Facts of the Case

The assessee, a partnership firm engaged in wholesale trading of plywood, adhesives, hardware, cement and allied goods, filed its return of income for Assessment Year 2018-19 declaring total income of ₹1,64,420. The Assessing Officer completed the assessment under section 144 of the Income Tax Act, 1961 and determined total income at ₹19,86,138 by making various additions.Aggrieved by the assessment order, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals). The learned CIT(A) dismissed the appeal for non-prosecution. The assessee thereafter approached the Income Tax Appellate Tribunal.

 Issues Involved

  1. Whether an assessment framed under section 144 without granting sufficient opportunity is sustainable in law.
  2. Whether dismissal of appeal for non-prosecution without adjudicating issues on merits is justified.
  3. Whether the matter requires restoration for fresh assessment after providing reasonable opportunity.

 Petitioner’s Arguments

The assessee submitted that both the Assessing Officer and the learned CIT(A) passed their respective orders without affording sufficient time and reasonable opportunity of being heard. It was contended that the assessment as well as the appellate proceedings suffered from violation of principles of natural justice and therefore deserved to be set aside with a direction for fresh adjudication.

 Respondent’s Arguments

The learned Senior Departmental Representative did not raise any objection to the submissions of the assessee and left the matter to the discretion of the Tribunal.

 Court Order / Findings

The Tribunal observed that the assessment was completed under section 144 and the appeal before the CIT(A) was dismissed for non-prosecution. Considering the submissions of the assessee and noting that the Revenue did not object to restoration, the Tribunal held that the impugned appellate order could not be sustained.

Accordingly, the Tribunal set aside the appellate order dated 16.12.2024 and restored the matter to the file of the Assessing Officer with a direction to pass a de novo assessment order in accordance with law after providing reasonable opportunity to the assessee.

Important Clarification

The Tribunal reiterated that assessments and appellate proceedings must conform to principles of natural justice. Orders passed without affording reasonable opportunity of hearing are liable to be set aside, and matters should ordinarily be decided on merits after granting adequate opportunity to the assessee.

Link to download the order - https://www.mytaxexpert.co.in/uploads/1770628595_NAVNIRMANALLAHABADVS.DEPUTYCOMMISSIONEROFINCOMETAXCENTRALCIRCLEALLAHABAD.pdf

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