SRI SAI BABA SANSTHAN, BHILAI,DURG V. INCOME TAX OFFICER, EXEMPTION-2, RAIPUR, RAIPUR

ITA 247/RPR/2025

AI Insights

The case involves Sri Sai Baba Sansthan, the appellant, contesting orders from the CIT(Appeals)/NFAC for the assessment years 2012-13 and 2013-14. The appeals were initially dismissed in limine by the CIT(Appeals) due to non-prosecution, without addressing the merits, which led to the appellant challenging this decision before the ITAT. The ITAT found that the CIT(Appeals) had not adhered to the statutory obligation to adjudicate on merits as mandated by Sections 250(4) & (6) of the Income Tax Act, 1961. Citing principles of natural justice and previous judicial precedents, the ITAT remanded the case back to the CIT(Appeals) for a thorough examination on merits, emphasizing the need for a fair hearing.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 398216 (ITAT-RAIPUR)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Other Referred Cases: CIT Vs. Premkumar Arjundas Luthra (HUF), Vijay Shrinivasrao Kulkarni Vs. Income-tax Appellate Tribunal, Delhi Transport Corporation vs. DTC Mazdoor Union, Commissioner of Income Tax Madras v. Chenniyappa Mudiliar
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASSESSEE GETTING; PRIYANKA PATEL
• Assessee Lawyers: S.R. RAO
• Keywords: Set aside; Opportunity of being heard; Principle of natural justice; Validity of assessment
• Section: 147; 148; 143(3); 271(1)(c); 11; 12AA; 139; 12; 80G

Judgement Text

"आयकर अपीलȣय अͬधकरण Ûयायपीठ “एक-सदèय” मामला रायपुर मɅ IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH “SMC”, RAIPUR Įी पाथ[ सारथी चौधरȣ, ÛयाǓयक सदèय क े सम¢ BEFORE SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER आयकर अपील सं./ITA Nos.247 & 248/RPR/2025 Ǔनधा[रण वष[ /Assessment Years : 2012-13 & 2013-14 Sri Sai Baba Sansthan Sai Mandir, Avenue-B, Civic Center, Sector-6, Bhilai-490 006 (C.G.) PAN: AADTS8938G .......अपीलाथȸ / Appellant बनाम / V/s. The Income Tax Officer Exemption-II, Raipur (C.G.) ……Ĥ×यथȸ / Respondent Assessee by : Shri S.R. Rao, Advocate Revenue by : Dr. Priyanka Patel, Sr. DR सुनवाई कȧ तारȣख / Date of Hearing : 02.06.2025 घोषणा कȧ तारȣख / Date of Pronouncement : 03.06.2025 2 Sri Sai Baba Sansthan Vs. ITO, Exemption-II, Raipur ITA Nos.247 & 248/RPR/2025 आदेश / ORDER PER PARTHA SARATHI CHAUDHURY, JM The captioned appeals preferred by the assessee emanates from the respective orders of the Ld.CIT(Appeals)/NFAC, Delhi dated 17.03.2025 for the assessment years 2012-13 and 2013-14 as per the grounds of appeal on record. 2. At the very outset, the Ld. Counsel submitted that as per Paras 3, 4.2 & 5 of the impugned order, the Ld.CIT(Appeals) dismissed the appeal in limine for non-prosecution without dealing the same on merits in terms with Section 250(4) & (6) of the Income Tax Act, 1961 ( for short ‘the Act’) . For the sake of clarity, the Paras 3, 4.2 & 5 of the Ld.CIT(Appeals)/NFAC’s order in ITA No.247/RPR/2025 for A.Y.2012-13 are culled out as follows: “3. In the course of appellate proceedings, the appellant has not furnished any written submission or documents despite of giving several opportunities. 4.2 Ground No. 2 is related to assessed income at Rs. 20,44,873/-. In this regard, ant part of the assessment order is reproduced below: - “The return of income u/s 139 was not filed by the assessee. The assessee had applied for approval u/s 80G which was rejected by CIT(Exemption). Bhopal vide order dated 30.07.2015, it was found that the assessee did not file Return of Income despite surplus of Rs.20,44,873/-, the assessee was granted registration u/s 12AA vide order dated 30.07.2015 w.e.f 01.4.2015, therefore, the assessee was not entitled to claim exemption u/s 11 and 12 for the year under consideration. Hence, after recording reasons to believe that the income of the assessee has escaped assessment, notice u/s 148 dated 26.11.2015 was issued by the undersigned. In response, the assessee filed ROI on 18-01-2016 3 Sri Sai Baba Sansthan Vs. ITO, Exemption-II, Raipur ITA Nos.247 & 248/RPR/2025 and offered the surplus of Rs.20,44,873/- for taxation and declared total Income of Rs.28.90,387/-. The assessee had submitted written replies against the questionnaires. In response, Shri Anirudh Das, CA, and AR attended the assessment proceedings from time to time. Replies and details filed during the course of hearings have been duly perused and placed on the record. Books of Accounts, bill and vouchers produced are examined by way of test check basis. The case was discussed with him on various