CBDT Instruction No. 20/2003 regarding timely disposal of appeals is also applicable to faceless regime – ITAT
In a recent judgment, ITAT Raipur held that CBDT Instruction No. 20/2003 related to timely disposal of appeals is also applicable to faceless regime. The ITAT set aside the appellate order passed by CIT(A) after a lapse of an inordinate period of 3½ years from the date on which the appeal was last fixed for furnishing online submission.
ABCAUS Case Law Citation:
4305 (2024) (11) abcaus.in ITAT
Case laws relied upon by the Parties:
Pr. CIT Vs. Shodiman Investments Pvt. Ltd. 422 ITR 37 (Bom.)
Micro Marbles Private Limited Vs. ITO
DCIT Vs. Sunita Finlease Ltd.
In the instant case, the assessee had challenged the order passed by the CIT(A) / National Faceless Appeal Center (NFAC) in confirming order passed by the Assessing Officer (AO) under Sec.147 r.w.s. 143(3) of the Income Tax Act, 1961 (the Act).
The AO based on information received from the Investigation Wing that the appellant assessee company was a beneficiary of accommodation entries received from Kolkata based company initiated proceedings u/s 147 of the Act. Notice u/s 148 of the Act was issued to the assessee company.
The AO in order to verify the authenticity of the assessee’s claim of having received an amount towards share application money issued notice u/s.133(6) of the Act calling upon the party to furnish certain information.
However, the afore mentioned share applicant party failed to comply with the notice issued u/s. 133(6) of the Act. The AO after deliberating upon the “balance sheet” of the share applicant company observed that it did not possess the creditworthiness to make the investment under observation as share application money with the assessee company.
Accordingly, the AO vide his order passed u/s 147 r.w.s. 143(3) of the Act held the amount of said share application money as an unexplained cash credit u/s 68 of the Act.
However, the CIT(A) dismissed the appeal of the assessee.
Before the Tribunal, apart from the contesting the appeals on merit, the assessee assailed the validity of the order of the CIT(Appeals). It was submitted that the assessee company was in receipt of notice for filing online submission on or before specified date. In compliance, the assessee company had filed its reply within the specified date. However, after the assessee company had filed its reply no further hearing of the appeal was fixed by the CIT(Appeals), who thereafter, had proceeded with and disposed of the appeal vide order after a lapse of a period of 3½ years from the date of last hearing of the appeal.
It was contended that the order of the CIT(A) disposing of the appeal was not only an arbitrary exercise carried out by the appellate authority, but also was in violation of the CBDT Instruction.
The Tribunal observed that in the order of the CIT(A) there was not a whisper that the appeal of the assessee company was re-fixed after filing of the online submissions by the assessee. These facts were also not disputed by the Revenue. The CIT(Appeals) had though taken cognizance of the reply/written submission filed by the assessee company but thereafter, had not refixed the hearing of the appeal and had disposed off the same after a lapse of a period of 3½ years.
The Tribunal observed that the CBDT Instruction No. 20/2003 which requires appeals to be disposed off within 15 days of the last hearing, although pertains to the era of physical regime of hearing of the appeals by the CIT(Appeals), but the same in pith and substance, clearly applicable to the disposal of the appeals in faceless manner in the present regime. Further, the CBDT considering the importance of its Instruction No. 20/2003, and ensuring strict adherence to the same, had thereafter, issued a letter dated 19th June, 2015 wherein, they were requested to ensure strict compliance of the time frame provided in the aforesaid instruction for disposal of the appeals by the CIT(Appeals).
The Tribunal observed that the Instructions issued by the CBDT are binding on the revenue as had been held by the Hon’ble High Court and expressed its firm conviction, that the disposal of the appeal in a efficacious manner, within the time frame as provided in the aforesaid Instruction, which though was issued during the physical regime of disposal of appeals by the CIT(Appeals) requires to be strictly adhered to.
The Tribunal noted that the CIT(Appeals), NFAC had issued notice intimating the hearing of the appeal, wherein the assessee company was called upon to comply on or before the specified date. Thereafter after almost one and half year later, the CIT(Appeals), NFAC provided enablement of communication window. Nothing was on record to show that any notice intimating fixation of the appeal was issued thereafter.
The Tribunal observed that as the appeal of the assessee company had been disposed off after a lapse of an inordinate period of 3½ years from the date on which the appeal was last fixed for furnishing online submission, therefore, the order so passed cannot be sustained on the said count itself.
Accordingly, the Tribunal set-aside the impugned order and restored the matter to the file of the CIT(Appeals), with a direction to re-adjudicate the same afresh within a reasonable time period after affording a reasonable opportunity of being heard to the assessee company.
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