2025 (6) TMI 1908 - AT - Income Tax

Ex parte order passed by CIT(A) - Assessee submitted that since the assessee did not have access to the Income Tax Portal therefore he had no knowledge about any of these notices being issued by CIT(A) - HELD THAT - It is evident that the CIT(A) while passing the impugned order has not considered any of the submissions as filed by the assessee before migration of the appeal to the National Faceless Appeal Centre. It is further evident from the perusal of the impugned order that there is no reference to the notices issued during the physical hearing and the submissions filed by the assessee. CIT(A) in limine dismissed the appeal filed by the assessee placing reliance upon the decision of B.N.Bhattacharjee 1979 (5) TMI 4 - SUPREME COURT merely on the basis of non-compliance with notices by the assessee without adjudicating the grounds raised by the assessee on merits as required u/s 250(6) of the Act. From the perusal of the record it is further evident that the assessment was also concluded on a best judgment basis u/s 144 of the Act in the absence of a response/details being filed by the assessee. Assessee should be granted one more opportunity to represent its case on merits before the AO. Consequently we deem it fit and proper to set aside the impugned order and restore the matter to the file of the AO for de novo adjudication with a direction to the assessee to furnish all the details/submissions in support of its claim. Appeal by the assessee is allowed for statistical purposes

Summary

The core legal questions considered by the Appellate Tribunal (AT) in this appeal include:

• Whether the delay of 569 days in filing the appeal against the order of the Commissioner of Income Tax (Appeals) (CIT(A)) could be condoned given the circumstances presented by the assessee.
• Whether the impugned order passed by the learned CIT(A), which dismissed the appeal ex parte on the ground of non-compliance with notices, was legally sustainable.
• Whether the learned CIT(A) was obligated under section 250(6) of the Income Tax Act, 1961 ("the Act") to adjudicate the appeal on merits rather than dismissing it solely for non-compliance.
• Whether the best judgment assessment order passed under section 144 read with section 147 of the Act was justified in the absence of any response from the assessee.
• Whether the matter should be remanded to the Assessing Officer (AO) for fresh adjudication with an opportunity to the assessee to present its case on merits.

Issue 1: Condonation of Delay in Filing Appeal

Relevant legal framework and precedents: The limitation period for filing an appeal under section 250 of the Act is prescribed by law, but courts have discretion to condone delay if sufficient cause is shown. The Supreme Court has consistently held that delay should be condoned if the appellant can demonstrate bona fide reasons and sufficient cause preventing timely filing.

Court's interpretation and reasoning: The Tribunal examined the assessee's submissions that the impugned order was not received, and the assessee had no access to the Income Tax Portal due to incorrect contact details linked with the PAN. The assessee supported this with screenshots and correspondence with the Income Tax Department. The Tribunal found these reasons constituted sufficient cause.

Key evidence and findings: The assessee's affidavit, screenshots from the Income Tax Portal, and letters to the Income Tax Department evidencing difficulty in accessing notices and communications.

Application of law to facts: Given the genuine difficulty faced by the assessee in accessing the order and notices, the Tribunal exercised its discretion to condone the delay.

Treatment of competing arguments: The Revenue did not successfully rebut the assessee's claim of non-receipt and lack of access to the portal.

Conclusion: Delay of 569 days in filing the appeal was condoned.

Issue 2: Validity of Ex Parte Dismissal of Appeal by CIT(A)

Relevant legal framework and precedents: Section 250(6) of the Act mandates that the CIT(A) must adjudicate the appeal on merits after affording the appellant a reasonable opportunity of hearing. The Supreme Court decision in B.N. Bhattacharjee was relied upon by the CIT(A) to dismiss the appeal for non-compliance with notices.

Court's interpretation and reasoning: The Tribunal noted that the CIT(A) dismissed the appeal in limine without considering the submissions made by the assessee prior to migration of the appeal to the National Faceless Appeal Centre. The impugned order did not reference the notices issued during physical hearings or the submissions filed by the assessee. The Tribunal held that mere non-compliance with notices does not justify dismissal without adjudication on merits, as mandated by section 250(6).