aspects of the case. The assessee has concealed the particulars of its income and furnished inaccurate particulars, hence, penalty proceedings u/s 271(1)(c) is hereby initiated as the assessee did not file ROI suo-moto u/s 139 and filed the ROI only after issuance of notice u/s 148. Considering the above and on the basis of replies filed, the assessed income of the assessment year 2012-13 is determined as under. Returned and Assessed income: Rs.20,44,873/-” The appellant could not submit any explanation/reply in support of its grounds of appeal despite of giving seven opportunities during the appellate proceeding. Further, I have gone through the assessment order and found that no addition has been made by the AO in assessment order. The AO has simply accepted the returned income at Rs.20,44,873/-. The appellant itself has filed return of income on 18.01.2016 in response to notice issued u/s 148 dated 26.11.2015 declaring total income of Rs.20,44,873/- for the AY 2012-13. Thus, the appellant should not have any grievance as no addition has been made by the AO in the assessment order. In the statement of facts, the appellant itself has mentioned as under: - \"2. For the year under consideration, the appellant did not file return u/s 139 and was issued notice u/s 148 on 26.11.2015 (subsequent to granting of registration u/s 12AA). In response to this notice, the appellant filed return of income on 18.01.2016 offering the surplus of Rs.20,44,873/- to tax. Tax due on returned income was paid by way of Self-Assessment Tax. The AO completed assessment u/s 147 r.w.s. 143(3) assessing the income at Rs.20,44,873/-, as returned by appellant.\" Having submitted the above statement by the appellant and further no submission/explanation was made in respect of grounds of appeal by the appellant during the appellate proceeding despite of giving seven opportunities, the grounds of appeal have no merits and hence these are dismissed. 4 Sri Sai Baba Sansthan Vs. ITO, Exemption-II, Raipur ITA Nos.247 & 248/RPR/2025 5. In the result, appeal is dismissed.” In so far the appeal filed by the assessee in ITA No.248/RPR/2025 for A.Y. 2013-14, similarly it is evident from Paras 3, 4.2 and 5 of the impugned order of the Ld. CIT(Appeals)/NFAC that since there was no compliance by the assessee, therefore, the Ld. CIT(Appeals)/NFAC dismissed the appeal. For the sake of brevity, the same are only referred to and not being extracted. 3. On a perusal of the order of the Ld.CIT(Appeals)/NFAC, it is observed that the Ld.CIT(Appeals)/NFAC dismissed the appeal of the assessee in limine for non-compliance without dealing with the merits of the case. The power of the Ld. CIT(Appeals)/NFAC being co-terminus with that of the A.O and as per mandate of Section 250(4) & (6) of the Act, the Ld. CIT(Appeals)/NFAC ought to have conducted independent enquiry and verification of facts in this case as per facts adjudicated in the assessment. In my considered view, once an appeal is preferred before the CIT(Appeals), it becomes obligatory on his part to dispose off the same on merit and it is not open for him to summarily dismiss the appeal on account of non-prosecution of the same by the assessee. In fact, a perusal of Sec.251(1)(a) and (b), as well as the “Explanation” to Sec.251(2) of the Act reveals that the CIT(Appeals)/NFAC remains under a statutory obligation to apply his mind to all the issues which arises from the 5 Sri Sai Baba Sansthan Vs. ITO, Exemption-II, Raipur ITA Nos.247 & 248/RPR/2025 impugned order before him. As per the mandate of law the CIT(Appeals) is not vested with any power to summarily dismiss the appeal for non- prosecution. The aforesaid view is fortified by the judgment of the Hon'ble High Court of Bombay in the case of CIT Vs. Premkumar Arjundas Luthra (HUF) (2017) 297 CTR 614 (Bom). In the aforementioned case the Hon’ble High Court had observed as under: \"8. From the aforesaid provisions, it is very clear once an appeal is preferred before the CIT(A), then in disposing of the appeal, he is obliged to make such further inquiry that he thinks fit or direct the AO to make further inquiry and report the result of the same to him as found in Sec. 250 of the Act. Further, Sec. 250(6) of the Act obliges the CIT(A) to dispose of an appeal in writing after stating the points for determination and then render a decision on each of the points which arise for consideration with reasons in support. Sec. 251(1)(a) and (h) of the Act provide that while disposing of appeal the CIT(A) would have the