Facts of the Case

The assessee, an individual, filed her return of income for Assessment Year 2012-13 on 05.03.2013 declaring income of ₹3,00,000 under the head “Salary”. The return was processed under Section 143(1). Subsequently, based on information received from ACIT, Central Circle-2(4), Ahmedabad pursuant to a search conducted on the JP Iscon Group, it was alleged that the assessee had paid on-money of ₹61,53,500 for purchase of Flat No. H-304 in ISCON Platinum, as recorded in the statement of a sales manager under Section 132(4). A notice under Section 148 dated 31.03.2019 was issued. Due to non-response, an ex parte reassessment under Section 144 read with Section 147 was completed making additions of ₹77,08,500 towards unexplained investment, ₹35,50,000 as short-term capital gain on sale of property, and ₹6,20,500 towards unexplained cash deposits, determining total income at ₹1,21,79,000. The appeal before the CIT(A), NFAC was also dismissed ex parte despite multiple notices, leading to the appeal before the Tribunal.

Issues Involved

Whether the ex parte appellate order passed by the CIT(A) was sustainable when notices were not properly served on the assessee, whether dismissal of appeal without effective opportunity violated principles of natural justice, and whether the matter required restoration for fresh adjudication on merits.

Petitioner’s Arguments

The assessee contended that she was unaware of both the assessment and appellate proceedings as all financial affairs and communications were handled by her ex-husband, from whom she was divorced by mutual consent in January 2022. It was submitted that notices were issued on the email ID, mobile number and address belonging to the ex-husband, resulting in complete lack of communication to the assessee. It was further contended that she neither owned Flat No. H-304 nor made any cash payment as alleged, and that relevant documentary evidence including bank statements was available. The assessee sought one effective opportunity to present her case and also intended to challenge the validity of reopening.

Respondent’s Arguments

The Revenue fairly submitted that considering the peculiar facts and circumstances of the case, including incorrect service of notices, the matter could be restored to the file of the CIT(A) for fresh adjudication after granting proper opportunity of hearing to the assessee.

Court Order / Findings

The ITAT Ahmedabad observed that the email ID and contact details mentioned in Form No. 35 belonged to the assessee’s ex-husband and not to the assessee herself. The Tribunal held that despite issuance of multiple notices, there was no effective service on the assessee, resulting in denial of opportunity of hearing. The Tribunal further noted that the assessee claimed that the property and bank transactions did not pertain to her and that substantial documentary evidence was sought to be placed on record. In the interest of principles of natural justice, the Tribunal set aside the ex parte appellate order and restored the matter to the file of the CIT(A) with a direction to issue notices on the correct address, mobile number and email ID of the assessee and to adjudicate the appeal on merits in accordance with law.

Important Clarification

The Tribunal clarified that effective service of notice is a foundational requirement for valid appellate proceedings. Where notices are sent to incorrect or outdated contact details resulting in denial of opportunity, ex parte orders cannot be sustained and must be set aside to uphold principles of natural justice.

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 CIT(A) for fresh adjudication on merits after granting proper and effective opportunity of being heard to the assessee.Top of Form

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Link to download order
https://www.mytaxexpert.co.in/uploads/1769151659_ANNIEHEMENDRAKUMARKHATRIAHMEDABADVS.THEITOWARD321AHMEDABAD.pdf
 

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