Facts of the Case

The assessee, Jagdish Kumar Mahto, an individual, filed his return of income for Assessment Year 2016–17 declaring total income of ₹10,06,440. During assessment proceedings, the Assessing Officer formed a belief that the assessee had capital gains amounting to ₹5,40,00,000. Accordingly, notice under Section 148 dated 23.03.2021 was issued along with other statutory notices. Due to non-compliance and failure to furnish supporting details, the Assessing Officer completed reassessment under Sections 147/144B assessing total income at ₹5,50,06,440. The assessee filed an appeal before the CIT(A), which was dismissed due to non-compliance during appellate proceedings.

Issues Involved

Whether reassessment completed ex parte without effective compliance warranted reconsideration, whether the CIT(A) was justified in dismissing the appeal without adjudicating the merits, and whether the matter deserved restoration to the appellate authority in the interest of justice.

Petitioner’s Arguments

No appearance was made on behalf of the assessee before the Tribunal. However, the Tribunal examined the record to determine whether the matter deserved adjudication on merits in view of the substantial additions made and principles of natural justice.

Respondent’s Arguments

The Revenue supported the orders passed by the Assessing Officer and the CIT(A), contending that the assessee repeatedly failed to comply with statutory notices and did not furnish any documentary evidence in support of his claims.

Court Order / Findings

The ITAT Ranchi observed that both the reassessment order and the appellate order were passed ex parte due to non-compliance by the assessee. While noting the assessee’s failure to cooperate, the Tribunal held that considering the magnitude of additions and in the interest of justice and fair play, the assessee should be granted one more opportunity to substantiate the claims with supporting evidence. Accordingly, the Tribunal restored the entire matter to the file of the CIT(A) with a direction to adjudicate the appeal afresh on merits after affording reasonable opportunity of hearing to the assessee. The Tribunal further directed the assessee to cooperate fully and cautioned that failure to comply would entitle the appellate authority to pass an order in accordance with law on the basis of material available on record.

Important Clarification

The Tribunal clarified that while repeated non-compliance cannot be condoned indefinitely, substantive justice requires that issues involving substantial tax liability should, where possible, be decided on merits rather than dismissed on technical or procedural grounds.

Final Outcome

The appeal filed by the assessee was allowed for statistical purposes, the ex parte orders passed by the lower authorities were set aside, and the matter was restored to the file of the CIT(A) for fresh adjudication on merits in accordance with law after granting due opportunity of hearing to the assessee.

Link to Download Order- https://www.mytaxexpert.co.in/uploads/1769148234_JAGDISHKUMARMAHTORANCHIVS.RANCHICOMMISSIONERRANCHI.pdf


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