AI Structured Summary
Not yet generated for this judgment
Judgment
Per Raj Kumar Chauhan, Judicial Member:
The appeal is directed against the order dated 22.09.2025 of Ld. Commissioner of Income Tax (Appeals), Ahmedabad [hereinafter referred to as the “CIT(A)”] passed u/s 250 of the Income Tax Act, 1961 [hereinafter referred to as “the Act”] wherein the appeal against the assessment order has been dismissed ex-parte and the addition made by the AO was upheld.
The facts in brief as culled out from the proceedings are that the appellant is a HUF and has filed its return of income for A.Y.2012-13 on 28.07.2012 declaring income of Rs.10,39,34,780/-. The assessment was completed u/s 143(3) vide Assessment Order dated 26.03.2015 and the returned income was accepted. Thereafter, the Assessing Officer initiated re-assessment proceeding vide notice dated 30.03.2019 u/s 148 of the Act. On the basis of the information received from Income Tax Officer, Investigation, Unit-IV, New Delhi, dated 26.02.2019. The re-assessment proceedings were completed vide order dated 25.12.2019 assessing the total income of the appellant at Rs.10,68,81,730/- after making addition of Rs.29,46,953/- on account of disallowance of expenses incurred for commission/brokerage on sale of property, legal expenses by denying the claim u/s 54 of the Act. And also, denying the claim of u/s 54 of the Act to the tune of Rs.12,60,765/-.
Aggrieved by the impugned re-assessment order, assessee filed appeal before the Id. CIT(A) who has dismissed the same ex-parte.
Aggrieved by the order of the Id. CIT(A), the assessee filed appeal before us and raises the following grounds of appeal:
'1. That the Commissioner of Income-tax (Appeals) ['CIT(A)'] erred on facts and in law in passing the ex-parte order dated 22.09.2025 confirming the additions of Rs. 29,46,953/- made by the assessing officer under section 147 r.w.s. 143(3) of the Act of the Income Tax Act, 1961 ('the Act').
1.1.That the CIT(A) erred on facts and in law in passing the impugned order in undue haste in gross violation of the principles of natural justice and without judiciously considering/ adjudicating the grounds raised by the appellant.
1.2.That the CIT(A) erred on facts and in law in dismissing, ex-parte, the appeal of the appellant without proper/ effective service of notice of hearing on the appellant, and proceeding on presumed service by purportedly sending the notice through email of the ex-Accounting Firm of the appellant.
2.That on the facts and circumstances of the case and in law, the reassessment order dated 25.12.2019 passed under section 147 of the Act is without jurisdiction, illegal and bad in law.
2.1.That on the facts and circumstances of the case and in law, the reassessment proceedings are bad in law since the reasons recorded did not constitute reasonable belief of escapement of income, being based on incorrect facts and mere suspicion, without application of mind and in absence of any tangible material.
2.2.That the CIT(A) erred on facts and in law in not appreciating that since no addition/disallowance was made by the assessing officer on any of the issues in respect of which reassessment proceedings were initiated, the AO had no jurisdiction to make addition on any other issues.
2.3.That the CIT(A) erred on facts and in law in not appreciating that no fresh tangible material has come to the possession of the AO after completion of the original assessment which could lead to the formation of the 'belief that income has escaped assessment.
2.4.That the CIT(A)/AO failed to appreciate that there was no failure on the part of the appellant to disclose fully and truly all material facts.
2.5.That on the facts and circumstances of the case and in law, the reassessment proceedings under section 147 of the Act, having being initiated on mere change of opinion and without any application of mind, are illegal and bad in law.
2.6.That the CIT(A) erred on facts and in law in not appreciating that the initiation of reassessment proceedings under section 147 of the Act is barred by limitation prescribed in section 149 of the Act, since the reassessment notice and reasons recorded have been served after six years from the end of the relevant assessment year.
2.7.That the reassessment proceedings having been initiated without proper sanction under section 151 of the Act communicated to the appellant, is illegal and bad in law.
