Ex-Parte Order after 10 Notices Not Final: ITAT Remands ₹64.12 Lakh S. 69C Disallowance [Read Order]

The Income Tax Appellate Tribunal, Mumbai Bench (ITAT), has held that an ex-parte appellate order passed without adjudicating issues on merits cannot be treated as final merely because multiple notices were issued, thereby has remanded the matter for fresh consideration after granting a reasonable opportunity of hearing.

The appellant, Paras Multiplex LLP, filed its return of income for the Assessment Year 2011-12 declaring a nominal income, which was initially accepted after scrutiny assessment. Subsequently, the assessment was reopened under Section 147 of the Income Tax Act, 1961, leading to disallowance of contractual expenses amounting to ₹64.12 lakh under Section 69C of the Income Tax Act, 1961. The reassessment resulted in a substantial addition to income.

Aggrieved by the reassessment order, the appellant approached the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [CIT(A)]. Although ten notices were issued during the appellate proceedings and adjournments were granted on multiple occasions, the appeal came to be decided ex-parte, confirming the reopening of assessment as well as the disallowance made by the Assessing Officer.

The Bench comprising Narender Kumar Choudhry, Judicial Member, and Bijyananda Pruseth, Accountant Member, observed that although several notices had been issued and adjournments granted, the appellate authority proceeded to decide the matter without examining the issues on merits. The ITAT noted that the disallowance under Section 69C of the Income Tax Act, 1961, involved substantive factual examination, which warranted a fair opportunity to the appellant.

The Tribunal set aside the ex-parte appellate order and remanded the matter to the CIT(A) for fresh adjudication after providing a reasonable opportunity of hearing. The remand was made subject to payment of costs, and the appeal was allowed for statistical purposes.

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