SWAMI SHYAMLANAND SHIKSHA SAMITI JAIPUR vs. COMMISSIONER OF INOCME TAX (EXEMPTION)

Facts

The assessee, Swami Shyamlanand Shiksha Samiti, filed an appeal under Section 260A of the Income Tax Act, 1961, against an order dated 02.05.2023 (pronounced 07.06.2023) passed by the Income Tax Appellate Tribunal (ITAT), Jaipur Bench. The ITAT had dismissed the assessee's appeal ex-parte. The assessee contended that a notice for appearance was issued for 02.05.2023, and on 26.04.2023, an adjournment application was filed due to ongoing examinations. This application was dismissed on 02.05.2023, leading to the ex-parte dismissal of the appeal. The assessee sought to quash the ITAT's order and have the appeal decided on merits after a hearing.

Held

The High Court allowed the appeal, holding that the impugned order of the ITAT was passed without granting a reasonable opportunity of hearing to the appellant, thus violating principles of natural justice. The Court reasoned that the appellant had filed an adjournment application due to unavoidable circumstances (examinations), and its dismissal led to an ex-parte order. The ratio decidendi is that an appellate tribunal must ensure a fair hearing before passing an order, and ex-parte decisions based on dismissed adjournment applications without proper consideration can be set aside. The Court quashed and set aside the ITAT's ex-parte order and remanded the matter back to the ITAT for a fresh decision on merits after granting an opportunity of hearing to the appellant. Parties were directed to appear before the ITAT on 25.11.2024. No issue was expressly left undecided.

Key Issues

1. Whether the ITAT erred in dismissing the appeal ex-parte without affording a reasonable opportunity of hearing to the appellant, thereby violating principles of natural justice? (Question of law and fact, concerning the procedural fairness of the ITAT's proceedings). Assessee's Contention: The appellant argued that its adjournment application, filed due to ongoing examinations, was dismissed, and the appeal was subsequently decided ex-parte. They relied on the principle that a reasonable opportunity of hearing must be granted. The limited prayer was to set aside the ex-parte order and have the appeal decided on merits. Revenue's Contention: The respondent (Commissioner of Income Tax (Exemption)) did not oppose the prayer made by the appellant.