Facts of the Case

The assessee was subjected to assessment proceedings in which the Assessing Officer completed the assessment ex-parte, allegedly due to non-compliance with statutory notices. Additions were made to the returned income on the basis of available material.

In appellate proceedings, the Commissioner of Income Tax (Appeals) also disposed of the appeal without granting effective opportunity or without adequately considering the assessee’s submissions.

Issues Involved

Whether assessment and appellate orders passed ex-parte, without providing adequate opportunity of hearing, are sustainable in law.

Petitioner’s (Assessee’s) Arguments

  • The assessment was completed without proper and reasonable opportunity to present evidence.
  • The appellate authority failed to adjudicate the issues on merits.
  • The orders violated principles of natural justice.
  • The assessee was willing to cooperate and substantiate claims if another opportunity were granted.

Respondent’s (Revenue’s) Arguments

  • Statutory notices were issued but not complied with by the assessee.
  • In such circumstances, the Assessing Officer was justified in passing a best judgment assessment.
  • The orders were passed in accordance with law based on available records.

Court Order / Findings (ITAT Decision)

  • Both the assessment order and the appellate order were passed without ensuring effective opportunity to the assessee.
  • Proper adjudication requires consideration of evidence and submissions on merits.
  • Denial of reasonable opportunity amounts to violation of natural justice.

Accordingly, the Tribunal:

  • Set aside the orders of the lower authorities
  • Remanded the matter to the Assessing Officer for fresh adjudication
  • Directed that adequate opportunity of hearing be provided to the assessee

Important Clarification

  • Best judgment assessments must still comply with principles of fairness and natural justice.
  • Appellate authorities are required to pass reasoned and speaking orders.
  • Remand does not grant relief on merits but ensures fair reconsideration.

Link to download the order - https://itat.gov.in/public/files/upload/1611226859-131%20Alld%202019%20Swatantra%20Mishra.pdf

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