SHAFIQ AHMED ,MUMBAI vs. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 41(1)(1), MUMBAI

2.1 In light of the decision of In light of the decision of Hon’ble Supreme Court in Court in Union of India v. Ashish Agarwal India v. Ashish Agarwal [(2022) SCC OnLine SC 543], a fresh notice [(2022) SCC OnLine SC 543], a fresh notice under Section 148A(b) under Section 148A(b) of the Act was issued on 25.05.2022, thereby was issued on 25.05.2022, thereby affording the assessee an opportunity of being heard. However, no ssessee an opportunity of being heard. However, no ssessee an opportunity of being heard. However, no response was furnished by the assessee. Consequently, an order response was furnished by the assessee. Consequently, an order response was furnished by the assessee. Consequently, an order under Section 148A(d) was passed, and a fresh notice under Section under Section 148A(d) was passed, and a fresh notice under Section under Section 148A(d) was passed, and a fresh notice under Section 148 was issued on 07.07.2022, after obtaining due approval from 148 was issued on 07.07.2022, after obtaining due approval from 148 was issued on 07.07.2022, after obtaining due approval from the competent authority. nt authority.

2.2 During the reassessment proceedings, multiple statutory During the reassessment proceedings, multiple statutory During the reassessment proceedings, multiple statutory notices were issued between 08.07.2022 and 06.05.2023, which notices were issued between 08.07.2022 and 06.05.2023, which notices were issued between 08.07.2022 and 06.05.2023, which also remained unresponded. also remained unresponded. A final show-cause notice dated cause notice dated 16.05.2023 was likewise ignored. In the absence of any compliance, 16.05.2023 was likewise ignored. In the absence of any compli 16.05.2023 was likewise ignored. In the absence of any compli the AO proceeded to complete the reassessment ex parte and made the AO proceeded to complete the reassessment ex parte and made the AO proceeded to complete the reassessment ex parte and made additions aggregating to additions aggregating to ₹14,84,700.

2.3 The assessee carried the matter in appeal before the Ld. The assessee carried the matter in appeal before the Ld. The assessee carried the matter in appeal before the Ld. CIT(A). However, there was no effective representation despite CIT(A). However, there was no effective representation despite CIT(A). However, there was no effective representation despite repeated opportunities. T repeated opportunities. The appellate authority, in its order, he appellate authority, in its order, recorded that notices were issued on 05.02.2025, 13.02.2025 and recorded that notices were issued on 05.02.2025, 13.02.2025 and recorded that notices were issued on 05.02.2025, 13.02.2025 and 20.02.2025, granting sufficient time for the assessee to respond. 20.02.2025, granting sufficient time for the assessee to respond. 20.02.2025, granting sufficient time for the assessee to respond. Despite such indulgence, no substantive reply was submitted. Despite such indulgence, no substantive reply was submitted. Despite such indulgence, no substantive reply was submitted. Consequently, the appeal wa Consequently, the appeal was dismissed for non-prosecution. prosecution. The finding of the Ld. CIT(A) is reproduced as under: finding of the Ld. CIT(A) is reproduced as under:

