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Facts
The assessee's appeals for Assessment Years 2016-17 & 2017-18 were dismissed ex-parte by the CIT(Appeals)/NFAC due to continuous non-compliance and failure to submit information despite being given multiple opportunities. The assessee also failed to appear before the Income Tax Appellate Tribunal (ITAT) during the hearing.
Held
The ITAT, invoking principles of natural justice and citing judicial precedents, set aside the ex-parte orders of the CIT(Appeals)/NFAC. The matter was remanded back to the CIT(Appeals) for fresh adjudication on merits, granting the assessee one final opportunity to present their case. The CIT(Appeals) was directed to provide a reasonable opportunity of being heard and pass an order under Section 250(4) and (6) of the Income Tax Act within three months.
Key Issues
Whether appeals dismissed ex-parte by the CIT(Appeals) for non-compliance should be remanded for fresh adjudication, upholding principles of natural justice and providing a final opportunity to the assessee.
Sections Cited
Section 250(4), Section 250(6), Article 14 of Constitution of India
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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 captioned appeals preferred by the assessee emanates from the respective orders of the Ld.CIT(Appeals)/NFAC, Delhi dated 17.12.2024 for the assessment years 2016-17 & 2017-18 as per the grounds of appeal on record.
At the time of hearing, none appeared for the assessee though hearing of notices have been sent through registered email id as brought on record before the Tribunal. That as is evident from Para 6.1 and 6.2 of the Ld. CIT(Appeals)/NFAC order in the appeal filed by the assessee in that since there was no compliance from the assessee, therefore, the Ld. CIT(Appeals)/NFAC dismissed the appeal vide an ex- parte order. For the sake of completeness, Para 6.1 and 6.2 of the Ld. CIT(Appeals)/NFAC are culled out as follows: “6.1 On a perusal of records, it is noticed that during the course of appellate proceedings, appellant had not filed or uploaded any response and written submissions in the office of the undersigned to substantiate its claim made in the statement of facts and grounds of appeal. Only he remained silent since filing this appeal to till date. The response of the appellant in response to the notices issued u/s. 250 of the Act on various dated is summarized as under: Sr. Notice issuing Date fixed Way of Status Result No. date for hearing service of notice 1. 07.01.2021 22.01.2021 E-mail Delivered Submission made, seeking adjournment
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2. 05.10.2021 15.10.2021 E-mail Delivered Submission made, seeking adjournment 3. 29.12.2021 06.01.2022 E-mail Delivered No complinace 4. 07.11.2024 14.11.2024 E-mail Delivered Submission made, seeking adjournment
6.2. Considering the response as detailed above by the appellant, it seems that appellant is not interested to pursue his appeal. Therefore, it cannot be kept pending adjudication for indefinite period. The appellant has not bothered to comply to notices issued during the course of appellate proceedings. This shows that t appellant is not interested in pursuing his appeal and/or he has no defence against the additions made by the AO. If the appellant is not availing opportunities given, the cannot allege contravention of principles of natural justice as held in the case of P.N Balasubramanium (AP) 112 ITR 512. Therefore, the appeal of the appellant is liable for dismissal. Such view is further supported by the following judicial pronouncements: - i) Hon'ble Supreme Court in the case of CIT vs. B.N. Bhattacharjee and another, reported in 118 ITR 461 (relevant pages 477 and 478) wherein their Lordships have held that: - "An appeal means an effective appeal. An appeal withdrawn is an appeal non est as judicial thinking suggests. Purposefully interpreted, preferring an appeal means more than formally filing it but effectively prosecuting it. Mere institution followed by withdrawal would cancel the effect and result in non- prosecution and obliteration of appeal which is the same as not preferring an appeal" ii) Hon'ble M.P. High Court in the case of Estate of Late Tukojirao Holkar vs. CVVT, 223 ITR 480 (MP), while dismissing the reference made at the instances of the assessee in default made following observation in their order: - "If the party, at whose instance the reference is made, fails to appear at the hearing, or fails in taking steps for preparation of the paper books so as to enable hearing of the reference, the court is not bound to answer the reference."
4 Deepak Kumar Jain Vs. ITO, Dhamtari & 84/RPR/2025 In so far the appeal filed by the assessee in Para 6.1 and 6.2 of the Ld. CIT(Appeals)/NFAC order that since there was no compliance from the assessee, therefore, the Ld. CIT(Appeals)/NFAC dismissed the appeal vide an ex-parte order. For the sake of brevity, the same are only referred to and not being extracted.
On perusal of the Ld. CIT(Appeals)/NFAC order, it is crystal clear that the assessee though had filed appeal but was not vigilant enough to take the matter to a logical end. The same applies even in the appellate forum before this bench. However, in this situation since the tax payer assessee contributes to the socio-economic well-being and development of the nation by paying taxes, the principles of natural justice demands that the rights and liabilities of such tax payer requires to be considered and the benefit of doubt to be given within the parameters of facts and law. Considering the totality of the facts and circumstances, the Ld. Sr. DR fairly conceded that one final opportunity may be provided to the tax payer assessee to represent his case on merits before the Ld. CIT(Appeals)/NFAC.
I have carefully considered the contents in the documents/material available on record, submissions of the Ld. Sr. DR. As per the aforesaid examination of the entire spectrum of the matter in the interest of natural justice, I deem it fit and proper to provide one final opportunity to the 5 Deepak Kumar Jain Vs. ITO, Dhamtari & 84/RPR/2025 assessee to represent his case on merits before the Ld. CIT(Appeals)/NFAC.
At this stage, I herein observe that 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 had dealt with similar issue on the same parameters of ex- parte order passed by the Ld. CIT(Appeals)/NFAC and remanded the matter back to the file of the Ld. CIT(Appeals)/NFAC observing 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.
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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.
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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 8 Deepak Kumar Jain Vs. ITO, Dhamtari & 84/RPR/2025 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.”
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Respectfully following the aforesaid order, I set-aside the respective orders of the Ld. CIT(Appeals)/NFAC and remand the matter back to its file for denovo adjudication while complying with the principles of natural justice as per similar terms. At the same time, it is directed that this being the final opportunity, the assessee shall duly comply with the hearing notices from the Ld. CIT(Appeals)/NFAC.
As per the aforesaid terms, the grounds of appeal raised by the assessee stands allowed for statistical purposes.
In the result, both the appeals of the assessee are allowed for statistical purposes.
Order pronounced in open court on 21st day of March, 2025.