Facts of the Case

The assessee was subjected to assessment proceedings for the relevant assessment years. Due to alleged non-compliance with statutory notices, the Assessing Officer completed the assessments ex-parte under best judgment provisions and made additions to the returned income based on available material.

In appellate proceedings, the Commissioner of Income Tax (Appeals) also disposed of the appeals without effectively considering the assessee’s submissions or granting meaningful opportunity.

Issues Involved

Whether assessment and appellate orders passed ex-parte, without providing adequate opportunity of hearing, are sustainable in law.

Petitioner’s (Assessee’s) Arguments

  • The assessments were completed without providing a fair and reasonable opportunity to present evidence.
  • The appellate authority failed to adjudicate the issues on merits.
  • The orders violated principles of natural justice.
  • The assessee was willing to cooperate and substantiate claims if given another opportunity.

Respondent’s (Revenue’s) Arguments

  • Statutory notices were duly issued but not complied with by the assessee.
  • In such circumstances, the Assessing Officer was justified in completing the assessments under Section 144.
  • The orders were passed based on available records and within statutory authority.

Court Order / Findings (ITAT Decision)

The ITAT Allahabad Bench held:

  • Proper adjudication requires granting effective and reasonable opportunity of hearing.
  • Orders passed ex-parte without examination of evidence on merits cannot be sustained.
  • Denial of opportunity amounts to violation of principles of natural justice.

Accordingly, the Tribunal:

  • Set aside the assessment as well as appellate orders on the disputed issues
  • Remanded the matters to the Assessing Officer for fresh adjudication
  • Directed that adequate opportunity of hearing be provided to the assessee

Important Clarification

  • Best judgment assessments under Section 144 must still adhere to fairness and due process.
  • Appellate authorities are required to pass reasoned and speaking orders.
  • Remand ensures fair reconsideration and does not amount to relief on merits.

Link to download the order - https://itat.gov.in/public/files/upload/1611138334-120%20-%20121%20Rajendra%20Kumar.pdf

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.