“4. Observations & Findings of Appellate Authority: 4. Observations & Findings of Appellate Authority: 4. Observations & Findings of Appellate Authority: - 4.1 During the appellate proceedings, the appellant was 4.1 During the appellate proceedings, the appellant was 4.1 During the appellate proceedings, the appellant was issued issued issued notice notice notice on05.02.2025 on05.02.2025 on05.02.2025 and and and 13.02.2025requiring 13.02.2025requiring 13.02.2025requiring submission of a response. submission of a response. In the response no reply submitted In the response no reply submitted and adjournment and adjournment sought by the appellant. Subsequently, in sought by the appellant. Subsequently, in the interest of natural justice, adjournment granted through the interest of natural justice, adjournment granted through the interest of natural justice, adjournment granted through notice dated 20.02.2025 issued to appellant with compliance notice dated 20.02.2025 issued to appellant with compliance notice dated 20.02.2025 issued to appellant with compliance date26.02.2025 t date26.02.2025 to submit the reply. The notice explicitly o submit the reply. The notice explicitly stated:"You are requested to furnish your detailed replies on stated:"You are requested to furnish your detailed replies on stated:"You are requested to furnish your detailed replies on the points (mentioned in the notice) within the specified time the points (mentioned in the notice) within the specified time the points (mentioned in the notice) within the specified time frame mentioned in the notice. Non frame mentioned in the notice. Non-compliance may result in compliance may result in the case being decided on mer the case being decided on merits or dismissed accordingly."It its or dismissed accordingly."It was further highlighted that timely submission of the was further highlighted that timely submission of the was further highlighted that timely submission of the response would ensure a fair and just examination of the response would ensure a fair and just examination of the response would ensure a fair and just examination of the appellant's case. Despite this opportunity, the appellant once appellant's case. Despite this opportunity, the appellant once appellant's case. Despite this opportunity, the appellant once again failed to comply with the notice. again failed to comply with the notice. 4.2 In this context, reference may be made to the ratio of is context, reference may be made to the ratio of is context, reference may be made to the ratio of various judicial pronouncements where it has been held that: various judicial pronouncements where it has been held that: various judicial pronouncements where it has been held that: "natural justice are not codified nor are they unvarying in all "natural justice are not codified nor are they unvarying in all "natural justice are not codified nor are they unvarying in all situations, rather they are flexible. It has to be adhered from situations, rather they are flexible. It has to be adhered from situations, rather they are flexible. It has to be adhered from both ends i.e. fr both ends i.e. from the assessee as well as from the om the assessee as well as from the authority. They may, however, be summarized in one word: authority. They may, however, be summarized in one word: authority. They may, however, be summarized in one word: 'fairness'. In other words, what they require is fairness by 'fairness'. In other words, what they require is fairness by 'fairness'. In other words, what they require is fairness by the authority concerned. Of course, what is fair would the authority concerned. Of course, what is fair would the authority concerned. Of course, what is fair would depend on the situation and the context. Lord E depend on the situation and the context. Lord Esher M.R. in sher M.R. in Voinet vs. Barrett (1885) 55 L.J. QB 39, observed: "Natural Voinet vs. Barrett (1885) 55 L.J. QB 39, observed: "Natural Voinet vs. Barrett (1885) 55 L.J. QB 39, observed: "Natural justice is the natural sense of what is right and wrong." In justice is the natural sense of what is right and wrong." In justice is the natural sense of what is right and wrong." In this context, we may refer to observations of the Hon'ble this context, we may refer to observations of the Hon'ble this context, we may refer to observations of the Hon'ble Justice Krishna lyer J..... opportunity should be real and not Justice Krishna lyer J..... opportunity should be real and not Justice Krishna lyer J..... opportunity should be real and not ritualistic, effective and not illusory and must be followed by itualistic, effective and not illusory and must be followed by itualistic, effective and not illusory and must be followed by a fair consideration of the explanation offered and the a fair consideration of the explanation offered and the a fair consideration of the explanation offered and the materials available, culminating in an order which discloses materials available, culminating in an order which discloses materials available, culminating in an order which discloses reasons for the decision sufficient to show that the mind of reasons for the decision sufficient to show that the mind of reasons for the decision sufficient to show that the mind of the authority h the authority has been applied relevantly and rationally and as been applied relevantly and rationally and without reliance on facts not furnished to the affected party. without reliance on facts not furnished to the affected party. without reliance on facts not furnished to the affected party. Natural justice, must warn, cannot be perverted into Natural justice, must warn, cannot be perverted into Natural justice, must warn, cannot be perverted into anything unnatural or unjust and cannot therefore be treated anything unnatural or unjust and cannot therefore be treated anything unnatural or unjust and cannot therefore be treated as a set of dogmatic prescription as a set of dogmatic prescriptions applicable without s applicable without reference to the circumstances of the case. The question reference to the circumstances of the case. The question reference to the circumstances of the case. The question merely is, in all conscience have you been fair in dealing with merely is, in all conscience have you been fair in dealing with merely is, in all conscience have you been fair in dealing with that man? If you have not been arbitrary, not absent that man? If you have not been arbitrary, not absent that man? If you have not been arbitrary, not absent-minded, not unreasonable or not unspeaking, you cannot deny t not unreasonable or not unspeaking, you cannot deny t not unreasonable or not unspeaking, you cannot deny that there has been no 'natural justice' breached, rather fullest there has been no 'natural justice' breached, rather fullest there has been no 'natural justice' breached, rather fullest natural justice has been followed but it is the person who natural justice has been followed but it is the person who natural justice has been followed but it is the person who has not availed any chances for the reasons best known to has not availed any chances for the reasons best known to has not availed any chances for the reasons best known to him." Despite providing ample opportunities of being heard and Despite providing ample opportunities of being heard and Despite providing ample opportunities of being heard and following the principle of natural justice, the assessee chose he principle of natural justice, the assessee chose he principle of natural justice, the assessee chose not avail the same by failing to comply with the notices of the not avail the same by failing to comply with the notices of the not avail the same by failing to comply with the notices of the appellant authority. appellant authority.

