Facts of the Case

The assessee, UP Education Service Selection Commission, a statutory body constituted under an Act of the Uttar Pradesh Legislative Assembly for selection of Principals, Lecturers, and LT Grade Teachers in Government-aided schools, was subjected to verification by the Assessing Officer (TDS).

During verification, it was noticed that the assessee had made certain payments during Financial Year 2013-14 which attracted provisions of Tax Deducted at Source, but tax was not deducted. Consequently, the Assessing Officer passed an order under sections 201(1) and 201(1A) of the Income-tax Act, 1961, raising a demand of ₹41,48,511.

Aggrieved, the assessee filed an appeal before the Commissioner of Income Tax (Appeals). The learned CIT(A), however, dismissed the appeal ex-parte on account of alleged non-compliance with notices of hearing, without adjudicating the issues on merits. The assessee, therefore, approached the Income Tax Appellate Tribunal.

 

Issues Involved

  1. Whether ex-parte dismissal of an appeal against TDS demand without adjudication on merits is sustainable in law.
  2. Whether the CIT(A) is statutorily required to pass a speaking order under section 250(6).
  3. Whether the matter deserved to be restored for fresh adjudication.

 

Petitioner’s Arguments

The assessee contended that the learned CIT(A) failed to decide the appeal on merits and dismissed it solely on the ground of non-appearance. It was argued that the first appellate authority is duty-bound to pass a reasoned and speaking order under section 250(6), irrespective of appearance. The assessee requested that the matter be restored to the CIT(A) for adjudication on merits after granting reasonable opportunity.

 

Respondent’s Arguments

The Revenue raised no objection to the submission of the assessee and fairly agreed that the matter could be restored to the file of the CIT(A) for fresh adjudication in accordance with law.

 

Court Order / Findings

The Income Tax Appellate Tribunal observed that the learned CIT(A) had passed a cryptic and non-speaking ex-parte order without dealing with the grounds raised by the assessee. The Tribunal reiterated that section 250(6) mandates the CIT(A) to pass a speaking order stating points for determination, decision thereon, and reasons for such decision.

Considering the overall facts and circumstances, and in the interest of substantial justice, the Tribunal set aside the impugned appellate order dated 21.10.2024. The matter was restored to the file of the learned CIT(A) with a direction to adjudicate the appeal de novo, on merits, in accordance with law, after providing reasonable opportunity of being heard to the assessee and ensuring compliance with section 250(6).

 

Important Clarification

The Tribunal clarified that even in cases of alleged non-compliance by the appellant, the first appellate authority cannot summarily dismiss an appeal without adjudicating the issues on merits. Passing a speaking order under section 250(6) is a statutory obligation and an integral part of principles of natural justice. The appeal was partly allowed for statistical purposes.

Link to download the order -  https://www.mytaxexpert.co.in/uploads/1770880800_UPEDUCATIONSERVICESELECTIONCOMMISIONPREVIOUSLYKNOWNASUPSECONDARYEDUCATIONSERVICSELECTIONBOARDALLAHABADVS.INCOMETAXOFFICERCIRCLEALLAHABDALLAHABAD2.pdf 

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