SHREE MAHALAKSHMI ENTERPRISES,GURGAON V. NATIONAL FACELESS ASSESSMET CENTRE, GURGAON

ITA 2952/DEL/2024

AI Insights

The case involves Shree Mahalakshmi Enterprises, which appealed against the order of the Commissioner of Income Tax (Appeals), National Faceless Assessment Centre, New Delhi. The appeal was initially dismissed by the CIT(A) for non-prosecution. The appellant contested that the dismissal was unjust as it violated the principles of natural justice and did not consider the merits of the case. The Assessing Officer had previously assessed unexplained cash deposits and other incomes, leading to a significant tax liability. The Tribunal found that the CIT(A) erred in dismissing the appeal without addressing the substantive issues raised, thus restoring the matter for a fresh assessment.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 470453 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-10-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 24-09-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 13-06-2024
• Other Referred Cases: CIT vs. Premkumar Arjundas Luthra HUF, MARC Laboratories Ltd. in ITA No.2731, 2732, 2733, 2730, 2734 & 2735/DEL/ 2022
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANINDER KAUR
• Assessee Lawyers: D.C. GARG
• Keywords: Set aside; Principle of natural justice
• Section: 148; 142(1); 69A

Judgement Text

"ITA No.2952/Del/2024 P a g e | 1 IN THE INCOME TAX APPELLATE TRIBUNAL “G” BENCH, NEW DELHI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER AND SHRI AVDHESH KUMAR MISHRA, ACCOUNTANT MEMBER ITA No. 2952/Del/2024 (Assessment Year 2017-18) Shree Mahalakshmi Enterprises, VPO- Bhora Kalan, Distt, Gurgaon, Haryana – 122413 Vs. Assessing Officer, National Faceless Assessment Centre, Gurgaon - 122022 PAN: ABZFS8582P Appellant Respondent Appellant by: Shri D.C. Garg, C.A. Respondent by: Ms. Maninder Kaur, Sr. D.R. Date of Hearing 24.09.2024 Date of Pronouncement 24.10.2024 O R D E R PER AVDHESH KUMAR MISHRA, AM: This appeal filed by the assessee for the Assessment Year (hereinafter, the ‘AY’) 2017-18 is directed against the order dated 04.06.2024 passed by the Commissioner of Income Tax (Appeal), National Faceless Assessment Centre (NFAC), New Delhi [hereinafter, the CIT(A)]. ITA No.2952/Del/2024 P a g e | 2 2. Following grounds are raised in this appeal: - “1. Learned National Faceless Appeal Centre (NFAC) has grossly erred in dismissing appeal of the Appellant without service of the notice hence violated principles of natural justice. 2. Learned NFAC has grossly erred on the facts of the case as well as at law while disposing off the appeal without considering the merit of the case. 3. Learned NFAC has grossly erred on the facts of the case in disposing off the appeal without appreciating the fact that the reopening was made without conducting any independent inquiry by the Assessing Officer. 4. Learned NFAC has grossly erred on the facts of the case in disposing off the appeal without appreciating the fact that the Partnership firm has already been dissolved and erstwhile partner is running the firm as his proprietary concern. 5. Learned NFAC has grossly erred on the facts of the case in disposing off the appeal without appreciating the fact that the same income has already been offered for taxation in the capacity of proprietary concern, resulting into double taxation on the same income. 6. The Assessee craves leave to add, alter, or delete, all or any of the ground before or at the time of hearing of the matter before Hon'ble Tribunal.” 2.1 In nutshell, the appellant/assessee has challenged the impugned appellate order of the CIT(A) on the reasoning of violation of Principle of Natural Justice and non-adjudication of the grounds appeal on merit. 3. Briefly, the relevant facts giving rise to this appeal are that the appellant/assessee who deposited cash of Rs.1,06,38,000/- during the demonetization period and also received brokerage & commission of Rs.1,200/- did not file any Income Tax Return(hereinafter, the ‘ITR’) of the ITA No.2952/Del/2024 P a g e | 3 relevant year; therefore, the Assessing Officer (hereinafter, the ‘AO’) issued notice under section 148 of the Act for assessing the income which escaped assessment. Thereafter, the AO also issued various notices under section 142(1) of the Act from time to time as mentioned on page 1 and 2 of the Assessment Order which remained un-complied with. However, on 04.12.2021, the appellant/assessee filed its ITR which had been treated as non-est by the AO as detailed on page 2 of the Assessment Order. Since, the appellant/assessee did not file detailed explanation for the cash deposits made during the demonetization period; therefore, the AO treated the cash deposit of Rs.1,06,38,000/- during the demonetization period as unexplained and taxed the same under section 69A of the Act. Further, the AO also taxed the brokerage & commission income of Rs.1,200/-. Consequently, the assessment was completed at income of Rs.1,06,39,200/-. Aggrieved, the appellant/assessee filed appeal before the CIT(A), who dismissed the appeal for non-prosecution. 