Ex-Parte Appellate Order Without Reasonable Opportunity: ITAT Restores Rs. 2.55 Cr Matter for Fresh Adjudication [Read Order]

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) restored the matter to the Commissioner of Income Tax (Appeals) [CIT(A)] for de novo adjudication and held that the ex-parte appellate order violated principles of natural justice by not providing the assessee a reasonable opportunity to be heard.

Gemini Dyeing and Printing Mills Pvt Ltd (assessee) filed return of income for Assessment Year (AY) 2012-13, declaring a total income of Rs. 1,94,65,740. The case was selected for scrutiny under CASS, and the assessment was completed under Section 143(3) of the Income Tax Act, 1961, determining the total income at Rs. 2,55,32,947.

Aggrieved by the Assessing Officer’s (AO) order, the assessee appealed to the CIT(A). The CIT(A) passed an ex-parte order, upholding the assessment without examining the merits of the case or affording the assessee an opportunity to present evidence.

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Aggrieved by the CIT(A)’s order, the assessee appealed to the ITAT. The assessee’s counsel argued that the appellate order was passed ex-parte and passed without reasonable opportunity to the assessee.

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The Counsel relied on the Bombay High Court’s judgment in CIT, Central, Nagpur v. Prem Kumar Arjundas Luthra (HUF), which held that the CIT(A) cannot dismiss an appeal for non-prosecution and must apply its mind to all issues.

The two-member bench comprising Narendra Kumar Billaiya (Accountant Member) and Anikesh Banerjee (Judicial Member) observed that the CIT(A) disposed of the appeal ex-parte without affording the assessee a reasonable opportunity to present its case or examining the merits.

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The bench held that the CIT(A) is required to apply mind to all issues arising from the impugned order, irrespective of whether raised by the appellant, and lacks power to dismiss an appeal for non-prosecution.

The bench restored the matter to the CIT(A) for fresh adjudication in accordance with law by relying on the Bombay High Court’s ruling. It directed the CIT(A) to provide a reasonable opportunity of hearing to the assessee. The appeal was allowed for statistical purposes

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