ITAT Sets Aside Appeal Dismissal for Non-Prosecution, Orders Fresh Hearing

The assessee, a partnership firm engaged in civil construction, filed its return for AY 2023-24 declaring income of Rs 26,776,510. The case was selected for scrutiny, and assessment was completed at Rs 59,803,455 after making three additions and disallowances for non-deduction of TDS under Sections 194Q and 194C, and an addition towards unexplained sundry creditors.

Aggrieved, the assessee filed an appeal before the CIT(A). However, the CIT(A) dismissed the appeal for non-prosecution on the ground that the assessee failed to respond to four notices issued via email. The assessee contended before the Tribunal that such notices were not properly served, as no consent for email communication was provided in Form 35, and further argued that the merits of the case were not examined at all.

Central Issue: Whether the CIT(A) can dismiss an appeal for non-prosecution without deciding the case on merits, especially when the service of notice itself is questionable.

Tribunal’s Decision: The Tribunal held that the CIT(A) erred in dismissing the appeal solely for non-prosecution without adjudicating the issues on their merits. It observed that the CIT(A) is statutorily required to decide appeals by confirming, reducing, enhancing, or annulling the assessment and has no power to summarily dismiss an appeal without such examination.

Further, the Tribunal noted that the assessee had not consented to receiving notices via email in Form 35, and therefore, service of notices through email could not be considered valid. In the absence of proper service and without any discussion on merits, the appellate order was held to be unsustainable in law. Therefore, the Tribunal set aside the order of the CIT(A) and restored the matter to its file with a direction to provide a proper opportunity of hearing and decide the appeal afresh on its merits. The assessee was also directed to cooperate and respond to notices.

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