What did the Tribunal hold?

The Tribunal found that the assessee was not aware of the notices due to the company's closure. The CIT(A) had not decided the appeal on merits, hence the matter was remitted back for a fresh decision.

The assessee's company incurred heavy losses, leading to its closure and unserved notices. The CIT(A) passed an ex-parte order, confirming the AO's order without giving the assessee an opportunity to be heard.

What were the issues?

Whether the CIT(A) erred in passing an ex-parte order without providing a reasonable opportunity of being heard to the assessee.

M/S. M K Chandan Broking Limited… vs ITO | ITAT Mumbai 2022

Income Tax Appellate Tribunal, “D” BENCH, MUMBAI

Before: SHRI AMIT SHUKLA, JM & SHRI S. RIFAUR RAHMAN, AM

For Appellant: Shri Ashish Kumar, Ld. DR

For Respondent: Shri Ashish Kumar, Ld. DR

O R D E R

Per Amit Shukla, Judicial Member:

The aforesaid appeal has been filed by the assessee against the impugned order dated 28.11.2019, passed by Ld. CIT(A)-21, Mumbai for the quantum appeal of assessment passed u/s 143(3) for AY 2014-15.

M/s MK Chandan Broking Ltd 2. The assessee is mainly aggrieved by ex-parte order passed by Ld. CIT (A) without giving any reasonable and sufficient opportunity of being heard to the assessee and not deciding the appeals on merits.

Before us, Ld. Counsel for the assessee submitted that that during the year under consideration, it has incurred heavy losses from the business operation and the assessee’s company was remained closed most often. Therefore, the notices were returned by the postal authorities as ‘Unserved’. He further submitted that Ld. CIT(A) had confirmed the order of AO on the ground that assessee could not comply with the notices and consequently concluded the assessee’s proceedings ex-parte without offering sufficient opportunity of being heard to the assessee. He further submitted that Ld. CIT (A) has dismissed the appeal of the assessee without adjudication on merits, therefore he requested that the matter be restored back to the file of Ld. CIT(A).

On the other hand, Ld. DR does not have any objection if the matter is remitted back to the file of Ld. CIT (A) to be decided on merits.

M/s MK Chandan Broking Ltd 5. We have heard both the parties and perused the impugned order as well as material placed on record. We find that assessee was not aware of such notices sent due to non-functioning of its company because of heavy losses from the business, therefore the notices sent to his address were returned back ‘Unserved’ by the postal authorities. For that reason, Ld. CIT (A) had confirmed the order of AO on the ground that assessee could not comply with the notices and consequently concluded the appellate proceedings ex- parte without offering sufficient opportunity of being heard to the assessee. Looking to the fact that Ld. CIT(A) has not decided the issue before him on merits, therefore, in the interest of justice we remit back the entire appeal to the file of Ld. CIT(A) to decide afresh and in accordance with law on the grounds raised before him after giving the assessee due and effective opportunity of being heard. The assessee is also directed to co-operate in the hearing and to substantiate its case.

In the result, the appeal filed by the assessee is allowed for statistical purposes. Orders pronounced in the open court on 28th December, 2022.

M/S. M K CHANDAN BROKING LIMITED (FORMERLY KNOWN AS RTG SHARE BROKING LTD.),MUMBAI vs. ITO 13(3)(2), MUMBAI

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