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Facts
The assessee's appeal for Assessment Year 2012-13 challenged an ex-parte order passed by the Ld. CIT(Appeals)/NFAC on 31.08.2023. The CIT(A) had disposed of the appeal ex-parte because the assessee failed to file replies or make submissions despite receiving multiple notices.
Held
The Tribunal, emphasizing principles of natural justice, set aside the ex-parte order of the CIT(A). It remanded the matter back for de novo adjudication, granting the assessee one final opportunity to present their case on merits with submissions and evidence. The CIT(A) was directed to provide a reasonable opportunity of being heard and pass an order in terms of Section 250(4) and (6) of the Act within three months.
Key Issues
Whether an ex-parte order passed by the CIT(A) due to the assessee's non-compliance violates principles of natural justice, warranting a remand for fresh adjudication on merits.
Sections Cited
Section 250, Section 282, Section 250(4), Section 250(6), Section 33(4) of the Income Tax Act, 1922 (referenced)
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Income Tax Appellate Tribunal, RAIPUR BENCH “SMC”, RAIPUR
Before: SHRI PARTHA SARATHI CHAUDHURY
आदेश / ORDER
PER PARTHA SARATHI CHAUDHURY, JM
The present appeal preferred by the assessee emanates from the order of the Ld.CIT(Appeals)/NFAC, Delhi dated 31.08.2023 for the assessment year 2012-13 as per the grounds of appeal on record.
At the time of hearing, none appeared for the assessee. However, an adjournment petition has been filed which is rejected since the parameters and spectrum of the matter is no more res-integra so far as this Bench is concerned in terms with the decision of the ITAT, “Division Bench”, Raipur in the cases of Brajesh Singh Bhadoria Vs. Dy./ACIT, Central Circle-2, Naya Raipur, IT(SS)A Nos. 1 to 6, 8 & 9/RPR/2025, dated 20.03.2025. The submissions of the Ld. Sr. DR are recorded and documents perused and considered carefully.
At the very outset, it is noted that there is an ex-parte order passed by the Ld. CIT(Appeals)/NFAC since there was no compliance by the assessee. The relevant paras are extracted as follows:
“2. Vide notices dated 24/04/2021, 06/07/2023 & 25/07/2023 the appellant was requested to file its reply. However, no submissions were made during the entire appellate proceedings. Decision:-
3. It is pertinent to state that to decide this appeal in a timely manner several notices u/s. 250 of the Income Tax Act,1961 (the Act) were issued to the appellant through ITBA portal, as noted in para 2 above, which amounts to service of notice as provided u/s.282 of the Act. However, there has been no response from the appellant till date. There is no gainsaying that once the appeal is filed by the appellant, it is obligatory on its part to pursue the same in a worthwhile manner, which the appellant has failed to do. Hence, in view of the aforesaid total non-compliance of the instant appeal on the part of the appellant, the instant appeal is adjudicated and disposed of, as under, ex-parte, primarily on the basis documentation available on record.”
There is no doubt that reasonable opportunities were provided to the assessee. At the same time, no evidence has been placed on record by the Revenue or in the order of the Ld. CIT(Appeals)/NFAC that such non- compliance by the assessee was deliberate or malafide. That therefore, plausible doubt also accrues in favour of the assessee. Meaning thereby that the assessee may have been prevented from responding to the hearing notices and uploading the submissions due to reasons beyond his control and therefore, the principles of natural justice demands that one final opportunity should be given to the assessee so to represent his matter before the Ld. CIT(Appeals)/NFAC on merits with submissions and evidences. That further, since there was no compliance by the assessee, the Ld. CIT(Appeals)/NFAC was not able to comply with the mandate of Section 250(4) & (6) of the Act. That since the statutory provisions were not complied with and there has been no adjudication on merits by the sub-ordinate authorities, therefore, this Tribunal which is also part of the statute and highest fact finding authority cannot suo-motto verify and enquire all facts and it is incumbent upon the Ld. CIT(Appeals)/NFAC to first adjudicate on merits considering all the relevant facts/material and provide reasoning of its decision and only then it is appropriate for this Bench to look into the correctness of such decision in case of the assessee, thereby complying with the intent of the legislature. In other words, one statutory authority should not usurp the power of another statutory authority without allowing any opportunity to that authority to adjudicate the matter on merits. At the same time, the assessee should also know that the compliance in any legal proceedings before any legal forum as per statute is clearly mandatory. In this regard, I also refer to the relevant paras of the decision of the ITAT, “Division Bench”, Raipur in the cases of Brajesh Singh Bhadoria Vs. Dy./ACIT, Central Circle-2, Naya Raipur (supra) which reads as follows:
“7. We have considered the submissions of the parties herein and analyzed the facts and circumstances involved in all the captioned appeals. After careful perusal of the documents on record, we find that the assessee had assailed the legal ground as aforestated, however, the fact of the matter is that on perusal of the respective orders of the Ld. CIT(Appeals) for all the years before us, it is also evident from Para 3 that there has been no compliance by the assessee before the said authority and as such, an ex-parte order was passed for the concerned years in appeal. Admittedly, as per record, sufficient opportunities had been provided to the assesse, however, there was no compliance by the assessee. In effect, rights and liabilities of the parties herein are yet to be adjudicated substantially at the level of the first appellate authority. Though in the impugned orders, discussion has been done as per material available on record by the Ld.CIT(Appeals) but they are only Form 35, statement of facts, grounds of appeal and the assessment order. However, due to non-compliance by the assessee, there are no submissions, evidence and documents submitted for adjudication by the assessee before the Ld. CIT(Appeals). That as per Para 3 of the Ld. CIT(Appeals) order, there has been no compliance on the part of the assessee for submitting detailed explanations regarding the grounds of appeal for the years under consideration which clearly shows that the grounds of appeal raised before the first appellate authority has not been substantiated on merits through corroborative evidence /submissions.
