The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) upheld the principles of natural justice by setting aside the ex-parte order issued by the Commissioner of Income Tax (Appeals) in the case for Assessment Years 2011-12 and 2012-13.
Aditech Infotech Pvt. Ltd., the appellant-assessee, did not file its return of income for the assessment years (AY) 2011-12 and 2012-13. Notices were issued, but the assessee did not respond adequately, leading the Assessing Officer (AO) to make additions of ₹1,89,34,890 for AY 2011-12 and ₹1,47,11,677 for AY 2012-13 to the total income.
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The assessee subsequently challenged the AO’s decision before the CIT(A), but the appeal was dismissed ex parte due to non-appearance, despite the CIT(A) issuing various notices of hearing.
The appellant received the order passed under sections 144 and 147 of the Act and filed the current appeal. However, after filing the appeal, the appellant chose not to respond to any of the notices issued by this office. Several courts have stated that the law helps those who are vigilant and not those who neglect their rights. This is reflected in the legal maxim “Vigilantibus Non Dormientibus Jura Subveniunt,” which means that individuals must not only be aware of their rights but also act promptly to assert and protect them. As an aware citizen, the appellant had a responsibility to know the legal provisions, comply with the law, and pursue available legal remedies diligently.
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The High Court of Delhi, in the case of Moddus Media Pvt. Ltd. vs M/s Scone Exhibition Pvt. Ltd. , emphasized that the appellant should remain vigilant and pursue the appeal diligently. The court observed: “The litigant owes a duty to be vigilant of his rights and is also expected to be equally vigilant about the judicial proceedings pending in the court of law against him or initiated at his instance. After filing the civil suit or written statement, the litigant cannot go off to sleep and wake up from a deep slumber after passing a long time as if the court is storage of the suits filed by such negligent litigants.”
The CIT(A) observed that The appellant failed to remain vigilant and did not take the opportunity to submit its arguments or response. By not responding to various notices issued by this office, the appellant showed a clear disregard for the legal process. As a result, the appellant could not challenge the findings made by the Assessing Officer on the merits of the issue. This failure to act diligently leads to the conclusion that the appellant has not been able to controvert the findings made by the Assessing Officer.
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The appellant raised several grounds of appeal, asserting that the CIT(A) erred in confirming the addition of ₹1,89,34,890, claiming that the Assessing Officer (AO) made the addition without providing adequate opportunity to submit evidence and that the addition was made on an estimation basis. The appellant also contended that the CIT(A) failed to provide a fair hearing and that the penalties invoked were unjustified.
During the proceedings before the ITAT, the assessee’s representative argued that the CIT(A) had not given an effective opportunity for the assessee to present its case, leading to a miscarriage of justice, as the assessee was not given a fair chance to present its case due to non-compliance and non-appearance.
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The Bench,observed that the Assessing Officer (AO) added all the cash deposits as income for the appellant without considering any withdrawals made by the appellant. The appellant’s representative has assured that they will respond to all future hearing notices issued by the tax department. To ensure fairness, the case is being sent back to the AO for a fresh review, where the taxpayer will be given a chance to present their case properly.
The appellant is instructed to respond to all hearing notices promptly. If the taxpayer fails to comply or attend any future hearings, the AO can make the assessment based on the available evidence and in accordance with the law.
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The two-member bench comprising Siddhartha Nautiyal (Judicial Member) and Annapurna Gupta (Accountant Member) set aside the impugned order and restored the matter to the AO for denovo consideration, instructing that the appellant be allowed to present its case, and directing the AO to give the assessee a fair opportunity to present its case.
As a result the appeal was allowed for Statistical Purposes.
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