Ex-Parte Order Passed without Adjudicating Issue On Merits: ITAT Remits Rs. 3 Cr Sales and Purchases Matter to CIT(A) [Read Order]

The Chandigarh Bench of the Income Tax Appellate Tribunal (ITAT) has set aside the ex-parte order of the Commissioner of Income Tax (Appeals) [CIT(A)] citing the failure to adjudicate the issue on merits and remanded the matter for fresh adjudication.

Jagmohan Garg (assessee), proprietor of M/s Garg Woolen Mills, Ludhiana, filed an appeal before the CIT(A) against an ex-parte assessment order passed under Section 144 of the Income Tax Act, 1961.

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The CIT(A) issued notices to the assessee for hearings but observed that the assessee failed to appear or respond. Consequently, the CIT(A) dismissed the appeal via an ex-parte order without adjudicating the issues on merits or considering the material available on record.

Aggrieved by the CIT(A)’s order, the assessee appealed to the ITAT. The grounds of appeal included that the CIT(A) erred in verifying whether notices were duly served and wrongly upheld the AO’s addition by passing an ex-parte order, violating settled principles of law.

The two-member bench comprising Laliet Kumar (Judicial Member) and Krinwant Sahay (Accountant Member), reviewed the records and noted that both the AO and the CIT(A) had passed ex-parte orders without providing the assessee adequate opportunity for a hearing.

The tribunal observed that the CIT(A) failed to adjudicate the appeal on merits based on the available material which needed a fresh consideration.

The tribunal held that in the interest of justice the assessee deserved a proper opportunity to present the case. The tribunal set aside the CIT(A)’s order and remanded the matter to the CIT(A) with directions to adjudicate the appeal afresh on merits, ensuring a reasonable opportunity of being heard for the assessee.

The tribunal also directed the assessee to cooperate fully in the fresh proceedings and to respond promptly to all notices issued by the CIT(A). The appeal of the assessee was allowed for statistical purposes.

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