8. That in such scenario we are of the considered view that the Income tax Act is within the ambit of welfare legislation which are completely different from that of the penal legislation, therefore, benefit of doubt whenever arises, it has to be interpreted in favour of the assessee tax payer within the parameters of law and facts. There may be circumstances beyond control of the assessee because of which, the assessee may not have been able to represent his case on the given dates of hearing before the Ld. CIT(Appeals). Though it is correct that there was no compliance from the side of the assessee, however, nothing is there on record which suggests any deliberate non-compliance or malafide conduct of the assessee. That further, if one final opportunity is provided to the assessee to represent his case before the first appellate authority, the position of the revenue will also not be jeopardized. Recently, the Hon’ble High Court of Bombay in the 9. case of Vijay Shrinivasrao Kulkarni Vs. Income-tax Appellate Tribunal (2025) 171 taxmann.com 696 (Bom.), dated 04.02.2025 observed that in the case the Assessing Officer had passed an ex-parte order and when the matter went on appeal before the Ld. CIT(Appeals)/NFAC, it had also dismissed the matter ex-parte due to non-compliance by the assessee’s authorized representative, when the matter came up before the ITAT, it had failed to address the infirmity regarding the fact that the assessee was not afforded proper opportunity of being heard and the matter was dismissed ex- parte by the Ld. CIT(Appeals)/NFAC which amounted to violation of principles of natural justice, and instead ITAT decided the case on merits, in such circumstances, the Hon’ble High Court of Bombay held that passing of an order on merits by the ITAT even when the impugned order was passed ex-parte amounts to violation of principles of natural justice and accordingly, the said matter was remanded to ITAT for passing a fresh order in accordance with law after hearing the parties. The legal principle as enshrined in the present judgment is crystal clear that the principles of natural justice i.e. the right to be heard is to be provided and accordingly, the matter had to be substantially adjudicated by the appellate authority. Therefore, if the impugned order of the Ld. CIT(Appeals)/NFAC is an ex-parte order, the only recourse in conformity with the aforesaid judicial pronouncement is to remand the matter back to the file of the Ld. CIT(Appeals)/NFAC for fresh adjudication in terms with the principles of natural justice providing one final opportunity to the assessee.
10. In the aforesaid case, the Hon’ble High Court of Bombay had referred to a judgment of the Hon’ble Supreme Court in the case of Delhi Transport Corporation vs. DTC Mazdoor Union AIR 1999 SC 564, wherein the Supreme Court inter-alia held that Article 14 guarantees a right of hearing to a person who is adversely affected by an administrative order. The principle of audi-alteram partem is a part of Article 14 of the Constitution of India. In light of such decision, the petitioner ought to have been granted an opportunity of being heard which, partakes the characteristic of the fundamental right under Article 14 of the Constitution of India.
The Hon’ble High Court of Bombay in the aforesaid case had referred to a decision of the Hon’ble Supreme Court in the case of Commissioner of Income Tax Madras v. Chenniyappa Mudiliar 1969 1 SCC 591, wherein the Supreme Court in interpreting the section 33(4) of the Income Tax Act, 1922 has held that the appellate tribunal was bound to give a proper decision on question of fact as well as law, which can only be done if the appeal is disposed off on merits and not dismissed owing to the absence of the appellant. Reverting to the facts of the present case the grounds of appeal were simply filed before the Ld.CIT(Appeals) they were not substantiated or corroborated through submissions and filing of documentary evidences since the assessee had not complied before the Ld.CIT(Appeals) on the dates of hearing. Therefore, as per framework of the Act there must be adjudication on merits by the first appellate authority and one final opportunity be provided to the assessee to represent his matter on merits in the interest of natural justice.
