Facts of the Case

The assessee, The Kara Dudh Utpadak Sahkari Mandli Ltd., a cooperative society engaged in dairy activities, filed an appeal against the appellate order dated 22.08.2024 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, for Assessment Year 2019-20. The Assessing Officer had completed assessment by estimating profits at 8% of total sales and made an addition of ₹79,61,778. An additional amount of ₹7,46,348 was also added as income from other sources. The CIT(A), NFAC confirmed the additions and consequential initiation of penalty proceedings under Sections 270A, 271A and 271B, as well as charging of interest under Sections 234A, 234B and 234F, by passing an ex parte order due to non-compliance by the assessee during appellate proceedings.

Issues Involved

Whether the CIT(A) was justified in deciding the appeal ex parte without granting a real and meaningful opportunity of hearing, whether confirmation of estimated profit addition at a flat rate of 8% without considering the assessee’s constraints was sustainable, and whether such ex parte confirmation violated the mandatory requirement of passing a reasoned order under Section 250(6).

Petitioner’s Arguments

The assessee contended that due to genuine constraints, it could not effectively participate in the faceless appellate proceedings. It was argued that the CIT(A) erred in confirming additions and penalty initiation ex parte without ensuring meaningful opportunity of hearing. The assessee submitted that given an opportunity, it would furnish all necessary bank statements, documents, clarifications and explanations to substantiate its case on merits.

Respondent’s Arguments

There was no representation on behalf of the Revenue before the Tribunal.

Court Order / Findings

The ITAT Ahmedabad observed that the CIT(A) decided the appeal ex parte solely on the basis of material available on record, without considering the peculiar circumstances and limitations faced by the assessee. The Tribunal held that non-appearance of the assessee does not absolve the appellate authority from the statutory obligation under Section 250(6) to pass a reasoned and speaking order after affording meaningful opportunity of hearing. In the interest of justice, the Tribunal set aside the order of the CIT(A) and restored the matter to his file for de novo adjudication. The Tribunal directed the assessee to comply with notices and furnish all relevant submissions and documents without seeking unnecessary adjournments.

Important Clarification

The Tribunal clarified that appellate proceedings cannot be concluded mechanically on an ex parte basis. Even in faceless proceedings, authorities are required to ensure effective opportunity of hearing and pass reasoned orders dealing with each ground of appeal, in conformity with principles of natural justice and Section 250(6) of the Act.

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 de novo after granting meaningful opportunity of hearing to the assessee.

 Link to download order 
  https://www.mytaxexpert.co.in/uploads/1769151116_THEKARADUDHUTPADAKSAHKARIMANDLILTD.AHMEDABADVS.THEITOWARD1GODHRA.pdf 

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