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Facts
The assessee company, engaged in manufacturing solvent oils, filed its return including agricultural income. The original assessment under Section 143(3) was subsequently set aside by the Principal CIT under Section 263 for re-examination of the agricultural income. The Assessing Officer, in the fresh assessment, disallowed the agricultural income, leading to an appeal that the CIT(A) dismissed ex-parte without the assessee's participation.
Held
The Tribunal found that the assessee had specifically opted out of email communication for notices in "Form 35" and provided a physical address. Despite this, the CIT(A) sent all notices electronically via ITBA and failed to serve physical copies, thereby denying the assessee a reasonable opportunity of being heard. The Tribunal set aside the CIT(A)'s order and remanded the matter for fresh adjudication on merits.
Key Issues
Whether the CIT(A) was justified in dismissing the appeal ex-parte when the assessee had specifically opted out of email communication, and notices were not physically served, thereby denying the assessee a fair hearing.
Sections Cited
143(3), 263, 143(2), 10, Rule 34(4) of ITAT Rules
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Income Tax Appellate Tribunal, Visakhapatnam Bench, Visakhapatnam
Before: Shri Ravish Sood & Shri Balakrishnan S.
(िनधा�रण वष�/Assessment Year:2014-15) Naga Hanuman Solvent Vs. Deputy Commissioner Oils (Pvt) Ltd., of Income Tax, Visakhapatnam. Circle-3(1), Visakhapatnam. PAN: AACCN1547J (Appellant) (Respondent) िनधा��रती �ारा/Assessee by: Sri GVN Hari, Advocate राज� व �ारा/Revenue by: Dr. Aparna Villuri, Sr. AR सुनवाई की तारीख/Date of Hearing: 24/09/2025 घोषणा की तारीख/Date of 30/09/2025 Pronouncement: आदेश / ORDER PER. RAVISH SOOD, JM: The present appeal filed by the assessee company is directed against the order passed by the Commissioner of Income-Tax (Appeals), National Faceless Appeal Center (NFAC), Delhi, dated 21/02/2025, which in turn arises from the order passed by the Assessing Officer under Section 143(3) r.w.s. 263 of the Income Tax Act, 1961 (for short, “Act”), dated 29/10/2019 for A.Y. 2014-15.
The assessee company has assailed the impugned order on the following grounds of appeal before us:
1. The order of the Ld. CIT(A) is contrary to the facts and also the law applicable to the facts of the case.
2. The Ld.CIT(A) is not justified in deciding the appeal ex-parte.
3. Without prejudice to the above, the Ld.CIT(A) is not justified in sustaining the addition of Rs. 33,87,382/- made by the AO by not granting exemption for agricultural income and treating the same as ‘income from other sources’. 4. Any other ground that may be urged at the time of appeal hearing.”
Succinctly stated the assessee company which is engaged in the business of manufacturing of solvent oils had filed its return of income for AY 2013-14 on 27/11/2014 declaring an income of Rs. 78,08,455/- along with agriculture income of Rs. 33,87,382/-. Subsequently, the case of the assessee company was selected for scrutiny assessment under Section 143(2) of the Act.
Originally, assessment was passed by the AO U/s. 143(3) of the Act, dated 29/12/2016.
Thereafter, the Learned Principal Commissioner of Income Tax-1, Visakhapatnam (in short “Pr. CIT”), vide his order passed U/s. 263 of the Act, set aside the order passed by the AO U/s. 143(3) of the Act, dated 29/12/2016 for the limited purpose of re-doing the assessment after thoroughly examining the assessee’s claim of having derived agriculture income during the subject year.
Thereafter, the AO, vide his order passed U/s. 143(3) r.w.s 263 of the Act, dated 29/10/2019 determined the income of the assessee at Rs. 1,14,24,460/-, wherein he disallowed the assessee’s claim of having derived agriculture income of Rs. 33.87 lacs and brought the said amount to tax in his hands.
Aggrieved, the assessee carried the matter in appeal before the CIT(A), but without success. For the sake of clarity, the observations of the CIT(A) are culled out as under:
The assessee, being aggrieved by the order of the CIT(A), has carried the matter in appeal before us.
Sri GVN Hari, Advocate, the learned Authorized Representative (for short “Ld.AR”) for the assessee company, at the threshold of the hearing of the appeal submitted that the assessee company had remained divested of an opportunity to put forth its case in the course of the proceedings before the CIT(A). Elaborating on his contention, the Ld. AR submitted that though the assessee company in its Memorandum of Appeal i.e., “Form-35”, had specifically opted out of receipt of notices/ communications from the office of the CIT(A) through e-mail, but no hard/physical copy of any such notices intimating the fixation of the hearing of the appeal on either of the said six occasions was ever served upon him. The Ld.AR to buttress his claim had taken us through the order of the CIT(A), which revealed that all the aforementioned six notices intimating the fixation of the appeal were issued through ITBA. The Ld. AR submitted that considering the aforesaid facts, the matter, in all fairness, be restored to the file of the CIT(A) with a direction to readjudicate the same after affording a reasonable opportunity of being heard to the assessee.
Per contra, Dr. Aparna Villuri, the Learned Departmental Representative (for short, “Ld. DR”) relied upon the orders of the lower Authorities.
We have thoughtfully considered the contentions of the Learned Authorized Representatives of both the parties in the backdrop of the facts discernible from the record.
Admittedly, it is a matter of fact borne from the record that the assessee company had in its Memorandum of Appeal i.e., “Form-35” specifically opted out of service of notices/ communications from the office of the CIT(A) through e-mail. For the sake of clarity, we cull out the relevant extract of “Form-35” as under:
We find that the CIT(A) office had forwarded the notices /communications intimating the fixation of the appeal on all the six occasions ie., notice(s) dated 16/02/2021; 20/12/2023; 10/01/2024; 01/05/2024; 05/10/2024 and 04/02/2025 electronically through ITBA, and no hard/physical copy of the said notices were ever served upon the assessee company. At this stage, we may herein observe that not only the assessee company had opted out of the receipt of the notices/communications through e-mail, but also at Sl No. 17 of the “Form-35” specifically provided the address at which it had sought the notices to be served upon.
Considering the facts involved in the present appeal, we find substance in the Ld. AR’s claim that as the assessee company had remained divested of an opportunity to participate in the proceedings before the CIT(A) and present its case, therefore, the order so passed by him at its back cannot be approved on our part. We, thus, in terms of our aforesaid observations, set-aside the matter back to the file of the CIT(A) with a direction to re-adjudicate the appeal on merits after affording a reasonable opportunity of being heard to the assessee company.
Resultantly, the appeal filed by the assessee company is allowed for statistical purposes in terms of our aforesaid observations. Order pronounced U/Rule 34(4) of the Income Tax ( Appellate Tribunal) Rules, 1963 on 30th September, 2025.