Facts of the Case

The assessee, a cooperative society, filed an appeal before the CIT(A) against the assessment order. The CIT(A) issued multiple notices but, due to absence of response, proceeded to dispose of the appeal ex-parte on the assumption that the assessee was not interested in prosecuting the matter.

Before the Tribunal, the assessee contended that it was unaware of the appellate proceedings because notices were sent only to the earlier authorized representative, who failed to respond. The assessee had subsequently engaged new counsel and sought an opportunity to present its case on merits.

Issues Involved

  1. Whether the assessee can be penalized for failure of its authorized representative to respond to notices.
  2. Whether an ex-parte order passed without hearing the assessee violates principles of natural justice.
  3. Whether the appellate order complied with the requirement of a speaking order under Section 250(6).

 Petitioner’s Arguments (Assessee)

  • The assessee was unaware of the appellate proceedings due to non-communication by the earlier counsel.
  • Failure to respond was attributable to the representative and not to the assessee.
  • No effective opportunity of hearing was granted.
  • The appeal should be restored for adjudication on merits.

 Respondent’s Arguments (Revenue)

  • Notices were issued on multiple occasions.
  • The assessee did not respond to the communications from the appellate authority.
  • Therefore, disposal of appeal ex-parte was justified.

Court Order / Findings (ITAT Allahabad)

The Tribunal observed that the CIT(A) had passed the order without hearing the assessee and without adjudicating the appeal in accordance with Section 250(6). It further noted that the assessee should not suffer for the omission or negligence of its counsel.

Holding that the order violated principles of natural justice, the Tribunal:

  • Set aside the impugned order of the CIT(A)
  • Restored the appeal for fresh adjudication on merits
  • Directed the CIT(A) to pass a speaking order after hearing the assessee
  • Allowed the appeal for statistical purposes

 Important Clarification

  • Assessees should not be penalized for mistakes or omissions of their authorized representatives.
  • Appellate authorities must provide effective opportunity of hearing.
  • Orders must comply with the requirement of reasoned decision-making under Section 250(6).
  • The Tribunal did not adjudicate the substantive tax dispute.
  • The assessee must cooperate in the remand proceedings.

Link to download the order -  https://itat.gov.in/public/files/upload/1694424626-49%20of%202023%20Devlan%20Sadhan%20Sahkari%20Samiti%20Ltd.%20(Assessee%20Appeal)%20uder%20section%20143(3)%20of%20the%20Act%20SMC%20(Corrected).pdf

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