2025 (6) TMI 1634 - AT - Income Tax

Ex parte order passed by CIT(A) - Addition u/s 56(2)(x) - difference in stamp duty value and purchase value of the property shown by the assessee which was added back under the head Income from other sources to the total income - HELD THAT - The assessee had bona fide relied on her Chartered Accountant who neither properly participated in the appellate proceedings nor informed the assessee about the status thereof. Additionally the assessee was undergoing emotional distress due to the loss of a close relative. The appellate order has been passed ex parte without affording the assessee a reasonable opportunity of being heard thereby resulting in a denial of the principles of natural justice. We find it appropriate in the interest of justice to remand the matter to the file of the CIT(A) for adjudication afresh. We make no comment on the merits of the case so as not to prejudice the outcome of the de novo proceedings. It is however directed that the assessee be granted a reasonable opportunity of being heard and be permitted to file any additional documents in support of her case in accordance with law. Appeal of the assessee allowed for statistical purpose.

Summary

1. ISSUES PRESENTED and CONSIDERED

- Whether the delay of 221 days in filing the appeal before the Appellate Tribunal is liable to be condoned based on the explanation provided by the assessee.

- Whether the ex parte order passed by the Commissioner of Income Tax (Appeals) (Ld. CIT(A)) upholding additions under sections 56(2)(x) and 69B of the Income Tax Act, 1961, without the assessee's participation, violated the principles of natural justice.

- Whether the matter should be remanded to the Ld. CIT(A) for fresh adjudication in light of the assessee's non-appearance due to bona fide reasons and procedural irregularities.

2. ISSUE-WISE DETAILED ANALYSIS

Condonation of Delay in Filing Appeal

Relevant legal framework and precedents: The Income Tax Act empowers the Appellate Tribunal to condone delay in filing appeals if sufficient cause is shown. The principle of "sufficient cause" encompasses bona fide reasons such as illness, absence of legal counsel, or other unavoidable circumstances. Judicial precedents emphasize that procedural delays should be condoned liberally to advance substantial justice rather than technicalities.

Court's interpretation and reasoning: The Tribunal noted the delay of 221 days in filing the appeal and considered the affidavit filed by the assessee explaining the delay. The explanation included the change of Chartered Accountant (CA) from Mr. Kushwat Ojha to Mr. Nikash Mehta, with the latter failing to pursue the appeal before the Ld. CIT(A). Additionally, the assessee was under mental distress due to the demise of a close relative, impairing her ability to manage appellate proceedings.

Key evidence and findings: The affidavit dated 06/06/2025 detailing the circumstances causing delay was accepted. The Revenue did not raise substantive objections to the explanation.

Application of law to facts: The Tribunal found that the assessee was prevented by sufficient cause from filing the appeal in time. The reliance on the Chartered Accountant who failed to act and the emotional distress were held to constitute reasonable cause.

Treatment of competing arguments: The Revenue's acceptance of the explanation without contesting the sufficiency of cause reinforced the Tribunal's decision to condone the delay.

Conclusion: The delay of 221 days in filing the appeal was condoned.

Validity of Ex Parte Order Passed by Ld. CIT(A)

Relevant legal framework and precedents: The principles of natural justice require that an assessee be given a reasonable opportunity of being heard before adverse orders are passed. Ex parte orders are generally disfavored unless the assessee wilfully abstains from participation. The Income Tax Act and judicial pronouncements mandate adherence to fair hearing norms in appellate proceedings.

Court's interpretation and reasoning: The Tribunal observed that the Ld. CIT(A) allowed a hearing opportunity, but the assessee did not appear due to reliance on her Chartered Accountant who failed to represent her, compounded by emotional distress. The ex parte order upholding additions under sections 56(2)(x) and 69B was thus passed without the assessee's effective participation.

Key evidence and findings: The Tribunal relied on the affidavit and the absence of any wilful non-cooperation by the assessee. The failure was attributed to the Chartered Accountant's non-action and personal distress of the assessee.

Application of law to facts: Since the ex parte order was passed without affording the assessee a genuine opportunity to be heard, the principles of natural justice were violated. The Tribunal emphasized that such procedural irregularity warranted remedial action.

Treatment of competing arguments: The Revenue did not contest the bona fide nature of the non-appearance, and no substantive objection was raised to the explanation provided.

Conclusion: The ex parte order is set aside on the ground of denial of natural justice.

Remand for Fresh Adjudication

Relevant legal framework and precedents: Courts and Tribunals have the power to remand matters for de novo consideration when procedural lapses or denial of natural justice occur. Remand ensures that the assessee receives a fair hearing and the matter is decided on merits.

Court's interpretation and reasoning: The Tribunal refrained from expressing any opinion on the merits of the additions under sections 56(2)(x) and 69B. Instead, it directed the matter to be remanded to the Ld. CIT(A) for fresh adjudication with the explicit direction to grant the assessee a reasonable opportunity of hearing and allow filing of additional documents.

Key evidence and findings: The Tribunal relied on the procedural history, the affidavit explaining non-appearance, and the absence of substantive objections from the Revenue.

Application of law to facts: The Tribunal applied the principles of natural justice and fair play to ensure that the assessee's appeal is adjudicated afresh without prejudice.

Treatment of competing arguments: The Revenue did not oppose the remand and accepted the explanation for delay and non-appearance.

Conclusion: The matter is remanded to the Ld. CIT(A) for de novo adjudication with directions to provide a fair hearing and allow submission of documents.

3. SIGNIFICANT HOLDINGS

"We find that the assessee was prevented by sufficient cause from filing the appeal in time; therefore, we condone the delay of 221 days and adjudicate the matter as below."

"The appellate order has been passed ex parte without affording the assessee a reasonable opportunity of being heard, thereby resulting in a denial of the principles of natural justice."

"In view of the above, we find it appropriate, in the interest of justice, to remand the matter to the file of the Ld. CIT(A) for adjudication afresh. We make no comment on the merits of the case, so as not to prejudice the outcome of the de novo proceedings."

Core principles established include the liberal condonation of delay where bona fide reasons exist, strict adherence to natural justice in appellate proceedings, and the necessity of remanding matters for fresh adjudication where procedural lapses occur without prejudice to substantive rights.

Final determinations:

- Delay in filing the appeal was condoned.