Facts of the Case

The assessee was originally assessed under the scrutiny provisions of the Income-tax Act for the relevant assessment year. Subsequently, reassessment proceedings were initiated on the ground that income had escaped assessment, and a reassessment order was passed determining a higher taxable income. Aggrieved by the reassessment, the assessee filed an appeal before the Commissioner of Income Tax (Appeals).

However, the appellate authority dismissed the appeal for non-prosecution due to absence of representation by the assessee and did not adjudicate the issues on merits. The assessee thereafter approached the Income Tax Appellate Tribunal challenging the validity of such dismissal.

Issues Involved

  1. Whether the Commissioner (Appeals) was justified in dismissing the appeal solely for non-prosecution.
  2. Whether the appellate authority is statutorily required to pass a reasoned order on merits.
  3. Whether failure to adjudicate grounds of appeal violates principles of natural justice and statutory provisions.

Petitioner’s (Assessee’s) Arguments

  • The assessee contended that dismissal of the appeal without deciding the issues on merits was unlawful.
  • It was argued that the appellate authority has a statutory duty to examine the grounds raised and pass a speaking order.
  • The assessee submitted that absence on a hearing date cannot justify outright dismissal of the appeal.

Respondent’s (Revenue’s) Arguments

  • The Revenue relied upon the order of the Commissioner (Appeals).
  • It was submitted that the assessee failed to prosecute the appeal despite opportunities provided.
  • Therefore, dismissal for non-prosecution was justified under the circumstances.

Court Order / Findings (ITAT)

  • The Commissioner (Appeals) is legally obligated to dispose of the appeal on merits.
  • Section 250(6) mandates that the order must state points for determination, decision thereon, and reasons for the decision.
  • Failure to pass a reasoned and speaking order amounts to violation of statutory duty and principles of natural justice.

Important Clarification

The Tribunal reiterated that appellate proceedings are not adversarial defaults but quasi-judicial adjudications. Even in the absence of the appellant, the authority must examine the record and pass a reasoned order. Non-speaking ex-parte orders are legally unsustainable.

Link to download the order –

https://itat.gov.in/public/files/upload/1625809381-30%20&%2031%20Uma%20Kesharwani%20PDF.pdf

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