power to confirm, reduce, enhance or annul an assessment and/or penalty. Besides Explanation to sub- s. (2) of s. 251 of the Act also makes it clear that while considering the appeal, the CIT(A) would be entitled to consider and decide any issue arising in the proceedings before him in appeal filed for its consideration, even if the issue is not raised by the appellant in its appeal before the CIT(A). Thus once an assessee files an appeal under s. 246A of the Act, it is not open to him as of right to withdraw or not press the appeal. In fact the CIT(A) is obliged to dispose of the appeal on merits. In fact w.e.f. 1st June, 2001 the power of the CIT(A) to set aside the order of the AO and restore it to the AO for passing a fresh order stands withdrawn. Therefore, it would be noticed that the powers of the CIT(A) are co-terminus with that of the AO i.e. he can do all that A.O could do. Therefore, just as it is not open to the AO to not complete the assessment by allowing the assessee to withdraw its return of income, it is not open to the assessee in appeal to withdraw and/or the CIT(A) to dismiss the appeal on account of non-prosecution of the appeal by the assessee. This is amply clear from the s. 251(1)(a) and (b) and Explanation to Sec. 251(2) of the Act which requires the CIT(A) to apply his mind to all the issues which arise from the impugned order before him whether or not the same has been raised by the appellant before him. Accordingly, the law does not empower the 6 Sri Sai Baba Sansthan Vs. ITO, Exemption-II, Raipur ITA Nos.247 & 248/RPR/2025 CIT(A) to dismiss the appeal for non-prosecution as is evident from the provisions of the Act.” 4. As per the spectrum of the facts as has been emanated in both these appeals, an ex-parte order has been passed by the Ld. CIT(Appeals)/NFAC due to non-compliance by the assessee. In this regard, the Ld. Counsel made a statement at bar that they are willing to submit all the relevant documents before the Ld.CIT(Appeals)/NFAC and represent its case on merits and accordingly, prayed for one final opportunity. In the entire periphery of the matter, I herein observe that the ITAT, “Division Bench”, Raipur in the cases of Brajesh Singh Bhadoria Vs. Dy./ACIT, Central Circle-2, Naya Raipur, IT(SS)A Nos. 1 to 6, 8 & 9/RPR/2025, dated 20.03.2025 had dealt with similar issue on the same parameters of ex-parte order passed by the Ld. CIT(Appeals)/NFAC and remanded the matter back to the file of the Ld. CIT(Appeals)/NFAC observing as follows: “7. We have considered the submissions of the parties herein and analyzed the facts and circumstances involved in all the captioned appeals. After careful perusal of the documents on record, we find that the assessee had assailed the legal ground as aforestated, however, the fact of the matter is that on perusal of the respective orders of the Ld. CIT(Appeals) for all the years before us, it is also evident from Para 3 that there has been no compliance by the assessee before the said authority and as such, an ex-parte order was passed for the concerned years in appeal. Admittedly, as per record, sufficient opportunities had been provided to the assesse, however, there was no compliance by the assessee. In effect, rights and liabilities of the parties herein are yet to be adjudicated substantially at the level of the first appellate 7 Sri Sai Baba Sansthan Vs. ITO, Exemption-II, Raipur ITA Nos.247 & 248/RPR/2025 authority. Though in the impugned orders, discussion has been done as per material available on record by the Ld.CIT(Appeals) but they are only Form 35, statement of facts, grounds of appeal and the assessment order. However, due to non-compliance by the assessee, there are no submissions, evidence and documents submitted for adjudication by the assessee before the Ld. CIT(Appeals). That as per Para 3 of the Ld. CIT(Appeals) order, there has been no compliance on the part of the assessee for submitting detailed explanations regarding the grounds of appeal for the years under consideration which clearly shows that the grounds of appeal raised before the first appellate authority has not been substantiated on merits through corroborative evidence /submissions. 