Facts of the Case

The assessee, Mr. Narendra Singh, filed an appeal before the Income Tax Appellate Tribunal against the order passed by the National Faceless Appeal Centre (NFAC), New Delhi, which had upheld the assessment made by the Assessing Officer.

The assessment had been completed ex-parte under the provisions of the Income-tax Act due to alleged non-compliance with statutory notices. Consequently, additions were made to the returned income based on the material available on record.

The assessee contended that he could not effectively participate in the proceedings due to reasonable cause and that adequate opportunity of hearing was not granted during both assessment and appellate stages.

 Issues Involved

  1. Whether an assessment completed ex-parte without effective opportunity of hearing is sustainable in law.
  2. Whether an appellate order confirming such assessment without proper consideration violates principles of natural justice.
  3. Whether the matter should be restored for fresh adjudication.

 Petitioner’s Arguments (Assessee)

  • The assessment order was passed without granting reasonable and effective opportunity to present the case.
  • Non-compliance was due to genuine circumstances beyond the assessee’s control.
  • Additions were made without proper verification or supporting evidence from the assessee’s side.
  • The NFAC also disposed of the appeal without adequately addressing the merits.
  • Therefore, the orders were liable to be set aside and the matter restored.

 Respondent’s Arguments (Revenue)

  • The assessee failed to comply with notices issued during assessment proceedings.
  • Adequate opportunities had been provided as per statutory requirements.
  • The assessment was completed based on available records.
  • The appellate authority rightly confirmed the assessment.

 Court Order / Findings (ITAT)

The Tribunal observed that:

  • The assessment had been framed ex-parte.
  • The appellate authority had also confirmed the order without detailed examination of the merits of the case.
  • Effective opportunity of hearing is essential for fair adjudication.
  • Tax liability cannot be finally determined without allowing the assessee to present evidence and explanations.

The Tribunal held that:

Orders passed in violation of principles of natural justice cannot be sustained.
 The assessee should be provided a fair opportunity to present the case on merits.
 Interests of justice require restoration of the matter for fresh adjudication.

Accordingly, the Tribunal set aside the orders of the lower authorities and restored the matter to the Assessing Officer for fresh assessment after granting adequate opportunity of hearing.

The assessee was directed to cooperate fully in the proceedings and avoid unnecessary adjournments.

 Important Clarification

The Tribunal emphasized that:

  • Natural justice is a fundamental requirement in income-tax proceedings.
  • Ex-parte assessments should not be sustained where reasonable cause for non-appearance exists.
  • Restoration does not decide the merits but ensures due process is followed.
  • Both the assessee and the department must cooperate in fresh proceedings.

Link to download the order 

-https://itat.gov.in/public/files/upload/1676528967-ITA%20No.%2040%20Alld%202022%20Narendra%20Singh.pdf

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