NAJMA BEGAM,AURAIYA V. .J.O., A.C.I.T., WARD-2(1)(5), ORAI

ITA 19/AGR/2022

AI Insights

The case involves Najma Begam, who operates a petrol pump and filed her income tax return for the assessment year 2019-20, declaring an income of Rs. 5,25,460. The return was processed by the Centralized Processing Center (CPC), which added Rs. 1,70,414 to her income due to an incorrect claim related to disallowed expenditures. The CIT(Appeals) dismissed her first appeal ex-parte due to non-compliance with notices, without addressing the merits of the case. Aggrieved by this decision, Najma Begam appealed to the ITAT, which found that the CIT(Appeals) had not adjudicated the issues on merits and thus remanded the case back for a fresh decision.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 474813 (ITAT-AGRA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-12-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2019-2020
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHAILENDRA SRIVASTAVA
• Keywords: Set aside; Opportunity of being heard; Non compliance
• Section: 143(1); 139(1); 44AB

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL AGRA (SMC) BENCH, AGRA BEFORE: SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ITA No.19/Agr/2022 Assessment Year: 2019-20 Najma Begam, 0,Pata Road, Phaphund Auriya-206247, U.P. PAN: AMMPB8145P v. Assistant Director of Income Tax,CPC, Bengaluru-560500 (The J.O., ACIT, Ward-2(1)(5) Auriya, U.P. (Appellant) (Respondent) Assessee by :None Revenue by : Sh. Shailendra Srivastava, Sr. DR Date of hearing : 26.12.2024 Date of Pronouncement : 26.12.2024 ORDER This appeal in ITA No. 19/Agr/2022 for the assessment year 2019-20 has arisen from the appellate order dated 07.01.2022 (DIN& Order No. ITBA/NFAC/S/250/2021-22/1038518435(1)) passed by learned Commissioner of Income-tax(Appeals),NFAC, Delhi,which in turnhas arisen from the intimation/order dated 26.05.2020 passed by ITA No. 19/Agr/2022 2 Centralized Processing Center(CPC), Bengaluruu/s. 143(1) of the Income-tax Act, 1961. 2. Brief facts of the case are that the assessee is engaged in running of petrol pump ,and dealing in Petrol, Diesel and Lubes. The assessee filed her return of income declaring income of Rs. 5,25,460/- , on 29.10.2019. The said return of income was filed within extended due date for filing original return of income i.e.31.10.2019. The said return of income was processed by CPC u/s 143(1) vide intimation/order dated 26.05.2020, wherein Rs.1,70,414/- was added to the income of the assessee u/s 143(1)(1)(a)(iv) read with 143(1)(a)(ii), on account of incorrect claim filed by the assessee as the said amount of expenditure was mentioned by auditors in the Annexure to Form No. 3CD to bedisallowed but the same were not disallowed by the assessee in its return of income while computing income chargeable to income-tax. Thus, the CPC assessed the income of the assessee at Rs. 6,95,873/- against returned income of Rs. 5,25,460/-. ITA No. 19/Agr/2022 3 3. Aggrieved, the assessee filed first appeal with ld. CIT(Appeals). The Ld. CIT(Appeals) issued as many as four notices, but there was no compliance from the assessee. The Ld. CIT(Appeals) dismissed the appeal of the assessee ex-parte in limine without deciding the issues arising in the appeal on merits, by upholding the addition of Rs.170,414/- as was made by the AO, towards disallowance of expenditure claimed by the assessee towards penal charges paid to HPCL. 4. Aggrieved, the assessee filed second appeal with the Tribunal, and None appeared on behalf of the assessee when this appeal was called for hearing before the SMC Bench.Ld. Sr. DR, Shri Shailendra Srivastava appeared on behalf of Revenue, and relied upon the order of ld. CIT(Appeals). The ld. Sr. DR fairly submitted that the matter can be restored back to the file of ld. CIT(A) for fresh adjudication, as the ld. CIT(A) has not decided the issues arising in the appeal on merits. It was submitted that the assessee is equally responsible for its woes as the assessee did not comply with any of the four notices issued by ld.CIT(A) during the first appellate proceedings. ITA No. 19/Agr/2022 4 5. After hearing ld. Sr. SR and perusing the material on record, I have observed that the assessee is engaged in running petrol pump. The assessee deals in Petrol, Diesel and Lubes. I have observed that the assessee filed her return of income u/s. 139(1) for the impugned assessment year, declaring income of Rs.5,25,460/. The said return of income was processed by CPC u/s 143(1). The additions to the tune of Rs. 1,70,414/- were made by CPC u/s 143(1) to the income of the assessee on account of incorrect claim and inconsistency between disallowance of expenditure to the tune of Rs. 1,70,414/- as reported by the auditor in Annexure to Form No. 3CD in the tax-audit