ITAT Restores Assessee’s Case for Fresh Consideration: Rules Ex-parte Dismissal by NFAC Violated Principles of Natural Justice [Read Order]

The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) has set aside the ex-parte order passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, in the case of the assessee Airona Tiles Ltd., restoring the matter for fresh adjudication. The appeal was made on the assessment proceedings for the Assessment Year 2016–17. Airona Tiles Limited, a company engaged in the business of manufacturing and selling ceramic glazed tiles, had filed its return declaring an income of ₹62,63,380. However, the Assessing Officer (AO), after selecting the case for complete scrutiny, made several additions amounting to ₹16,36,864. These additions made the total assessed income ₹79,00,240.

Aggrieved by these additions, the assessee approached the CIT(A). However, the appeal was dismissed ex parte, citing non-compliance. The CIT(A) failed to consider adjournment applications filed by the assessee on multiple dates, all of which had been correctly uploaded to the portal. The assessee challenged the dismissal on several grounds, primarily citing a violation of natural justice and improper service of statutory notices. The assessee contended that the CIT(A) order was passed without giving it a meaningful opportunity to present its case and that no effective communication was received under the Faceless Appeal Scheme, 2021.

There was a delay of 382 days in filing the appeal before the ITAT. The assessee filed an application seeking condonation of delay, explaining that the order was not received through email or post, nor was it accessed on the portal due to a lack of updates from their Authorised Representative (AR). Upon learning about the order only in December 2023, the assessee took prompt steps to file the appeal.

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Taking note of these submissions and observing that the delay was unintentional and due to procedural complexities, the ITAT condoned the delay. The Departmental Representative raised no objections to this request.

The ITAT Bench, comprising Sanjay Garg(Judicial Member) and Makarand V. Mahadeokar (Accountant Member), strongly criticised the ex-parte dismissal of the appeal by the CIT(A) without considering the multiple adjournment requests placed on record. The Tribunal held that such a course of action constituted a clear violation of the principles of natural justice.

The Tribunal also noted that the assessee had now furnished additional documentary evidence, such as payment challans for PF and professional tax, as well as confirmations for unsecured loans. Since these materials directly affected the merits of the disputed additions, the Tribunal admitted them under Rule 29 of the Income Tax (Appellate Tribunal) Rules, 1963.

The tribunal observed that considering the totality of facts and circumstances. In the interest of justice, it is deemed appropriate to set aside the order of the CIT(A) and restore the matter to his file for fresh adjudication.

The CIT(A) has been directed to give the assessee a fair opportunity to be heard and decide the matter afresh after considering the newly submitted evidence. The assessee, in turn, has been directed to cooperate fully and comply with the proceedings. As a result, the appeal has been allowed for statistical purposes, and the matter now returns to the CIT(A) for a comprehensive and fair disposal.

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