Loading judgment…
Facts
The assessee challenged ex-parte orders of the Commissioner of Income Tax (Appeals), NFAC, Delhi, for Assessment Year 2014-15. These orders confirmed additions to income (u/s 69A taxed u/s 115BBE) and levied a penalty (u/s 271(1)(c)). The assessee contended that the CIT(A) passed these orders without providing a proper opportunity of being heard, thereby violating principles of natural justice.
Held
The Income Tax Appellate Tribunal (ITAT) set aside the ex-parte orders of the CIT(A) for both the quantum assessment and penalty appeals. The matters were remanded back to the CIT(A) for fresh adjudication on merits, with a direction to provide one final opportunity to the assessee and pass an appropriate order within three months, adhering to the principles of natural justice.
Key Issues
Whether the ex-parte orders passed by the CIT(A) without providing the assessee a proper opportunity of being heard violated the principles of natural justice, warranting a remand for de novo adjudication on merits.
Sections Cited
Section 250 of the Income Tax Act, 1961, Section 147 of the Income Tax Act, 1961, Section 144 of the Income Tax Act, 1961, Section 144B of the Income Tax Act, 1961, Section 271(1)(c) of the Income Tax Act, 1961, Section 69A of the Income Tax Act, 1961, Section 115BBE of the Income Tax Act, 1961, Section 148 of the Income Tax Act, 1961, Section 149 of the Income Tax Act, 1961, Section 150 of the Income Tax Act, 1961, Section 151 of the Income Tax Act, 1961, Section 250(4) of the Income Tax Act, 1961, Section 250(6) of the Income Tax Act, 1961, Article 14 of the Constitution of India
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, RAIPUR BENCH, RAIPUR
Before: SHRI PARTHA SARATHI CHAUDHURY, JM & SHRI ARUN KHODPIA, AM
आदेश / O R D E R Per Arun Khodpia, AM:
The captioned appeals are filed by the assessee against the separate orders of Commissioner of Income Tax (Appeal), NFAC, Delhi, [in short “Ld. CIT(A)”], both dated 29.01.2024, u/s 250 of the Income Tax Act, 1961 (in short “the Act”) for the Assessment Year 2014-15. Resulted against the assessment order u/s 147 r.w.s. 144 r.w.s. 144B of the Act, dated 23.09.2021 and penalty order u/s 271(1)(c) dated 17.02.2022, passed by Addl / Joint / Deputy / Asstt. Commissioner of Income Tax / Income Tax Officer, NFAC, Delhi, (in short “Ld. AR”).
& 174/RPR/2025 Sukhdev Singh Joshi vs. ITO, Ward, Jagdalpur 2. Since both the aforesaid appeals pertain to the same assessee, having common and interconnected issues, therefore, these appeals are heard together and taken up for adjudication under this common order ITA No. 173/RPR/2025
3. The grounds of appeal raised by the assessee in are as under:
1. In the facts and circumstances of the case and in law, the ld. Commissioner of Income-tax (Appeals), NFAC has erred in deciding the appeal ex-parte without providing proper opportunity and without following the principles of natural justice.
2. In the facts and circumstances of the case and in law, the ld. Commissioner of Income-tax (Appeals), NFAC has erred in confirming initiation of re- assessment proceedings u/s 147 read with section 148 to 151 of the Income Tax Act, 1961 is illegal and without jurisdiction because all the requisite conditions for initiating the proceedings are not fulfilled.
3. In the facts and circumstances of the case and in law, the ld. Commissioner of Income-tax (Appeals), NFAC has erred in confirming initiation of re- assessment proceedings on the basis of borrowed satisfaction. 4. In the facts and circumstances of the case and in law, the ld. Commissioner of Income-tax (Appeals), NFAC has erred in confirming reassessment proceedings initiated by Ld. Assessing Officer without following standard procedure mandated by CBDT through its binding letter dated 10/01/2018. 5. In facts and circumstances of the case and in law, the ld. Commissioner of Income-tax (Appeals), NFAC has erred in confirming the addition of Rs.81,89,400 as unexplained income under section 69A of the Act and charging the same to higher rate of tax under section 115BBE of the Act. 6. The order of ld. Commissioner of Income-tax (Appeals), NFAC, is bad in law and on facts. 7. The appellant reserves the right to add, alter, omit all or any of the grounds of appeal with the permission of the Hon'ble appellate authority.