4.3 interested non 4.3 interested non- The aforesaid mentioned circumstances The aforesaid mentioned circumstances show that the appellant is not in pursuing its appeal. The show that the appellant is not in pursuing its appeal. The show that the appellant is not in pursuing its appeal. The maxim 'vigilantibus dormientibusjurasubvenunť i.e. the law xim 'vigilantibus dormientibusjurasubvenunť i.e. the law xim 'vigilantibus dormientibusjurasubvenunť i.e. the law assists those who are vigilant and not those who sleep over assists those who are vigilant and not those who sleep over assists those who are vigilant and not those who sleep over their right, is applicable in this case. their right, is applicable in this case. The Hon'ble ITAT in The Hon'ble ITAT in for the 1027/CHD/2005 for the AY 2002-03 in the case of M/s Chhabra Land 03 in the case of M/s Chhabra Land 03 in the case of M/s Chhabra Land & Housing Ltd. after following the decision of Hon'ble Supreme Court in Ltd. after following the decision of Hon'ble Supreme Court in Ltd. after following the decision of Hon'ble Supreme Court in the case of B.N. Bhattacharjee & other 118 ITR 461 [SC] held the case of B.N. Bhattacharjee & other 118 ITR 461 [SC] held the case of B.N. Bhattacharjee & other 118 ITR 461 [SC] held that the appeal does not mean merely filing of the appeal but that the appeal does not mean merely filing of the appeal but that the appeal does not mean merely filing of the appeal but effectively pursuing the same. effectively pursuing the same. Considering the above facts an Considering the above facts and material on record, it is held d material on record, it is held that the Assessing Officer has made the addition on merits that the Assessing Officer has made the addition on merits that the Assessing Officer has made the addition on merits after thoroughly analyzing the facts of the case. No infirmity after thoroughly analyzing the facts of the case. No infirmity after thoroughly analyzing the facts of the case. No infirmity or error is observed in the order passed by the Assessing or error is observed in the order passed by the Assessing or error is observed in the order passed by the Assessing Officer. Consequently, the appeal filed by Officer. Consequently, the appeal filed by the assessee lacks the assessee lacks merit and is hereby dismissed. merit and is hereby dismissed. In the result, the appeal of the assessee stands In the result, the appeal of the assessee stands dismissed. dismissed.”

3. Before us, the learned counsel for the assessee submitted that Before us, the learned counsel for the assessee submitted that Before us, the learned counsel for the assessee submitted that the non-compliance before the Ld. CIT(A) was not deliberate but compliance before the Ld. CIT(A) was not deliberate but compliance before the Ld. CIT(A) was not deliberate but occasioned due to bona fide reasons. In respect of the first notice to bona fide reasons. In respect of the first notice to bona fide reasons. In respect of the first notice dated 05.02.2025, it was submitted that the assessee’s consultant dated 05.02.2025, it was submitted that the assessee’s consultant dated 05.02.2025, it was submitted that the assessee’s consultant failed to submit the requisite reply. As regards the second notice failed to submit the requisite reply. As regards the second notice failed to submit the requisite reply. As regards the second notice dated 13.02.2025, it was argued that an adjournment was indeed dated 13.02.2025, it was argued that an adjournment was indeed dated 13.02.2025, it was argued that an adjournment was indeed sought, though not acknowledged in the impugned appellate order. though not acknowledged in the impugned appellate order. though not acknowledged in the impugned appellate order. In respect of the third notice dated 20.02.2025, it was submitted In respect of the third notice dated 20.02.2025, it was submitted In respect of the third notice dated 20.02.2025, it was submitted that the same could not be retrieved from the registered e-mail ( g- that the same could not be retrieved from the registered e that the same could not be retrieved from the registered e mail) due to the account having exceeded its storage capacity. mail) due to the account having exceeded its storage capacity. mail) due to the account having exceeded its storage capacity.