8. That in such scenario we are of the considered view that the Income tax Act is within the ambit of welfare legislation which are completely different from that of the penal legislation, therefore, benefit of doubt whenever arises, it has to be interpreted in favour of the assessee tax payer within the parameters of law and facts. There may be circumstances beyond control of the assessee because of which, the assessee may not have been able to represent his case on the given dates of hearing before the Ld. CIT(Appeals). Though it is correct that there was no compliance from the side of the assessee, however, nothing is there on record which suggests any deliberate non-compliance or malafide conduct of the assessee. That further, if one final opportunity is provided to the assessee to represent his case before the first appellate authority, the position of the revenue will also not be jeopardized. 9. Recently, the Hon’ble High Court of Bombay in the case of Vijay Shrinivasrao Kulkarni Vs. Income-tax Appellate Tribunal (2025) 171 taxmann.com 696 (Bom.), dated 04.02.2025 observed that in the case the Assessing Officer had passed an ex-parte order and when the matter went on appeal before the Ld. CIT(Appeals)/NFAC, it had also dismissed the matter ex-parte due to non-compliance by the assessee’s authorized representative, when the matter came up before the ITAT, it had failed to address the infirmity regarding the fact that the assessee was not afforded proper opportunity of being heard and the matter was dismissed ex- parte by the Ld. CIT(Appeals)/NFAC which amounted to violation of principles of natural justice, and instead ITAT decided the case on merits, in such circumstances, the Hon’ble High Court of Bombay held that passing of an order on merits by the ITAT even when the impugned order was 8 Sri Sai Baba Sansthan Vs. ITO, Exemption-II, Raipur ITA Nos.247 & 248/RPR/2025 passed ex-parte amounts to violation of principles of natural justice and accordingly, the said matter was remanded to ITAT for passing a fresh order in accordance with law after hearing the parties. The legal principle as enshrined in the present judgment is crystal clear that the principles of natural justice i.e. the right to be heard is to be provided and accordingly, the matter had to be substantially adjudicated by the appellate authority. Therefore, if the impugned order of the Ld. CIT(Appeals)/NFAC is an ex-parte order, the only recourse in conformity with the aforesaid judicial pronouncement is to remand the matter back to the file of the Ld. CIT(Appeals)/NFAC for fresh adjudication in terms with the principles of natural justice providing one final opportunity to the assessee. 10. In the aforesaid case, the Hon’ble High Court of Bombay had referred to a judgment of the Hon’ble Supreme Court in the case of Delhi Transport Corporation vs. DTC Mazdoor Union AIR 1999 SC 564, wherein the Supreme Court inter-alia held that Article 14 guarantees a right of hearing to a person who is adversely affected by an administrative order. The principle of audi-alteram partem is a part of Article 14 of the Constitution of India. In light of such decision, the petitioner ought to have been granted an opportunity of being heard which, partakes the characteristic of the fundamental right under Article 14 of the Constitution of India. 11. The Hon’ble High Court of Bombay in the aforesaid case had referred to a decision of the Hon’ble Supreme Court in the case of Commissioner of Income Tax Madras v. Chenniyappa Mudiliar 1969 1 SCC 591, wherein the Supreme Court in interpreting the section 33(4) of the Income Tax Act, 1922 has held that the appellate tribunal was bound to give a proper decision on question of fact as well as law, which can only be done if the appeal is disposed off on merits and not dismissed owing to the absence of the appellant. Reverting to the facts of the present case the grounds of appeal were simply filed before the Ld.CIT(Appeals) they were not substantiated or corroborated through submissions and filing of documentary evidences since the assessee had not complied before the Ld.CIT(Appeals) on the dates of hearing. Therefore, as per framework of the Act there must be adjudication on merits by the first appellate authority and one final opportunity be provided to the assessee to represent his matter on merits in the interest of natural justice. 