& 174/RPR/2025 Sukhdev Singh Joshi vs. ITO, Ward, Jagdalpur 3.1 At the outset, it is noticed that the aforesaid appeal is filed by the assessee against the ex-parte order by the Ld. CIT(A). Further, it is assailed by the assessee that proper opportunity of being heard was not provided by the First Appellate Authority, which is against the principal of natural justice.
3.2 In view of the aforesaid aspect, on perusal of Ld. CIT(A), we find that the order passed by Ld. CIT(A) was an ex-pate order, wherein the assessee could not make necessary representation before Ld. CIT(A), the observation of Ld. CIT(A) qua passing the impugned ex-parte order are as under:
Findings & decision: 5.1 The appellant never cared to respond to any of the notices issued during the course of the first appellate proceedings, even though all the notices issued have duly been served on the given mail id. 5.2 The non-responsiveness of the appellant shows that the appellant is not willing to pursue the case. A famous legal maxim lays down the principle of "vigilantibus et non dormientibus jura subveniunt" which translates as the law aids those who are vigilant, not those who sleep upon their rights. The same is brought out in the case of Susham Singla Vs ACIT 33 ITR (T) 449 (Chandigarh Tribunal) wherein appeals are not admitted as the appellant has not responded before the CIT(A). 5.3 Further the Hon'ble Supreme Court in the case of Ashokji Chanduji Thakur vs PCIT reported in 130 raxmann.com 131 (SC) held that:
& 174/RPR/2025 Sukhdev Singh Joshi vs. ITO, Ward, Jagdalpur "It is required to be noted that in the present case right from very beginning i.e. assessment proceeding, assessee was non cooperative. Number of opportunities were given by the AO, however assessee did not cooperate and even did not file any reply. Therefore, considering the material on record, the AO made addition as unexplained investment. Even before the learned CIT(A) also the assessee was non cooperative. Number of opportunities was given to the assessee to represent his case, however none remained present on behalf of assessee. Thereafter, the learned CIT(A) proceeded further with the appeal ex-parte and decided the appeal on merits and confirmed the order passed by the AO confirming additions of unexplained investment. Thus, even learned CIT(A) also decided the matter on merits. On going through the orders passed by the AO as well as learned CIT(A), we are of the opinion that in absence of any explanation by the assessee on the investment in question, AO was justified in making the addition of unexplained investment and thereafter learned CIT(A) was justified in confirming the same."
5.4 However, in the interest of natural justice, the grounds of appeal are adjudicated on merits, on the basis of material available on record.
3.3 Being aggrieved with the aforesaid order of Ld. CIT(A), assessee preferred the present appeal, which in under consideration.
3.4 After thoughtfully considering the facts of the case and perusal of material available on record. It is undisputedly clear that, the order passed by the Ld. CIT(A) is on ex-parte basis, wherein the assessee for whatsoever reasons could not make necessary representation, thus, the appeal of the assessee has been decided without any submissions on behalf of the assessee. In identical cases a view has been adopted by us to restore the matter back to the file of Ld. CIT(A) for fresh adjudication after providing one last and final opportunity to the assessee. We, thus, without adverting to the merits of the issues, following our decision in the & 174/RPR/2025 Sukhdev Singh Joshi vs. ITO, Ward, Jagdalpur case of of Brajesh Singh Bhadoria Vs. Dy./ Asstt. Commissioner of Income Tax, Central Circle-2, in IT(SS) No. 1 to 6, 8 & 9/RPR/2025 dated 20.03.2025, set aside the impugned order of First Appellate Authority and restore the matter back to the file of Ld. CIT(A) for denovo adjudication. The relevant findings in the case of Brajesh Singh Bhadoria (supra), are extracted here under for the sake of support and reference:
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 & 174/RPR/2025 Sukhdev Singh Joshi vs. ITO, Ward, Jagdalpur of appeal raised before the first appellate authority has not been substantiated on merits through corroborative evidence /submissions.