3.1 Having regard to the facts on record, and upon hearing Having regard to the facts on record, and upon hearing Having regard to the facts on record, and upon hearing learned counsel for the parties, we are of the considered opinion learned counsel for the parties, we are of the considered opinion learned counsel for the parties, we are of the considered opinion that the ld First appellate authority ought to have decided the that the ld First appellate authority ought to have decided the that the ld First appellate authority ought to have decided the appeal on merits. The powers of the ld. CIT(A), as delineated under appeal on merits. The powers of the ld. CIT(A), as delineated under appeal on merits. The powers of the ld. CIT(A), as delineated under Section 250(6) of the Act, obligate the authority to pass a speaking Section 250(6) of the Act, obligate the authority to pass a speaking Section 250(6) of the Act, obligate the authority to pass a speaking and reasoned order, even in the absence of participation by the and reasoned order, even in the absence of participation by the and reasoned order, even in the absence of participation by the assessee. The dismissal of the appeal solely on account of non- assessee. The dismissal of the appeal solely on account of non assessee. The dismissal of the appeal solely on account of non compliance, without dealing with the merits of the additions made, compliance, without dealing with the merits of the addition compliance, without dealing with the merits of the addition cannot be countenanced in law. cannot be countenanced in law.

3.2 It is well settled that the principles of natural justice are not It is well settled that the principles of natural justice are not It is well settled that the principles of natural justice are not mere technical formalities but are intended to ensure substantive mere technical formalities but are intended to ensure substantive mere technical formalities but are intended to ensure substantive fairness in quasi-judicial proceedings. While the assessee is judicial proceedings. While the assessee is judicial proceedings. While the assessee is expected to be vigilant in pursuing its remedies, it is equally lant in pursuing its remedies, it is equally lant in pursuing its remedies, it is equally incumbent upon the appellate authority to adjudicate the matter in incumbent upon the appellate authority to adjudicate the matter in incumbent upon the appellate authority to adjudicate the matter in accordance with law, particularly where additions have been made accordance with law, particularly where additions have been made accordance with law, particularly where additions have been made in ex parte reassessment proceedings. in ex parte reassessment proceedings.

3.3 We also notice that the three notices We also notice that the three notices issued by the Ld. CIT(A) issued by the Ld. CIT(A) were within short intervals of time, and that there exists a plausible were within short intervals of time, and that there exists a plausible were within short intervals of time, and that there exists a plausible explanation for the assessee’s failure to respond. In such explanation for the assessee’s failure to respond. In such explanation for the assessee’s failure to respond. In such circumstances, we are of the view that the ends of justice would be circumstances, we are of the view that the ends of justice would be circumstances, we are of the view that the ends of justice would be met if one more opportunity is a met if one more opportunity is afforded to the assessee to contest fforded to the assessee to contest the matter on merits before the ld first appellate authority. the matter on merits before the ld first appellate authority. the matter on merits before the ld first appellate authority.

3.4 Accordingly, the impugned order passed by the Ld. CIT(A) is Accordingly, the impugned order passed by the Ld. CIT(A) is Accordingly, the impugned order passed by the Ld. CIT(A) is set aside. The matter is remitted to the file of the CIT(A) with a set aside. The matter is remitted to the file of the CIT(A) with a set aside. The matter is remitted to the file of the CIT(A) with a direction to decide the appe direction to decide the appeal afresh on merits, after affording the al afresh on merits, after affording the assessee a reasonable opportunity of being heard. It is clarified that assessee a reasonable opportunity of being heard. It is clarified that assessee a reasonable opportunity of being heard. It is clarified that the assessee shall extend full cooperation in the appellate the assessee shall extend full cooperation in the appellate the assessee shall extend full cooperation in the appellate proceedings and shall not seek unnecessary adjournments. In the proceedings and shall not seek unnecessary adjournments. In the proceedings and shall not seek unnecessary adjournments. In the event of continued non on-compliance, the appellate authority shall be compliance, the appellate authority shall be at liberty to proceed in accordance with law. at liberty to proceed in accordance with law.

The ground Nos s. 2 and 3 of the appeal are allowed. are allowed. Since the 3.5 ground No. 2 and 3 have ground No. 2 and 3 have been allowed, we are not required to we are not required to adjudicate upon ground No. 1 of the appeal. adjudicate upon ground No. 1 of the appeal.