report u/s 44AB , which expenditure was not disallowed by the assessee in the return of income filed with Revenue. The assessee filed first appeal with ld. CIT(A), wherein the assessee claimed in Grounds of Appeal filed before ld. CIT(A) that these charges were levied in the normal course of business and not for any violation of law, and hence these are not hit by provisions of Section 37. The ld. CIT(A) issued as many as four notices during appellate proceedings, but the assessee did not comply with the said notices. The ld. CIT(A) dismissed the appeal of the assessee ex-parte in limine without ITA No. 19/Agr/2022 5 deciding the issues arising in the appeal on merits, mainly on account of non compliance by the assessee to the four notices issued by ld. CIT(A). I have observed that the ld. CIT(Appeals) has not decided the appeal on merits, and the appeal of the assessee was dismissed ex- parte in limine without deciding the issues arising in the first appeal on merit in accordance with law by simply upholding the assessment order, mainly on the grounds of non-compliance by the assessee to the notices issued by ld. CIT(A).The ld. CIT(A) is required and obligated to pass appellate order in compliance with the provisions of section 250(6), as ld. CIT(A) is required to pass reasoned and speaking order on merits in accordance with law. Reference is drawn to provisions of Section 250(6), wherein ld. CIT(A) has to state point for determination, his decision and reasons thereof. The ld. CIT(A) even did not made any enquiry with HPCL as to the nature of penal charges levied to the tune of Rs. 1,70,414/-. Reference is drawn to provisions of Section 250(4).The appellate order passed by ld. CIT(A) is subject to further appeal with ITAT u/s 253. The appellate order passed by ITAT is subject to further appeal before Hon’ble High Court u/s 260A. The judgment and order passed by Hon’ble High Court is ITA No. 19/Agr/2022 6 also subject to challenge before Hon’ble Supreme Court. Thus, the appellate order passed by ld. CIT(A) is not a final order, as it is subject to challenge before higher appellate authority. Thus, Reasons which weighed in the minds of the adjudicating authority while adjudicating appeal on merits of the issues are cardinal as the higher appellate authority can then adjudicate appeal on the issues arising in appeal before them, based on decision and reasoning of ld. CIT(A) in deciding the issues. If the ld. CIT(A) simply dismiss the appeal merely because the assessee did not comply with the notices issued by ld. CIT(A) in limine without adjudicating issues arising in the appeal on merits , such order is not sustainable in the eyes of law keeping in view provisions of Section 250(6) , and also higher appellate authorities will be deprived to see what weighed in the mind of the ld. CIT(A) while adjudicating appeal as it will be an order passed without reasoning on the issues on merits . The appellate order of the CIT(A) is clearly in violation of section 250(6) of the Act and liable to be set aside. Merely stating the assessment order passed by AO is upheld, and that the assessee has not submitted details/documents is not sufficient. The ld. CIT(A) is not toothless as his powers are co- ITA No. 19/Agr/2022 7 terminus with the powers of the AO, which even includes power of enhancement. It is equally true that the assessee also did not complied with the notices issued by ld. CIT(A) and did not file the requisite details/documents to support his contentions. Thus, the assessee is equally responsible for its woes. Keeping in view the entire factual matrix as culled out above in the preceding para’s of this order, it will be fair to both the parties as well in the interest of justice, that the appellate order of ld. CIT(Appeals) be set aside and the matter be remanded back to the file of ld. CIT(Appeals) for fresh adjudication after giving proper opportunity of being heard to both the parties w.r.t. the issues arising in the appeal .The assessee is directed to comply with the notice issued by ld. CIT(Appeals) during the appellate proceedings in set aside remand proceedings, otherwise ld. CIT(A) shall be free to decide the appeal ex-parte on merits in accordance with law, after complying with provisions of Section 250(6). I clarify that I have not commented on merits of the issues. Thus, the appellate order passed by ld. CIT(A) is set aside and matter is restored back to the file of ld. CIT(A) for fresh adjudication. I order accordingly. ITA No. 19/Agr/2022 8 6. In the result, appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open court on 26.12.2024 on the conclusion of hearing in the presence of ld. Sr. DR Sd/- (RAMIT KOCHAR) ACCOUNTANT MEMBER Dated: 26/12/2024 Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT Assistant Registrar ITAT Agra "