Statutory Obligation of Appellate Authorities: ITAT Pune Rules CIT(A) Cannot Dismiss Appeals Solely for Non-Prosecution

The appellate framework under the Income Tax Act 1961 is designed to ensure that grievances raised by an assessee are evaluated thoroughly, objectively, and strictly on their substantive merits. A recurring procedural dispute within this framework is whether an appellate authority possesses the jurisdiction to dismiss an appeal outright due to the appellant's failure to attend hearings or respond to notices. Addressing this critical issue, the Income Tax Appellate Tribunal (ITAT), Pune Bench, in the matter of Urun Vividh Karyakari Vikas Society Ltd. vs ITO, has categorically reaffirmed that the Commissioner of Income Tax (Appeals) [CIT(A)] is statutorily bound to adjudicate appeals on their merits.

The Tribunal ruled that dismissing an appeal merely for non-prosecution, without passing a reasoned order on the substantive grounds, is legally unsustainable. This decision serves as a vital reminder of the mandatory obligations imposed upon appellate authorities under Section 250(6) of the Income Tax Act 1961.

Factual Matrix of the Dispute

The procedural history of the case reveals a sequence of non-compliances at the first appellate stage, which ultimately led to the dismissal of the appeal. The assessee, Urun Vividh Karyakari Vikas Society Ltd., was subjected to an assessment for the Assessment Year (AY) 2019-20. The Assessing Officer finalized the assessment order under Section 147 read with Section 144 of the Income Tax Act 1961 on 2 January 2024. Aggrieved by the additions and the ex-parte nature of the assessment, the assessee escalated the matter by filing an appeal before the CIT(A), National Faceless Appeal Centre (NFAC).

During the course of the appellate proceedings, the NFAC issued multiple notices to the assessee to provide an opportunity to present its case and submit supporting evidentiary documents. The timeline of the notices issued by the CIT(A) was as follows:

  • 18 March 2024
  • 28 March 2024
  • 26 April 2024
  • 24 May 2024
  • 27 September 2024
  • 28 March 2025

Despite the issuance of these six distinct notices over a prolonged period, the assessee did not furnish any written submissions, upload any documentary evidence, or seek an adjournment through the electronic income-tax portal.

The First Appellate Authority's Decision

Faced with continuous silence from the assessee, the CIT(A) concluded the proceedings and passed the appellate order on 22.05.2025. The CIT(A) observed that under the faceless appeal environment, communications are strictly electronic, and appellants are required to respond via the designated appeal module on the e-filing portal.

The CIT(A) deduced that the assessee's persistent failure to respond indicated a complete lack of interest in pursuing the litigation. Consequently, the CIT(A) dismissed all the grounds of appeal for non-prosecution, without delving into the substantive merits of the additions made by the Assessing Officer.