12. There may even be a situation where the Ld. Counsel for the assessee may assail a legal ground before the Tribunal following the decision of the Hon’ble Supreme Court in the case of National Thermal Power Company Ltd. Ltd. Vs. CIT (1998) 229 ITR 383 (SC) with a contention that irrespective of the order of the Ld. CIT(Appeals) being ex-parte, the Tribunal may decide the legal issue that has been raised by the Ld. Counsel. In our view, the decision of the Hon’ble Supreme Court in the case of National Thermal Power Company Ltd. Ltd. Vs. CIT (supra) provides that any legal issue which goes to the root of the matter and is established through legal principles, the assessee can take up and raise such legal issue at any appellate forum irrespective of whether the assessee had raised such legal issue at the sub-ordinate level or not, however, it always depends on facts and circumstances of each case whether the Tribunal would decide the legal ground or in a case where the question is of natural justice and ex- parte order by the Ld. CIT(Appeals) the Tribunal would remand it back to Ld.CIT(Appeals) providing final opportunity to a bonafide assessee. The Tribunal as the highest fact finding authority must be certain enough that the impugned order before it has been passed on merits and is a speaking order where the assessee has also complied during the process of litigation. In case, where the order of the Ld. CIT(Appeals) itself is ex-parte and some legal ground is raised and if the Tribunal decides such legal ground where in fact principles of natural justice is left unanswered due to the fact that the impugned order before the Tribunal is ex-parte and there was no compliance by the assessee in such scenario the Tribunal would also be usurping the power of the Ld. CIT(Appeals) which is also a statutory authority as per the Act. This is due to the reason that as per framework of the Act, Ld.CIT(Appeals) is the first appellate authority where an appeal by assessee it would be substantially decided through a speaking order by the Ld.CIT(Appeals). When this part is over and either party is aggrieved second appeal lies before the ITAT. Now if for every ex-parte order passed by the Ld. CIT(Appeals), of course due to non-compliance by the assessee, if the Tribunal adjudicates a legal ground, for instance validity of assessment or reassessment order and answers it in favour of the assessee then it would create an easy route for assessee getting redressal from Tribunal even without bothering to comply with hearing notices before the Ld. CIT(Appeals). This would dismantle the structure of the Act which is definitely not the intention of the legislature. Here in this situation, where the benefit of doubt is given to the assessee since he had not complied with the hearing notices before the Ld. CIT(Appeals) which resulted in passing of an ex-parte order by the Ld. CIT(Appeals), in such scenario, as per the scheme of the Act and following the principles of natural justice, the only course of action is to remand the matter back to the file of the Ld. CIT(Appeals) for adjudication on merits providing one final opportunity to the assessee.
In view thereof, we set aside the respective orders of the Ld. CIT(Appeals) for all the years and remand the same to their file for denovo adjudication on merits. At the same time, we direct the assessee that this being the final opportunity, there must be compliance on merits before the first appellate authority. Needless to say, the Ld. CIT(Appeals) shall provide reasonable opportunity of being heard to the assessee and pass an order in terms of Section 250(4) and (6) of the Act within three months from receipt of this order.”
In view of the aforesaid observations and judicial pronouncement, the order of the Ld. CIT(Appeals)/NFAC is set aside and remanded back to its file for denovo adjudication as per law and the assessee is directed that this being final opportunity, it should make full endeavor to comply with the hearing notices issued from the office of the Ld. CIT(Appeals)/NFAC.
Before parting, it is also made clear that in spite of non-compliance by the assessee and there being no submission or evidence on record from the assessee, the Ld.CIT(Appeals)/NFAC had adjudicated Ground No.4 and allowed this ground by observing as follows: “3.6. Ground No.4: With regard to the addition of Rs.2,62,800 as income from undisclosed sources, it is held that this figure pertains to an earlier period and cannot be covered under the proceedings for this financial year, hence, the ground is allowed.”
That as evident, there is no reasoning nor any enquiry conducted by the Ld. CIT(Appeals)/NFAC while providing such relief to the assessee in this ground. Therefore, in the interest of substantial justice, this ground is also set-aside and remanded back to the file of the Ld. CIT(Appeals)/NFAC a/w. other grounds as per afore-stated directions.
That as per above terms grounds of appeal by the assessee stands allowed for statistical purposes.
In the result, appeal of the assessee is allowed for statistical purposes. Order pronounced in open court on 1st day of December, 2025.