Without prejudice
3.That the assessing officer erred on facts and in law in assessing the income of the appellant, vide reassessment order dated 25.12.2019 passed under section 147 of the Act at income of Rs. 10,68,81,730/-.
4.That on the facts and in the circumstances of the case and in law, the CIT(A) erred in confirming the disallowance of Rs.27,86,188/- on account of expenses incurred for commission/ brokerage on sale of property, legal expenses etc. without appreciating the entire transfer expenses were incurred through proper banking channels and were intrinsically linked to the sale of the joint property.
5.That on the facts and in the circumstances of the case and in law, the CIT(A) erred in confirming the addition of Rs. 1,60,765/- on account of alleged shortfall in claim under section 54 of the Act without appreciating that the said amount pertained to loss from sale of Mutual fund and was set-off by the appellant against the long term capital gains earned from sale of property."
We have heard the Id. AR and Id. DR. Ld. AR at the very outset submitted that no notice was ever received allegedly sent by the Id. CIT(A) during the hearing. He further stated that the impugned order which has been passed ex-parte has resulted into miscarriage of justice as no effective opportunity of hearing has been given.
Ld. DR on the other hand supported the order of the Id. CIT(A) stating that various notices were issued and which were served in due course and it is the assessee has failed to avail the opportunity, hence prayed for dismissal.
We have considered the rival submission and examined the record, Section 250(2)(a) lays down as under:
'250(2) The following shall have the right to be heard at the hearing of the appeal-
(a)the appellant, either in person or by an authorized representative;"
It is evident from the provision that the hearing to be given is not a formality but an effective hearing is sine qua non for the purpose of upholding the principal of natural justice. We have examined the impugned order of the Ld. CIT(A) who observed as under:
"In this case, during the appellate proceedings, the contents filed by the appellant in Form 35 have been perused. The appellant has filed form 35 along with grounds of appeal. The same have been perused which were not sufficient to decide the appeal of the appellant, therefore the appellant were given multiple opportunities to file written submission to substantiate his grounds of appeal. The notices were issued electronically through ITBA (on email [email protected] and [email protected] provided in appeal memo), but the appellant has failed to comply with the same. He had neither made any compliance/submissions in response to the notices issued nor sought for adjournment. The details of the notices issued are as under:
Sr. No. Date of issue of hearing notice u/s 250 Date of fixing hearing Sent by/through Remarks 1 25.12.2020 11.01.2021 ITBA Non Compliance 2 04.03.2023 13.03.2023 ITBA Non Compliance 3 16.04.2025 23.04.2025 ITBA Non Compliance 4 25.06.2025 01.07.2025 ITBA Non Compliance 5 22.08.2025 28.08.2025 ITBA Non Compliance 6.1.The available material on record is verified along with grounds of appeals and statement of facts. After considering the material available on record, it is seen that no sufficient material is available to provide any relief to the appellant. If the appellant would have submitted some information and some documents, the case would have been decided on merits. Therefore, under such circumstances it is not possible to allow any relief to the appellant.
6.2.The issue of non-compliance by appellant at appellate stage has been considered and decided by the Hon'ble Supreme Court and Various High Courts as discussed below:
6.2.1.The Hon'ble Supreme Court in the decision pronounced on October 25, 2019 in the case of PCIT vs. NRA Iron & Steel Pvt. Ltd in Civil Appeal No. of 2019 (Arising out of SLP (Civil) No. 29855 of 2018) has held that if a notice is duly served upon the litigant through its authorized representative, and it was provided sufficient opportunity to appear before the Court and contest the matter but the litigant chooses to let the matter proceed ex-parte, the order cannot be recalled.
The decision rendered on 18 October, 2019 by the Hon'ble Supreme Court in the case of PCIT vs M/s I Ven Interactive Ltd in Civil Appeal No.8132 of 2019 (Arising out of SLP(C) No.3530/2019) is also squarely applicable.