9 Sri Sai Baba Sansthan Vs. ITO, Exemption-II, Raipur ITA Nos.247 & 248/RPR/2025 12. There may even be a situation where the Ld. Counsel for the assessee may assail a legal ground before the Tribunal following the decision of the Hon’ble Supreme Court in the case of National Thermal Power Company Ltd. Ltd. Vs. CIT (1998) 229 ITR 383 (SC) with a contention that irrespective of the order of the Ld. CIT(Appeals) being ex-parte, the Tribunal may decide the legal issue that has been raised by the Ld. Counsel. In our view, the decision of the Hon’ble Supreme Court in the case of National Thermal Power Company Ltd. Ltd. Vs. CIT (supra) provides that any legal issue which goes to the root of the matter and is established through legal principles, the assessee can take up and raise such legal issue at any appellate forum irrespective of whether the assessee had raised such legal issue at the sub-ordinate level or not, however, it always depends on facts and circumstances of each case whether the Tribunal would decide the legal ground or in a case where the question is of natural justice and ex- parte order by the Ld. CIT(Appeals) the Tribunal would remand it back to Ld.CIT(Appeals) providing final opportunity to a bonafide assessee. The Tribunal as the highest fact finding authority must be certain enough that the impugned order before it has been passed on merits and is a speaking order where the assessee has also complied during the process of litigation. In case, where the order of the Ld. CIT(Appeals) itself is ex-parte and some legal ground is raised and if the Tribunal decides such legal ground where in fact principles of natural justice is left unanswered due to the fact that the impugned order before the Tribunal is ex-parte and there was no compliance by the assessee in such scenario the Tribunal would also be usurping the power of the Ld. CIT(Appeals) which is also a statutory authority as per the Act. This is due to the reason that as per framework of the Act, Ld.CIT(Appeals) is the first appellate authority where an appeal by assessee it would be substantially decided through a speaking order by the Ld.CIT(Appeals). When this part is over and either party is aggrieved second appeal lies before the ITAT. Now if for every ex-parte order passed by the Ld. CIT(Appeals), of course due to non-compliance by the assessee, if the Tribunal adjudicates a legal ground, for instance validity of assessment or reassessment order and answers it in favour of the assessee then it would create an easy route for assessee getting redressal from Tribunal even without bothering to comply with hearing notices before the Ld. CIT(Appeals). This would dismantle the structure of the Act which is definitely not the intention of the legislature. Here in this situation, where the benefit of doubt is given to the assessee since he had not complied with the hearing notices before the Ld. CIT(Appeals) 10 Sri Sai Baba Sansthan Vs. ITO, Exemption-II, Raipur ITA Nos.247 & 248/RPR/2025 which resulted in passing of an ex-parte order by the Ld. CIT(Appeals), in such scenario, as per the scheme of the Act and following the principles of natural justice, the only course of action is to remand the matter back to the file of the Ld. CIT(Appeals) for adjudication on merits providing one final opportunity to the assessee. 13. In view thereof, we set aside the respective orders of the Ld. CIT(Appeals) for all the years and remand the same to their file for denovo adjudication on merits. At the same time, we direct the assessee that this being the final opportunity, there must be compliance on merits before the first appellate authority. Needless to say, the Ld. CIT(Appeals) shall provide reasonable opportunity of being heard to the assessee and pass an order in terms of Section 250(4) and (6) of the Act within three months from receipt of this order.” 5. Respectfully following the aforesaid orders, I set-aside the orders of the Ld. CIT(Appeals)/NFAC and remand the matters back to its file for denovo adjudication while complying with the principles of natural justice. At the same time, it is directed that this being the final opportunity, the assessee shall duly comply with the hearing notices from the Ld.CIT(Appeals)/NFAC. 6. As per the aforesaid terms, the grounds of appeal raised by the assessee stands allowed for statistical purposes. 11 Sri Sai Baba Sansthan Vs. ITO, Exemption-II, Raipur ITA Nos.247 & 248/RPR/2025 7. In the result, both the appeals of the assessee are allowed for statistical purposes. Order pronounced in open court on 3rd day of June, 2025. Sd/- (PARTHA SARATHI CHAUDHURY) ÛयाǓयक सदèय/JUDICIAL MEMBER रायपुर / Raipur; Ǒदनांक / Dated : 3rd June, 2025. SB, Sr. PS आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant. 2. Ĥ×यथȸ / The Respondent. 3. The Pr. CIT-1, Raipur (C.G.) 4. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण, “एक-सदèय” बɅच, रायपुर / DR, ITAT, “SMC” Bench, Raipur. 5. गाड[ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलȣय अͬधकरण, रायपुर / ITAT, Raipur "