ITAT Sets Aside Ex-Parte Orders Passed Without Considering Objections to Mechanical Reopening [Read Order]

The Income Tax Appellate Tribunal (ITAT) Ahmedabad Bench has set aside the ex-parte orders passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, holding that objections raised against mechanical reopening of assessment were not considered and remanded the matters for fresh adjudication.

The appellant, Aldiablos Infotech Pvt. Ltd., a company engaged in software-related services, had filed appeals against reassessment orders passed for Assessment Years 2013-14 to 2017-18. In these cases, reassessments were initiated under Section 147 of the Income Tax Act based on information from the Investigation Wing regarding substantial cash deposits. The Assessing Officer issued notices and completed assessments under Sections 143(3) read with 147 for Assessment Years 2013-14 to 2016-17, and under Section 144 for Assessment Year 2017-18. The appellant contended that the reassessments were initiated without independent application of mind and based purely on borrowed satisfaction. It was submitted that the reasons recorded for reopening were mechanical and identical across years, sometimes even referring to incorrect assessment years.

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The Tribunal noted that the CIT(A) passed ex-parte orders without adjudicating the appellant’s detailed objections challenging the legality of the reopening and other factual disputes. It was highlighted that the appellant had duly filed written submissions contesting the validity of the reassessment proceedings, but these were not considered by the CIT(A). The Tribunal observed that non-consideration of objections and passing of non-speaking orders violated the principles of natural justice. The Tribunal referred to the judgment in ITO v. D.C. Rastogi, wherein it was held that mechanical reopening without independent satisfaction is invalid.

The Tribunal also took note of the fact that the Assessing Officer had merely reproduced identical reasons for multiple years without verifying facts or forming a belief based on individual year-specific material. It found that the reopening was based on information received from an external source without any independent inquiry or application of mind by the Assessing Officer.

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The ITAT Bench comprising Suchitra Kamble (Judicial Member) and Makarand V. Mahaodekar (Accountant Member) restored the appeals for Assessment Years 2013-14 to 2016-17 back to the file of the CIT(A) for fresh adjudication after giving reasonable opportunity to the assessee. In relation to Assessment Year 2017-18, where the assessment was completed ex-parte under Section 144 based on alleged unexplained deposits during demonetisation, the Tribunal restored the matter to the file of the Assessing Officer for de novo assessment after affording the assessee an opportunity to explain the nature and source of the deposits.

To Read the full text of the Order CLICK HERE

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