Pearl Global Industries Ltd vs. ACIT Circle-19(2), New Delhi – ITA No. 6624/DEL/2019: Appeal Restored Due to Ex-Parte Order Without Merits Consideration

Pearl Global Industries Ltd vs. ACIT Circle-19(2), New Delhi

ITA No. 6624/DEL/2019 – Assessment Year 2015-16

Appellant: Pearl Global Industries Ltd, New Delhi

Respondent: ACIT, Circle-19(2), New Delhi

Date of Order: 22nd June 2022

Pronounced on: 22nd June 2022

Order Type: Final Tribunal Order

Background of the Case

This case involves a tax dispute between Pearl Global Industries Ltd, a prominent company in New Delhi, and the Additional Commissioner of Income Tax (ACIT), Circle-19(2), New Delhi. The dispute pertains to the assessment year 2015-16. Pearl Global Industries Ltd filed its return of income on 30th November 2015, declaring an income of Rs. 14,07,66,560. However, the Assessing Officer (AO), after selecting the case for scrutiny, passed an order under Section 143(3) of the Income Tax Act on 31st December 2017, determining a total income of Rs. 16,18,64,303 under normal provisions and book profits of Rs. 15,87,84,241 under the Minimum Alternate Tax (MAT) provisions.

Aggrieved by the AO’s order, Pearl Global Industries Ltd appealed to the Commissioner of Income Tax (Appeals) [CIT(A)], who dismissed the appeal in an ex-parte order dated 10th June 2019. Dissatisfied with the CIT(A)’s decision, the company filed an appeal with the Income Tax Appellate Tribunal (ITAT), arguing that the CIT(A) had passed the order without considering the merits of the case and without giving them a fair opportunity to present their case.

Grounds of Appeal

The appellant raised several grounds in their appeal, but the primary focus was on the ex-parte order passed by the CIT(A). The appellant contended that the CIT(A) dismissed their appeal without properly examining the nature of the additions and without providing them with a fair hearing. The company argued that this was a violation of the principles of natural justice and sought a restoration of their case to the CIT(A) for a fair hearing.

Proceedings Before the ITAT

During the proceedings before the ITAT, the appellant’s counsel highlighted that the CIT(A) had incorrectly noted that no one appeared before them on 25th April 2019. In reality, the counsel had appeared and submitted the required documents, which were not considered by the CIT(A) in their order. The appellant requested that the case be restored to the CIT(A) to allow them a fair opportunity to present their case.

The respondent’s counsel, representing the Revenue, objected to the appellant’s request for a second opportunity, arguing that the CIT(A)’s order should stand as it is. However, the ITAT noted that the CIT(A) had failed to follow the mandate required under Sub Section (6) of Section 250 of the Income Tax Act, which obligates the CIT(A) to state the points in dispute and provide reasons for their conclusions. By dismissing the appeal without considering the merits, the CIT(A) had failed to adhere to this mandate.

ITAT’s Findings and Decision

The ITAT, comprising Judicial Member Sh. Narender Kumar Choudhry and Accountant Member Sh. Anil Chaturvedi, found merit in the appellant’s arguments. The tribunal observed that the CIT(A) had passed an ex-parte order without giving due consideration to the submissions made by the appellant. The ITAT emphasized that the principles of natural justice require that all parties be given a fair opportunity to present their case and that no party should be condemned unheard.

In light of these considerations, the ITAT set aside the impugned order of the CIT(A) dated 10th June 2019 and restored the matter to the CIT(A) for re-adjudication. The ITAT directed the CIT(A) to consider the case on its merits and provide a fair opportunity for both parties to present their arguments. The appellant was also instructed to furnish all necessary details to support their case during the re-adjudication process.

As a result of the ITAT’s decision, the other grounds raised by the appellant were not adjudicated, as the primary issue was the restoration of the appeal for a fair hearing.

Conclusion

This case underscores the importance of adhering to the principles of natural justice in tax proceedings. The ITAT’s decision to restore the case to the CIT(A) highlights the necessity for tax authorities to provide a fair hearing to all parties and to carefully consider the merits of each case before passing a judgment.

For taxpayers, this decision serves as a reminder that procedural lapses by tax authorities can be successfully challenged to ensure a fair outcome. The restoration of this case to the CIT(A) provides Pearl Global Industries Ltd with a renewed opportunity to present their case and seek a just resolution.

Order Pronounced in the Open Court on 22nd June 2022

Per Anil Chaturvedi, Accountant Member and Narender Kumar Choudhry, Judicial Member.

Pearl Global Industries Ltd vs. ACIT Circle-19(2), New Delhi – ITA No. 6624/DEL/2019: Appeal Restored Due to Ex-Parte Order Without Merits Consideration