The Income Tax Appellate Tribunal, Delhi Bench 'C', has set aside an ex-parte dismissal of an appeal by the Commissioner of Income Tax (Appeals) for non-prosecution, holding that Section 250(6) of the Income-tax Act, 1961 mandates a reasoned, speaking order on merits and not a dismissal in limine. The Tribunal remanded the matter to the CIT(A) for fresh adjudication after affording proper opportunity of hearing to both parties.
Background & Facts
The Dispute
The assessee, a taxpayer with PAN AQLPJ2361G, filed original income tax returns for assessment years 2019-20 and 2020-21 declaring income of Rs. 4,57,190 each year. A search and seizure operation under Section 132 was conducted on the 'Rubberwala Group' on 17.03.2021, leading to the issuance of notice under Section 153C to the assessee on 15.11.2022. The assessee filed returns in response to these notices on 30.11.2022, maintaining the declared income.
Key Facts
- The assessee filed original return for AY 2019-20 on 24.09.2020 declaring income of Rs. 4,57,190.
- Search u/s 132 conducted on 17.03.2021 on 'Rubberwala Group'.
- Notice u/s 153C dated 15.11.2022 issued to the assessee; assessee filed return on 30.11.2022.
- Assessment order u/s 153C passed by AO on 28.03.2024 making addition of Rs. 6,50,000 u/s 69 of the Act for AY 2019-20.
- The assessee filed appeal before CIT(A) against the addition.
Procedural History
- 18.02.2026: CIT(A) dismissed the assessee's appeal ex-parte for non-prosecution after issuing three notices to the assessee, none of which were complied with.
- 20.07.2026: Hearing before ITAT Delhi Bench 'C'.
- 21.07.2026: Impugned order passed by ITAT allowing the appeal for statistical purposes and remanding the matter to CIT(A) for fresh adjudication.
Relief Sought
The assessee sought restoration of the appeal before the CIT(A) for fresh adjudication on merits, arguing that the ex-parte dismissal was unsustainable as it did not decide the issues on merits and violated Section 250(6).
The Legal Issue
The central question was whether an ex-parte dismissal of an appeal by the CIT(A) for non-prosecution, without adjudicating the issues on merits and without recording reasons, is sustainable under Section 250(6) of the Income-tax Act, 1961.
Arguments Presented
For the Appellant (Assessee)
The counsel argued that the CIT(A) had dismissed the appeal ex-parte without deciding the issues on merits and without recording reasons, which violated Section 250(6). It was prayed that the matter be restored to the CIT(A) for fresh adjudication after affording an opportunity of hearing.
For the Respondent (Revenue)
The learned CIT-DR submitted that the assessee had not complied with the three notices issued by the CIT(A) and that the ex-parte dismissal was justified. The Revenue relied upon the assessment order and the CIT(A)'s order, praying for confirmation of the dismissal.
The Court's Analysis
The Tribunal examined the statutory mandate under Section 250(6) of the Income-tax Act, 1961, which requires the CIT(A) to state the points for determination, his decision thereon, and the reasons for such decision. The Tribunal observed that the CIT(A) had not conducted any inquiry, nor called for the assessment records, and had merely dismissed the appeal in limine without adjudicating the issues on merits.
"The appellate order passed by ld. CIT(A) is a non speaking order passed ex-parte in limine without deciding the issue arising in the appeal on merits. The ld. CIT(A) is required and obligated to pass appellate order in compliance with the provisions of section 250(6) of the 1961 Act... The appellate order passed by ld. CIT(A) is clearly in violation of section 250(6) of the 1961 Act... and liable to be set aside."
The Tribunal further noted that the CIT(A) has powers co-terminus with the AO, including the power of enhancement, and that the failure to comply with statutory requirements vitiates the order. The Tribunal held that the ex-parte dismissal without adjudication on merits deprives higher appellate authorities of the reasoning necessary to adjudicate further appeals and violates the principles of natural justice.
The Tribunal clarified that it had not commented on the merits of the issues and directed the CIT(A) to pass a reasoned order on merits after affording proper opportunity of hearing to the assessee in accordance with Section 250(6).
The Verdict
The Tribunal allowed the assessee's appeal for statistical purposes, set aside the ex-parte dismissal order of the CIT(A) dated 18.02.2026, and remanded the matter to the CIT(A) for fresh adjudication after giving proper opportunity of hearing to both parties. The CIT(A) was directed to comply with Section 250(6) and pass a reasoned, speaking order on merits. The assessee was directed to comply with notices issued by the CIT(A) during the remand proceedings, failing which the CIT(A) would be free to decide the appeal ex-parte on merits in accordance with law.
What This Means For Similar Cases
Ex-parte Dismissal Must Be on Merits
- CIT(A) cannot dismiss an appeal ex-parte merely for non-prosecution without adjudicating the issues on merits.
- Section 250(6) mandates a reasoned, speaking order stating points for determination, decision, and reasons thereof.
- Non-compliance with Section 250(6) renders the appellate order liable to be set aside.
Natural Justice and Opportunity of Hearing
- The CIT(A) must afford proper opportunity of hearing to the assessee before passing an order.
- The order must reflect the reasoning for the decision to enable higher appellate authorities to adjudicate further appeals.
- The principles of natural justice are integral to the appellate process under the Income-tax Act.
Remand for Fresh Adjudication
- Where an appeal is dismissed ex-parte without merits, the ITAT will remand the matter for fresh adjudication.
- The remand order is not a final adjudication on merits but ensures compliance with statutory requirements and natural justice.
- Practitioners should ensure compliance with notices and timely submission of evidence to avoid ex-parte orders.
