Facts of the Case

The assessee, Shri Ajay Kumar, is an individual engaged in the business of trading in Dal and Dalhan as proprietor of M/s Raj Kumar and Co. Regular books of account were maintained and duly audited. For Assessment Year 2017-18, the assessee filed his return of income declaring total income of ₹10,83,960.The assessment was completed under Section 143(3) of the Income Tax Act, wherein the Assessing Officer determined total income at ₹56,63,290. An addition of ₹45,79,325 was made by applying a net profit rate of 1.5% as against 0.23% disclosed by the assessee.Aggrieved by the assessment order, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals). However, the appeal was dismissed through an ex-parte order dated 29.11.2023.

Issues Involved

  1. Whether the Commissioner of Income Tax (Appeals) was justified in dismissing the appeal ex-parte without providing adequate opportunity of hearing.
  2. Whether dismissal of the appeal without passing a reasoned and speaking order is in violation of Section 250(6) of the Income Tax Act.
  3. Whether principles of natural justice were violated by the appellate authority.

Petitioner’s (Assessee’s) Arguments

The assessee filed the appeal before the ITAT with a delay and submitted an application for condonation, stating that the delay was unintentional and beyond his control. It was contended that the CIT(A) passed the impugned order without granting sufficient opportunity of hearing and without adjudicating the grounds of appeal on merits, thereby violating statutory provisions and principles of natural justice.

Respondent’s (Revenue’s) Arguments

The learned Senior Departmental Representative relied upon the orders passed by the lower authorities. However, no objection was raised by the Revenue against the condonation of delay application, and the matter was left to the discretion of the Tribunal.

Court Order / Findings

The ITAT observed that the CIT(A) had passed the impugned order without affording reasonable opportunity to the assessee. The Tribunal further noted that the appellate order was non-speaking and had been passed in a summary manner, in clear violation of Section 250(6) of the Income Tax Act, which mandates disposal of appeals by a reasoned order dealing with each ground of appeal.

The Tribunal emphasized that the CIT(A) is duty-bound to pass a speaking order on merits after due consideration of facts and submissions.

Accordingly, the ITAT set aside the appellate order dated 29.11.2023 and restored the matter to the file of the CIT(A) with directions to pass a fresh speaking order in accordance with law after providing reasonable opportunity of being heard to the assessee. The appeal was allowed for statistical purposes.

 Important Clarification / Legal Principle

An appellate order passed without reasons and without dealing with the grounds of appeal is unsustainable in law. Section 250(6) of the Income Tax Act imposes a statutory obligation on the Commissioner (Appeals) to pass a speaking order. Failure to do so amounts to violation of principles of natural justice, warranting interference by the appellate tribunal.

Link to download the order -  https://www.mytaxexpert.co.in/uploads/1770870936_AJAYKUMARALLAHABADVS.INCOMETAXOFFICE11ALLAHABAD.pdf  

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