Raghupati Commodities Private Limited vs. Income Tax Officer, ITA No.4824/Del./2024
Income Tax Appellate Tribunal (ITAT) Delhi Bench in ITA No. 4824/Del/2024, ruled that a Commissioner of Income Tax (Appeals) [CIT(A)] cannot dismiss an appeal merely for non-prosecution without addressing the issues on merits. The case has been remanded to the Assessing Officer (AO) for fresh adjudication after the appellate authority failed to discharge its statutory duty under Section 250(6) of the Income Tax Act, 1961.
Case Background
The assessee, a private company engaged in commodity trading, filed its return declaring a meager income of ₹50 for A.Y. 2013-14. The return was subsequently reopened under Section 148 based on information indicating suspicious financial transactions. Due to the assessee’s consistent non-compliance, the AO completed the assessment ex parte under Sections 147 r.w.s. 144 & 144B, determining total income at ₹8.80 crores.
Key Additions Made by the AO:
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₹1.85 Cr – Alleged unaccounted cash routed through Surya Sales Corporation.
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₹1.01 Cr – Credits received from India Trade Link, linked to a non-filer.
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₹1.21 Cr – Supposed unexplained derivative trading.
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₹4.70 Cr – Unreported equity share purchases on NSE.
Each addition was accompanied by penalty proceedings under Section 271(1)(c).
Appellate Stage
The assessee’s appeal before CIT(A), NFAC, was dismissed in limine for non-prosecution. The CIT(A) did not engage with the grounds or the substantive merits of the case.
This action was challenged before the ITAT.
ITAT’s Observations and Ruling
The ITAT observed:
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Section 250(6) mandates CIT(A) to dispose of appeals in writing with reasoned orders, addressing each point of determination.
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Section 251(1) empowers the CIT(A) to confirm, reduce, enhance, or annul assessments — not dismiss them for default alone.
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The CIT(A), acting in a dual capacity as appellate authority and quasi-judicial adjudicator, is bound to apply independent mind and analyze the assessment order on merits, even in the absence of the assessee.
Referring to precedents like MARC Laboratories Ltd. and CIT v. Premkumar Arjundas Luthra HUF (2017) 291 CTR 614 (Bom.), the Tribunal reaffirmed that ex parte dismissal without merit-based adjudication is impermissible.
The Tribunal restored the matter to the file of the AO, as both the AO and CIT(A) failed to decide the case on its merits.
Tribunal’s Direction
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The case was remanded to the AO for fresh assessment.
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The assessee was instructed to fully cooperate in re-assessment proceedings.
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The AO must provide adequate opportunity of hearing before passing any fresh order.
Conclusion
This ruling reiterates a fundamental principle: taxpayers cannot be denied justice due to procedural lapses alone. Even in ex parte scenarios, authorities must perform a merit-based evaluation as mandated under law. The ITAT’s order upholds the spirit of fair hearing and substantive justice under the Income Tax framework.