the appeal ex parte and upheld the assessment order purely for want of prosecution, without entering into the merits of the additions. 7. Against the order of the Ld. CIT(A), the assessee preferred in appeal before the Tribunal. 8. During the course of hearing the Ld. AR submitted that non-appearance before the CIT(A)/NFAC was not deliberate or intentional. He contended that the assessee had substantial evidence relating to agricultural operations, books of the Printed from counselvise.com 3 hotel business, vouchers, and details of stone crusher income, which could not be filed earlier due to circumstances beyond control. 8.1 It was submitted that the CIT(A) erred in dismissing the appeal without examining the grounds on merits and without considering the detailed statement of facts and material already forming part of the appeal record. Reliance was placed on principles of natural justice and judicial precedents requiring matters to be decided on merits. 8.2 The Ld AR prayed that the matter may be remanded back to the CIT(A) for a fresh adjudication after giving adequate opportunity. 9. Per contra, the Ld. DR supported the order of the Ld. CIT(A) and argued that multiple opportunities were provided. Since the assessee failed to respond, the CIT(A) was justified in drawing adverse inference. However, the Ld. DR fairly submitted that if the Tribunal considers it appropriate in the interest of justice, the matter may be restored to the file of the Ld. CIT(A) with directions. 10. We have heard both parties and examined the materials on record, including the order passed by the Ld. CIT(A) under section 250 (NFAC) and the assessee’s Form-35 grounds contained in the uploaded documents. The Ld. CIT(A) has dismissed the appeal ex-parte solely on the ground that the assessee did not respond to notices. The operative portion of the order uses adverse-inference jurisprudence but does not adjudicate the grounds on merits, nor does it analyse the evidence or submissions that the assessee claims were available. This constitutes a denial of an effective appellate remedy. 10.1 It is well settled that the first appellate authority cannot dismiss an appeal merely for non-appearance. The CIT(A) is statutorily obligated to decide the issues on merits, as held by multiple High Courts and the Supreme Court. 10.2 Considering that substantial additions were made and the assessee has expressed willingness to produce all documents, we are satisfied that one more opportunity must be granted in the interest of substantive justice. We also take judicial notice that in faceless proceedings, technical or systemic communication difficulties often hamper compliance. Therefore, we deem it fit to set aside the ex- parte order and restore the matter to the file of the Ld. CIT(A) for fresh adjudication. Printed from counselvise.com 4 10.3 The Ld. CIT(A) shall:  Provide adequate opportunity to the assessee;  Permit filing of all supporting evidence regarding agricultural income, business expenses, and stone-crusher accounts;  Consider the submissions and documentary material judiciously;  Pass a speaking and reasoned order in accordance with law. 10.4 The assessee is directed to appear before the Ld. CIT(A) on the appointed date and shall not seek unnecessary adjournments. 11. The impugned order of the Ld. CIT(A) is set aside, and the matter is restored to the file of the Ld. CIT(A) for fresh adjudication. 12. In the result, appeal of the Assessee is allowed for statistical purposes. Order pronounced in the open Court on 19/11/2025 Sd/- Sd/- मनोज क ुमार अŤवाल लिलत क ुमार (MANOJ KUMAR AGGARWAL) (LALIET KUMAR) लेखा सद˟/ ACCOUNTANT MEMBER Ɋाियक सद˟ /JUDICIAL MEMBER AG आदेश की Ůितिलिप अŤेिषत/ Copy of the order forwarded to : 1. अपीलाथŎ/ The Appellant 2. ŮȑथŎ/ The Respondent 3. आयकर आयुƅ/ CIT 4. आयकर आयुƅ (अपील)/ The CIT(A) 5. िवभागीय Ůितिनिध, आयकर अपीलीय आिधकरण, चǷीगढ़/ DR, ITAT, CHANDIGARH 6. गाडŊ फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar Printed from counselvise.com "