Facts of the Case

The assessee, Aatash Norcontrol Limited, filed its appeal for Assessment Year 2019-20 against the order dated 15.09.2025 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi. The appeal before the CIT(A) was dismissed ex parte without adjudicating the issues on merits. The assessment involved reopening under Section 147 and disallowance of bad debts amounting to ₹1,31,16,367 claimed under Section 36(1)(vii). The assessee also raised objections regarding improper transfer from faceless assessment to jurisdictional Assessing Officer under Section 144B and violation of principles of natural justice.

Aggrieved by the ex-parte dismissal, the assessee filed an appeal before the Income Tax Appellate Tribunal, Ahmedabad Bench.

Issues Involved

Whether the CIT(A) was justified in passing an ex-parte order without adjudicating the appeal on merits, whether such dismissal violated Section 250(6) and principles of natural justice, and whether the issues relating to reopening under Section 147 and disallowance of bad debts required fresh adjudication.

Petitioner’s Arguments

The assessee contended that the CIT(A) erred in deciding the appeal ex parte without examining the merits of the case. It was submitted that the assessee had undertaken two distinct projects with Gujarat Maritime Board, one at the Gulf of Kutch and another at the Gulf of Khambhat. The assessee argued that allegations relied upon by the Revenue related to the Gulf of Khambhat project, whereas the transactions under dispute pertained to the Gulf of Kutch project. These crucial factual distinctions were neither examined by the Assessing Officer nor considered by the CIT(A). The assessee therefore prayed for restoration of the matter for fresh adjudication.

Respondent’s Arguments

The Revenue relied on the order of the CIT(A) and placed reliance on the judgment of the Hon’ble Supreme Court in the case of Jinofer Kawasji Bhujwala, contending that the said judgment had a bearing on the adjudication of the matter.

Court Order / Findings

The ITAT Ahmedabad observed that the CIT(A) had passed an ex-parte order without adjudicating the grounds raised by the assessee, thereby violating the mandate of Section 250(6) which requires passing of a reasoned and speaking order. The Tribunal further noted that the factual distinction between the two Gujarat Maritime Board projects, as highlighted by the assessee, was a vital aspect that had not been examined at any stage.

In the interest of justice and to ensure proper adjudication, the Tribunal held that the matter required fresh consideration. Accordingly, the Tribunal set aside the impugned order of the CIT(A) and restored the matter to his file for de novo adjudication on merits after granting reasonable opportunity of being heard to the assessee. The Tribunal directed the assessee to place all relevant evidence before the CIT(A) and refrain from seeking unnecessary adjournments.

Important Clarification

The Tribunal clarified that appellate authorities are duty-bound to adjudicate appeals on merits by passing reasoned orders in compliance with Section 250(6). Ex-parte dismissal of appeals without examination of factual and legal issues amounts to violation of principles of natural justice and cannot be sustained.

Final Outcome

The appeal filed by the assessee was allowed for statistical purposes. The ex-parte order passed by the CIT(A), NFAC was set aside and the matter was restored to the file of the CIT(A) for fresh adjudication on merits in accordance with law after providing adequate opportunity of being heard to the assessee.

 

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