BHAKTI KISHOR GADA,PUNE vs. INCOME TAX OFFCIER -3(5), PUNE

This case was called twice; none appeared at the behest of the appellant, on the primary briefing from the Revenue and having regard to order-sheet entries we deem it to advance ex-parte u/r 24 of ITAT- Rules, 1963 & adjudicate limited issue.

Briefly stated facts of the case are that, the assessee is an individual who filed his return of income declaring total income ₹3,23,920/- which was selected for scrutiny u/s 143(3) of the Act. The exemption u/s 10(38) of the Act claimed against the long term capital gain arising out of share/scrip transactions of ‘Conart Traders Ltd/Sunrise Asian Ltd.’ was treated as bogus/sham and consequently ₹31,88,889/- was added u/s 68 as unexplained cash credit and assessed the total income accordingly by an order dt. 27/12/2016 framed u/s 143(3) of the Act.

The assessee assailed the aforestated addition in appeal before the Ld. NFAC, which was dismissed for non-prosecution. Aggrieved assessee came in present appeal challenging the action of Ld. NFAC on the ground of violation of principle of natural justice first & on merits later.

Without touching the merits of the case we have heard the Ld. DR on the limited issue of ex-parte dismissal of appeal by the Ld. NFAC and subject to rule 18 of ITAT-Rules 1963 perused material placed on record, considered the facts in the light of settled legal position.

We noted the order of assessment was passed on 27/12/2016 against which the assessee filed appeal before the Ld. NFAC on 17/01/2017. During the course of appellate proceedings, the assessee vide five notices dt. 07/02/2019, 28/02/2020, 29/12/2020, 04/03/2023 & 05/03/2024 was called upon to produce evidential document in support of its claim, which however remained to be complied, in the event both appeals were dismissed ex-parte reiterating the findings of the tax authority below. We also note that, except against former first notice, in all other cases the assessee sought adjournments. Against the latest notice dt. 05/03/2024 the assessee sought reasonable time to compile & produce the requisite details in support of grounds raised by him. The said request of the assessee was accepted affording additional time for compliance instead of previous due dt. 12/03/2024. However turning blind eye to such extended time, the Ld. NFAC dismissed the appeal ex- parte immediately on very next day i.e. on 13/03/2024 itself.

Ostensibly the action of Ld. NFAC in dismissing this appeal ex- parte pre-maturely in our considered view has clearly violated the principle of natural justice hence rendered irregular. We also note that, by latest notice dt. 05/03/2024 the Ld. NFAC sought compliance within a period of seven days i.e. without according reasonable period of fifteen days to comply therewith, which in our considered view exhibits a paper opportunity and badly lacks real opportunity.

In our considered view, the action of the Ld. NFAC suffered from sufficiency of reasonable opportunity to the appellant to adduce necessary evidential material in support of its claim and to represent effectively vis-à-vis to comply with the requirements sought. It shall be worthy to underlined that the opportunity of being heard should be real, reasonable and effective and same should not be empty formalities, it should not be a paper opportunity, the doctrine of natural justice is a facet of fair play in action and no person shall be saddled with a liability without being heard.

Relying on Hon’ble High court of Patna judgement in ‘St. Paul’s Anglo Indian Education Society’ (2003) 262 ITR 377 (Pat)’, in our view the impugned adjudication is unjustified as the assessee was deprived of reasonable opportunity and time to produce all relevant documents to substantiate claims as made in the return of income filed.

In these facts and circumstance, further pressing into service the recent judgement of Hon’ble Supreme Court rendered in ‘Raheem Shah & ANR Vs Govind Singh & Ors’ [CIVIL APPEAL NO.4628 OF 2023], we are heedful to state that, while dealing with tax litigation, the Ld. NFAC being a quasi-judicial authority was expected to adopt justice oriented approach rather resorting to iron-cast technical one.

In the present case, the Ld. NFAC came to dismiss the appeal of the assessee ex-parte violating the principle of natural justice, thus suffered therefrom. In the event we deem in all the fairness and in the larger interest of justice feel necessary to accord further opportunity to the appellant assessee to comply with notices and contest its case on merits.

In view of this, without offering any comments on the merits of the case, we deem it fit to set-aside the impugned order and remit the file back to the Ld. NFAC with a direction deal therewith de-novo and pass a speaking order in terms of section 250(6) of the Act preferable in three effective opportunities of hearing to the assessee. Ordered accordingly.