4. The Ld. AR prayed for setting aside the case before the AO on the reasoning that both the CIT(A) and the AO had decided the case ex-parte. For non-compliance before both lower Authorities, it was submitted that the appellant/assessee was not well versed with the faceless process of assessment and appeal. It was contended that the appellant sought for personal hearing but the same was provided through video conferencing. ITA No.2952/Del/2024 P a g e | 4 5. The Ld. Sr. DR opposed and prayed for dismissal of the appeal on the reasoning that there was no proper justification for non-compliance on the part of the appellant/assessee. It was contended that the appellant/assessee had made tactful non-compliance to avoid investigation. 6. We have heard both the parties and have perused the material available on the record. We find that the Ld. CIT(A) has dismissed the appeal ex-parte for non-prosecution. The Ld. CIT(A) has not adjudicated the case on merits. Moreover, he has not decided each ground of appeal after discussing the issues in detail and his reasons for agreeing with the assessment order. As per provisions of section 250(6) of the Act, the CIT (A) is obliged to dispose of the appeal in writing after stating the points for determination and to then pass an order on each of the points which has arisen for his consideration. The CIT(A) is further obliged to state the reason for his/her decision on each such points for determination. The CIT(A) is duty-bound to dispose of the appeal through a speaking order on merits, on all the points for determination including each ground of appeal. Moreover, it is evident from the perusal of section 251(1)(a), 251(1)(b) and Explanation of section 251(2) of the Act that the CIT(A) is required to apply his/her mind to all the issues which arise from the ITA No.2952/Del/2024 P a g e | 5 impugned order before him/her, whether or not these issues have been raised by the assessee before him/her. 7. Section 251(1)(a) of the Act provides that while disposing of an appeal against assessment order, the CIT(A) shall have the power to confirm, reduce, enhance or annul the assessment. Similarly, the section 251(1) (b) of the Act provides that in disposing of an appeal against an order imposing a penalty, the CIT(A) may confirm or cancel such orders or vary it so as to either to enhance or to reduce the penalty. On cumulative consideration of the provisions of section 250(6) of the Act read with sections 250(4), 250(5), 251(1)(a), 251(1)(b) of the Act and Explanation of section 251(2) of the Act, it is concluded that the CIT(A) is not empowered to dismiss the appeal for non-prosecution of appeal and is obliged to dispose of the appeal on merits. In this regard, it is worth mentioning the finding of the Coordinate Bench in the case of MARC Laboratories Ltd. in ITA No.2731, 2732, 2733, 2730, 2734 & 2735/DEL/ 2022 wherein it has been held as under: “5. We straightway refer to Section 250(6) of the Act which enjoins that the CIT(A) shall state the points for determination before it and the decision shall be rendered on such points along with reasons for the decision. Thus, it is incumbent upon the CIT(A) to deal with the grounds on merits even in ex parte order. In view of Section 250(6) of the Act, the CIT(A) has no power to dismiss an appeal on account of non-prosecution. This view is also taken by the Hon'ble Bombay High ITA No.2952/Del/2024 P a g e | 6 Court in case of CIT vs. Premkumar Arjundas Luthra HUF, (2017) 291 CTR 614 (Bom.). A bare glance of the order of the CIT(A) shows that CIT(A) has not addressed itself on various points placed for its determination at all and dismissed the appeal of assessee for default in nonappearance. Needless to say, the CIT(A) plays role of both adjudicating authority as well as appellate authority. Thus, the CIT(A) could not have shunned the appeal for non- compliance without addressing the issue on merits. 6. In the totality of the circumstances, we consider it just and expedient to restore the matter back to the CIT(A) in the larger interest of justice with a view to enable the assessee to avail proper opportunity for disposal of appeal by the CIT(A) on various points. The assessee is cautioned to extend full cooperation to the CIT(A) without any demur, failing which, the CIT(A) shall be at liberty to conclude the appellate proceedings in accordance with law. Hence, the order of the CIT(A) appealed against, is set aside and all the issues raised in the impugned appeal are restored back to the file of the CIT(A) for fresh adjudication in accordance with law after giving reasonable opportunity of hearing to the assessee.” 8. Without offering any comment on merit of the case and considering the above discussion &facts of the case in entirety, we deem it fit to set aside the impugned order and remit the matter back to the file of the AO for de-novo consideration as the AO has also passed the ex-parte order. The appellant/assessee, no doubt, shall cooperate in the fresh assessment proceedings before the AO. ITA No.2952/Del/2024 P a g e | 7 9. In the result, appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 24.10.2024 Sd/- Sd/- (VIKAS AWASTHY) (AVDHESH KUMAR MISHRA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated:24/10/2024 Binita, Sr. PS Copy forwarded to: 1. Appellant 2. Respondent 3. PCIT 4. CIT(A) 5. Sr. DR: ITAT ASSISTANTREGISTRAR ITAT, NEW DELHI "