Key evidence and findings: Records showing the assessee's attendance at the CIT(A)'s office, submissions made, and correspondence seeking remand reports from the AO.

Application of law to facts: The Tribunal found that the CIT(A) erred in not considering the merits and in dismissing the appeal ex parte.

Treatment of competing arguments: The Revenue's reliance on B.N. Bhattacharjee was found misplaced as the factual matrix here involved prior submissions and opportunity given to the assessee.

Conclusion: The ex parte dismissal of the appeal by the CIT(A) was not sustainable.

Issue 3: Best Judgment Assessment under Section 144 read with Section 147

Relevant legal framework and precedents: Section 147 empowers the AO to reopen assessments if income has escaped assessment; section 144 allows best judgment assessment if the assessee fails to comply or respond.

Court's interpretation and reasoning: The AO initiated proceedings based on AIR information showing large cash deposits and absence of return filing by the assessee. Despite multiple notices under sections 148 and 142(1), no response was received, and notices were returned undelivered. The AO thus completed assessment on best judgment basis.

Key evidence and findings: AIR information indicating deposits exceeding Rs. 10 lakhs; non-filing of return; undelivered notices; no response from assessee.

Application of law to facts: The AO was justified in proceeding under sections 147 and 144 given the non-cooperation of the assessee.

Treatment of competing arguments: The assessee's failure to respond was noted, but the Tribunal emphasized that the assessee should be given a fresh opportunity to present its case.

Conclusion: The best judgment assessment was valid but requires reconsideration after hearing the assessee.

Issue 4: Remand for De Novo Adjudication

Relevant legal framework and precedents: Principles of natural justice and fair hearing require that an assessee be given reasonable opportunity to present its case before adverse orders are passed. The appellate authority must adjudicate on merits.

Court's interpretation and reasoning: The Tribunal found that the CIT(A) failed to consider the assessee's submissions and dismissed the appeal without merit adjudication. The AO's assessment was based on incomplete facts as the assessee was not heard. In the interest of justice, the matter was restored to the AO for fresh adjudication with directions to provide reasonable and adequate opportunity to the assessee.

Key evidence and findings: Assessee's submissions, letters, and communication evidencing attempts to engage with the authorities.

Application of law to facts: The Tribunal applied the principle that justice requires hearing on merits and directed remand.

Treatment of competing arguments: The Revenue's position on finality of assessment was not accepted in view of procedural lapses.

Conclusion: The appeal was allowed for statistical purposes and the matter remanded for fresh adjudication.

Significant Holdings:

"Having considered the submissions of the assessee, which are duly supported by the documents placed on record, we are of the considered view that there was sufficient cause which prevented the assessee from filing the present appeal within the prescribed limitation period."

"The learned CIT(A), while passing the impugned order, has not considered any of the submissions as filed by the assessee before migration of the appeal to the National Faceless Appeal Centre... The learned CIT(A) in limine dismissed the appeal filed by the assessee... merely on the basis of non-compliance with notices by the assessee without adjudicating the grounds raised by the assessee on merits, as required under section 250(6) of the Act."

"In the interest of justice, the assessee should be granted one more opportunity to represent its case on merits before the AO... We deem it fit and proper to set aside the impugned order and restore the matter to the file of the AO for de novo adjudication with a direction to the assessee to furnish all the details/submissions in support of its claim."

Core principles established include the necessity of condoning delay where sufficient cause is shown, the mandatory requirement under section 250(6) for the CIT(A) to adjudicate appeals on merits rather than dismissing ex parte, and the entitlement of the assessee to a fair opportunity to be heard before best judgment assessments are finalized.

Final determinations were that the delay in filing the appeal was condoned, the ex parte dismissal by the CIT(A) was set aside, and the appeal was allowed for statistical purposes with the matter remanded to the AO for fresh adjudication after affording the assessee reasonable opportunity of hearing. The stay application was dismissed as infructuous in view of the remand.