Disallowance Challenged: Bela Dharam Godha vs. ITO Ward 30(4), New Delhi – Appeal Remanded (ITA 6169/DEL/2019)

Case Overview

The case of Bela Dharam Godha vs. Income Tax Officer, Ward 30(4), New Delhi, relates to the assessment year 2009-10. The appellant, Bela Dharam Godha, challenged the reopening of her case under Section 147 of the Income Tax Act, 1961, which led to a disallowance of Rs. 2.84 crore on account of long-term capital gains.

The reopening of the case was conducted by the Income Tax Officer (ITO), Ward 30(4), New Delhi, who passed the assessment order leading to the disallowance. Dissatisfied with the order, the appellant filed an appeal with the Commissioner of Income Tax (Appeals)-10, New Delhi (CIT(A)). However, due to non-appearance, the CIT(A) dismissed the appeal ex-parte, which led to the appellant approaching the Income Tax Appellate Tribunal (ITAT).

Background and Proceedings

The original case was reopened under Section 147 of the Income Tax Act, which empowers the Assessing Officer to reassess income that may have escaped assessment. In this case, the reassessment led to the disallowance of Rs. 2.84 crore on account of long-term capital gains.

The appellant, Bela Dharam Godha, contested this disallowance and filed an appeal with the CIT(A). However, notices sent to the appellant’s address were returned unserved with the postal remarks “left,” indicating that the appellant was no longer residing at the provided address. Despite an attempt to serve notice through affixture, the appellant did not appear before the CIT(A), leading to the dismissal of the appeal ex-parte.

Appeal Before the ITAT

In the appeal before the ITAT, the appellant argued that the CIT(A) had dismissed the appeal solely based on non-appearance without addressing the merits of the case. The appellant’s representative submitted that the appeal should have been decided on its merits, given the significant amount involved in the disallowance.

The Revenue, on the other hand, supported the order of the CIT(A) and argued that the dismissal was justified due to the appellant’s non-compliance with the notice requirements.

ITAT’s Observations and Decision

The ITAT noted that while the appellant’s conduct in not appearing before the CIT(A) was questionable, the CIT(A) should have adjudicated the case on its merits rather than dismissing it solely based on non-appearance. The ITAT emphasized that the principles of natural justice require that cases be decided based on substantive issues rather than procedural defaults.

The ITAT observed that the notices sent to the appellant were returned with remarks indicating that the appellant had left the address provided. The tribunal also acknowledged that the appellant did not inform the CIT(A) of any change in address, contributing to the situation. However, the tribunal found it appropriate to remand the case to the CIT(A) for a fresh hearing, ensuring that the merits of the case would be duly considered.

Directions by the ITAT

The ITAT directed the CIT(A) to rehear the case on its merits, giving the appellant a reasonable opportunity to present her case. The tribunal also instructed the appellant to ensure her presence in the proceedings and provide all necessary documents for proper adjudication.

The ITAT warned that any further default on the part of the appellant could result in the dismissal of the appeal without further leniency. The tribunal’s decision to remand the case highlights the importance of addressing substantive issues in tax disputes, even when procedural lapses occur.

Conclusion

The decision in ITA 6169/DEL/2019 underscores the importance of fairness and due process in tax adjudication. The remanding of the case to the CIT(A) ensures that the substantive issues related to the disallowance of Rs. 2.84 crore on account of long-term capital gains will be addressed, providing the appellant with an opportunity to have her case heard on its merits.

The ITAT’s decision serves as a reminder to taxpayers of the importance of keeping their contact information up-to-date with tax authorities and responding promptly to notices. It also reinforces the principle that tax disputes should be resolved based on the substantive merits of the case rather than procedural defaults.

In the result, the ITAT allowed the appeal for statistical purposes, giving the appellant another opportunity to seek a resolution based on the merits of her case.

Disallowance Challenged: Bela Dharam Godha vs. ITO Ward 30(4), New Delhi – Appeal Remanded (ITA 6169/DEL/2019)