Facts of the Case

The assessee filed an appeal before the Income Tax Appellate Tribunal against the order of the Commissioner of Income Tax (Appeals), which arose from the assessment framed under Section 143(3) of the Income-tax Act for Assessment Year 2015-16.

During assessment proceedings, the Assessing Officer made additions, including under Section 68, and computed income without allowing the loss claimed by the assessee from share trading activities. The assessment order was subsequently upheld by the CIT(A), who dismissed the appeal ex-parte due to non-appearance of the assessee despite issuance of several notices.

Issues Involved

  1. Whether the ex-parte dismissal of appeal by the CIT(A) without effective hearing was justified.
  2. Whether the assessment ignoring the assessee’s claimed losses and making additions under Section 68 was sustainable.
  3. Whether denial of opportunity to present evidence violates principles of natural justice.

Petitioner’s Arguments (Assessee)

  • The assessment order under Section 143(3) was erroneous both on facts and in law.
  • Adequate opportunity of being heard was not granted.
  • Loss from share trading was duly claimed and supported by books of account and explanations.
  • Authorities failed to consider evidence and did not allow set-off of losses against additions under Section 68.
  • Ex-parte orders caused grave injustice.

Respondent’s Arguments (Revenue)

  • Multiple notices were issued to the assessee at both appellate and Tribunal stages.
  • The assessee consistently failed to appear or comply.
  • Therefore, dismissal of appeal was justified due to non-prosecution.
  • Additions made during assessment were legally sustainable.

 Court Order / Findings (ITAT)

  • The assessee did not participate in proceedings despite several opportunities.
  • However, dismissal of appeal without examining merits could result in injustice.
  • Tax proceedings must adhere to principles of natural justice.
  • Even when the assessee is non-cooperative, matters involving substantial tax liability should be decided on merits wherever possible.

Important Clarification

  • Ex-parte orders may be passed when a party fails to appear, but authorities must ensure fairness.
  • Denial of meaningful opportunity can invalidate proceedings.
  • Restoration does not grant relief on merits — it only reopens adjudication.

Link to download the order –

https://itat.gov.in/public/files/upload/1615372376-malay_prasad%20ITA%20No.%2032.pdf

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