Ex Parte and Uncommunicated CIT(A) Order Violates Natural Justice u/s 250: Chhattisgarh HC Sets Aside Income Tax Appeal Order [Read Order]

The Chhattisgarh High Court quashed an appellate order passed by the CIT(A) for violating Section 250 of the Income Tax Act, 1961, after finding that the order was passed ex parte, without granting the assessee a personal hearing or communicating the decision.

The petitioner, M/s Hidayatullah National Law University, an educational institution registered under the Societies Registration Act, had filed an appeal before the Commissioner of Income Tax (Appeals), challenging an assessment order under the Income Tax Act, 1961. The appeal was filed under Section 250(1) of the Act, and the petitioner had also requested a personal hearing before the appellate authority as part of the statutory procedure.

Despite the passage of several years, no hearing was granted. The petitioner repeatedly followed up with the appellate office for an opportunity to be heard, but the matter remained pending without progress. Unexpectedly, the CIT(A) passed an order on 29.12.2023—nearly six years after the appeal was filed—without any prior intimation or notice of hearing to the petitioner.

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The order was not communicated to the petitioner as required under Section 250(7) of the Act. The petitioner came to know of its existence only when it received a subsequent penalty notice from the department referencing the dismissed appeal order. Upon discovering this, the petitioner approached the High Court under Article 226 of the Constitution, alleging grave violation of natural justice and statutory procedure.

The petitioner argued that Section 250(1) and (2) mandate that the appellant must be afforded an opportunity of being heard in person or through an authorised representative. Despite multiple requests, the CIT(A) proceeded ex parte, thus violating the mandatory procedural safeguard.

Also under Section 250(7), the Commissioner (Appeals) is bound to communicate the appellate order to the assessee. The petitioner submitted that non-communication deprived it of its statutory right to file an appeal before the ITAT within the prescribed limitation period.

The order was passed after nearly six years, contrary to the legislative intent reflected in Section 250(6A), which contemplates disposal of appeals within one year “where possible.” The unexplained delay, the petitioner argued, indicated non-application of mind and procedural arbitrariness.

The petitioner submitted that the failure to grant a hearing and communicate the order amounted to a denial of the fundamental principle of audi alteram partem (hear the other side), rendering the order legally unsustainable. The petitioner therefore sought quashing of the appellate order and a direction for fresh adjudication after proper notice and hearing.

The Department contended that the writ petition was not maintainable, as the petitioner had an alternative remedy by way of a second appeal before the Income Tax Appellate Tribunal (ITAT). It was further submitted that the petitioner could also have sought rectification under Section 154 of the Act for any procedural irregularity or omission.

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The High Court rejected the preliminary objection on maintainability, holding that when an order is passed in violation of natural justice or statutory procedure, the existence of an alternative remedy does not bar the exercise of writ jurisdiction.

Examining the record, the Court observed that the petitioner had indeed made a written request for a personal hearing, but no opportunity was afforded, nor was there any evidence of service of hearing notice. The order was passed ex parte, and no communication of the order was made to the petitioner, contrary to Section 250(7).

The Court emphasised that Section 250(1) and (2) require the Commissioner (Appeals) to fix a day and place for hearing and give notice thereof to the appellant, while Section 250(7) mandates communication of the order. The failure to comply with these mandatory provisions, the Court held, vitiated the entire appellate proceeding.

The Court further noted that the order was passed after six years, far beyond the reasonable period envisaged under Section 250(6A). Although the section uses the phrase “where possible,” the Court held that such inordinate delay without justification indicated serious procedural lapse.

Accordingly, the Court concluded that the CIT(A) had acted in clear violation of the statutory provisions under Section 250 and the principles of natural justice.

The bench of Arvind Kumar Verma set aside the appellate order, holding it unsustainable in law. It remanded the matter back to the CIT(A) with directions to grant the petitioner a proper opportunity of hearing and pass a reasoned order in accordance with law within a stipulated time.

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