This article discusses ITA No. 1899/DEL/2020, involving Triple Play Broadband Pvt Ltd, New Delhi, and the Deputy Commissioner of Income Tax (DCIT) Circle 25(2), New Delhi. The case pertains to the Assessment Year (AY) 2018-19 and was filed on November 25, 2020, with the final order pronounced on July 18, 2022. The main issue in this case revolves around the additions made under Section 143(3) of the Income Tax Act.
Triple Play Broadband Pvt Ltd, the appellant, contested the additions made by DCIT Circle 25(2), New Delhi. The additions were related to disallowance under Section 40(a)(ia) and contributions to the Employee State Insurance (ESI) and labor welfare fund under Section 36(1)(va) of the Income Tax Act. The case was initially dismissed by the Commissioner of Income Tax (Appeals) [CIT(A)]-9, New Delhi, without addressing the merits due to the non-appearance of the assessee.
The assessee’s main contention was that the CIT(A) dismissed the appeal summarily without considering the merits of the case. The assessee argued that the contributions to the ESI and labor welfare fund were made before the due date of filing the income tax return under Section 139(1) and should be allowed as deductions.
The Senior Departmental Representative (DR), Shri M. Baranwal, argued that the CIT(A)’s decision was correct and there was no error in the findings. However, it was noted that the CIT(A) did not provide an adjudication on the merits of the case.
The Income Tax Appellate Tribunal (ITAT) reviewed the case, led by Dr. B.R.R. Kumar, Accountant Member, and Shri Anubhav Sharma, Judicial Member. The tribunal emphasized the statutory obligation of the CIT(A) to dispose of an appeal on merits, regardless of the appellant’s appearance.
The tribunal referred to the Mumbai Tribunal order dated July 19, 2022, in the case of Marvel Industries Ltd. vs. DCIT, Circle 2(2)(2), where it was held:
“Whether an appellant appears before the CIT(A) or not, it is the statutory obligation of the CIT(A) to dispose of an appeal on merits. The scheme of section 250 does not visualize any situation in which an appeal can be summarily dismissed disregarding the material on record. Section 250(6) lays down that the CIT(A)’s order ‘disposing of the appeal shall be in writing and shall state the points for determination, the decision thereon and the reason for the decision’. As for the points of determination, in our considered view, it cannot be open to the learned CIT(A) to disregard what the assessee has placed before him by way of a statement of facts and the grounds of appeal.”
In light of this precedent, the ITAT remitted the matter back to the CIT(A) for a fresh adjudication on merits, providing the assessee with a fair and reasonable opportunity of being heard. The appeal was allowed for statistical purposes.
The ITAT’s decision underscores the importance of addressing the merits of a case, regardless of the appellant’s appearance, ensuring a fair and just process. This case highlights the necessity for appellate authorities to adhere to statutory obligations and provide reasoned decisions based on the material on record.
The final order, pronounced on July 18, 2022, reads:
In the light of aforesaid, this Bench is of the considered view that the interpretation given by the Ld. Tax Authorities Below with regard to the application of provision the section 36 (1) (va) of the Act is not correct. The ground no 1&3 deserve to be sustained. The appeal is allowed and the impugned order, to the extent of grounds no1, is set aside. Order pronounced in the open court on 18th July, 2022.
Signed by:
(DR. B.R.R.KUMAR) Accountant Member
(ANUBHAV SHARMA) Judicial Member
Dated: 18th July, 2022
This judgment reinforces the principle that appeals must be decided on their merits, ensuring transparency and fairness in tax administration.
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