6.2.2.The decision of the Hon'ble High Court of Mumbai in the case of M/s Chemipol v/s. Union of India [Central Excise Appeal No.62 of 2009] clearly states, that every court judicial body or authority, which has a duty to decide a matter between two parties, inherently possesses the power to dismiss the case in default. For the sake of reference, the relevant extract of the judicial pronouncement rendered by the Hon'ble High Court of Mumbai quoting decision of Hon'ble Supreme Court in case of Nandramdas Dwarkadas, AIR 1958 MP 260, is reproduced below:
"Now the Act does not give any power of dismissal. But it is axiomatic that no court or tribunal is supposed to continue a proceeding before it when the party who has moved it has not appeared nor cared to remain present. The dismissal, therefore, is an inherent power which every tribunal possesses."
6.2.3.The principle that every court that is to decide on a matter of dispute, inherently possesses the power to dismiss the case for default, has been upheld by the Hon'ble Supreme Court in case of Dr. P. Nalla Thampy Vs. Shankar (1984 (Supp) SCC 63 and the case of New India Assurance vs. Srinivasan (2000) 3 SCC 242. In the latter case, the Apex Court has held as under:
"That every court or judicial body or authority, which has a duty to decide a list between two parties, inherently possesses the power to dismiss a case in default. Where a case is called up for hearing and the party is not present, the court or the judicial or quasi-judicial body is under no obligation to keep the matter pending before it or to pursue the matter on behalf of the complainant who had instituted the proceedings. That is not the function of the court or, for that matter of a judicial or quasi judicial body. In the absence of the complainant, therefore, the court will be will without its jurisdiction to dismiss the complaint for non prosecution. So also, it would have the inherent power and jurisdiction to restore the complaint on good cause being shown for the non appearance of the complainant."
6.2.4.In the case of CIT Vs. B. N. Bhattacharya reported at 118 ITR 461, it was held that appeal does not mean merely filing of appeal but effectively pursuing it.
6.2.5.The Hon'ble ITAT Delhi (ITR No.2006/Del/2011 dt.19.12.2001) in the case of Whirlpool of India Ltd. v. DCIT had dismissed appeal for non attendance at hearings, inferring that assessee was not interested in prosecuting of appeal.
6.2.6.In the case of Chadha Finlease Ltd. V. ACIT (ITA No.3013/ Del/2011 date of order 20.12.2011) the Hon'ble ITAT Delhi had dismissed the appeal for non-attendance at hearings.
6.2.7.In its decision in the case of CIT v. Gold Leaf Capital Corporation Ltd. on 02.09.2011 (ITA No.798 of 2009), the Hon'ble High Court of Delhi had held that a negligent assessee should not be given many opportunities just because that quantum of amount involved is high. Necessary course of action is to draw adverse inference; otherwise it would amount to give premium to the assessee for his negligence. When the assessee is non-cooperative, it can naturally be safely concluded that the assessee did not want to adduce evidence as it would expose falsity and non genuineness.
6.2.9.In view of the facts and legal position discussed above, it is presumed that appellant is not interested in pursuing the appeal and not producing any documents, explanation and evidence in support of grounds of appeal raised and thus has not discharged the onus to substantiate the grounds. It is seen that no written submission filed till date despite multiple opportunities. In view of the lack of prosecution by the appellant, I proceed to decide the appeal in view of the discussion made above.
6.3.The appellant has failed to furnish any material evidences or documents or even the written submission either with its appeal or during the appellate proceedings to substantiate the grounds of appeal. In view of the discussions in the preceding paras, the clear position of law and respectfully relying upon the judgments of Hon'ble High Courts as above I do not find merit in the grounds of appeal. Therefore, the appeal is dismissed on this count.
6.4.In the result, appeal of the appellant is dismissed."
It is thus evident from the contents of the impugned order extracted above that no effective opportunity of hearing has been given and there is no proof that the notice sent on various dates were duly served or brought to the notice of the appellant/assessee.
For these reasons, we are of the considered opinion that matter needs to be restored to the file of the Ld. CIT(A) for giving effective hearing to the assessee, who shall present its case before the Ld. CIT(A) within 60 days. The impugned order is accordingly set aside and appeal filed by the assessee is allowed in above terms.
In the result, the appeal of the assessee is allowed for statistical purpose.