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 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 & 174/RPR/2025 Sukhdev Singh Joshi vs. ITO, Ward, Jagdalpur 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.
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 & 174/RPR/2025 Sukhdev Singh Joshi vs. ITO, Ward, Jagdalpur 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 & 174/RPR/2025 Sukhdev Singh Joshi vs. ITO, Ward, Jagdalpur 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 & 174/RPR/2025 Sukhdev Singh Joshi vs. ITO, Ward, Jagdalpur 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.
3.5 Considering the ex-parte order by the Ld. CIT(A) and the controversy raised by the assessee, in our opinion the present case falls within the category covered by our view and decision in the case of Brajesh Singh Bhadoria (supra), therefore, in absence of any contradicting information or submission and as fairly agreed by both the parties, we find it appropriate to restore this matter back to the files of Ld. CIT(A) for fresh adjudication, providing the assessee one last and final opportunity to represent. Ld. CIT(A) is directed to pass an appropriate order following the mandate of law within a period of 3 months from the receipt of this order.
3.6 Needless to say, the assessee shall be afforded with reasonable opportunity of being heard, in the set aside appellate proceedings. The assessee, as conceded before us through its authorized representative is also directed to cooperate and assist proactively in the set aside proceedings, failing which the Ld. CIT (A) would be at liberty to decide the appeal in accordance with the mandate of law.
3.7 In result, appeal of the assessee in is allowed for statistical purposes, in terms of over aforesaid observations.
1. In the facts and circumstances of the case and in law, the ld. Commissioner of Income-tax (Appeals), NFAC has erred in deciding the appeal ex-parte without providing proper opportunity and without following the principles of natural justice.
In the facts and circumstances of the case and in law, the ld. Commissioner of Income-tax (Appeals), NFAC has erred in confirming penalty of Rs.25,30,525/- levied u/s. 271(1)(c) of the Income Tax Act, 1961.
The impugned order is bad in law and on facts. 4. The appellant reserves the right to add, alter, omit all or any of the grounds of appeal with the permission of the Hon'ble appellate authority.
4.1 This appeal is filed by the assessee towards penalty-imposed u/s 271(1)(c) of the Act for the AY 2014-15. Whereas, for the relevant AY 2014-15, the appeal against the quantum addition in is restored back to the file of Ld. CIT(A) for fresh adjudication, therefore, it would be justified to restore the appeal against the penalty order also to the file of Ld. CIT(A) on similar terms. Further, since the order passed by the Ld. CIT(A) qua the penalty u/s 271(1)(c) also is an ex-parte order, thus, following our decision in the appeal in Ld. CIT(A) for fresh adjudication, on similar directions in terms of our observations.
4.3 In combined result, & 174/RPR/2025 of the assessee for the AY 2014-15, both are allowed for statistical purposes, in terms of our observations hereinabove.
Order pronounced in the open court on 20/06/2025.
Sd/- Sd/- (PARTHA SARATHI CHAUDHURY) (ARUN KHODPIA) �ाियक सद� / JUDICIAL MEMBER लेखा सद� / ACCOUNTANT MEMBER रायपुर/Raipur; िदनांक Dated 20/06/2025 Vaibhav Shrivastav आदेश की �ितिलिप अ�ेिषत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant- Sukhdev Singh Joshi, Bastar 2. ��थ� / The Respondent- ITO, Ward, Jagdalpur 3. The Pr. CIT, Raipur (C.G.) िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, रायपुर/ DR, ITAT, 4. Raipur 5. गाड� फाईल / Guard file. // स�ािपत �ित True copy //