Facts of the Case

A search and seizure operation under section 132 of the Income-tax Act, 1961 was conducted on 03.12.2011 in the case of the Vaish Group, during which the residential and business premises of the assessee company were covered. Consequent assessments for several assessment years were completed by the Assessing Officer by making various additions.

Aggrieved by the assessment orders, the assessee preferred appeals before the Commissioner of Income Tax (Appeals). In respect of Assessment Years 2005-06, 2006-07, 2007-08 and 2009-10, the learned CIT(A) dismissed the appeals ex-parte due to alleged non-compliance. For Assessment Year 2011-12, the assessee contended that proper opportunity of hearing was not provided to explain the disputed issues. The assessee, therefore, approached the Income Tax Appellate Tribunal.

 

Issues Involved

  1. Whether ex-parte dismissal of appeals by the CIT(A) without granting reasonable opportunity of hearing is sustainable in law.
  2. Whether appeals arising out of search assessments require restoration for fresh adjudication in the interest of substantive justice.

 

Petitioner’s Arguments

The assessee submitted that the learned CIT(A) erred in passing ex-parte orders without affording reasonable opportunity of being heard and without considering the facts and evidences on record. It was further submitted that if an effective opportunity is granted, the assessee would be able to explain the reasons for non-compliance with statutory notices and address the issues on merits.

 

Respondent’s Arguments

The Revenue supported the orders passed by the lower authorities and contended that the assessee failed to comply with notices issued during appellate proceedings.

 

Court Order / Findings

The Income Tax Appellate Tribunal observed that in all the appeals, the assessee was not provided proper opportunity to explain the facts and issues in dispute before the CIT(A). The Tribunal held that denial of reasonable opportunity amounts to violation of principles of natural justice.

Considering the overall facts and circumstances, the Tribunal held that it would be in the interest of substantive justice to set aside the ex-parte appellate orders. Accordingly, the Tribunal set aside the orders of the learned CIT(A) and remanded all the matters back to his file with a direction to adjudicate the issues afresh in accordance with law after

 

Important Clarification

The Tribunal clarified that appellate proceedings, particularly in search-related matters involving multiple assessment years, must strictly adhere to principles of natural justice. Ex-parte disposal without affording reasonable opportunity cannot be sustained in law. All appeals were allowed for statistical purposes with directions for fresh adjudication.

Link to download the order -  https://www.mytaxexpert.co.in/uploads/1770879655_SUBHASHSTONEINDUSTRIESPVT.LTD.NAINITALVS.ACITC.CALLAHABAD2.pdf 

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