Facts of the Case

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

Subsequently, the Commissioner of Income Tax (Appeals) also disposed of the appeal without effective consideration of the assessee’s submissions.

Issues Involved

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

Petitioner’s (Assessee’s) Arguments

  • The assessment was completed without providing a fair opportunity to produce evidence and explanations.
  • The appellate authority failed to adjudicate the issues on merits.
  • The orders violated the principles of natural justice.
  • The assessee was ready to cooperate if another opportunity were granted.

Respondent’s (Revenue’s) Arguments

  • Statutory notices were issued but not adequately complied with.
  • The Assessing Officer was justified in completing the assessment under best judgment provisions.
  • The orders were passed based on available records.

Court Order / Findings (ITAT Decision)

The ITAT Allahabad Bench held:

  • Proper adjudication requires granting reasonable and effective opportunity of hearing to the assessee.
  • Orders passed ex-parte without examining evidence on merits cannot be sustained.
  • Denial of opportunity amounts to violation of principles of natural justice.

Accordingly, the Tribunal:

  • Set aside the assessment as well as appellate orders on the disputed issues
  • 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 adhere to fairness and due process.
  • Appellate authorities are required to pass reasoned and speaking orders.
  • Remand ensures fair reconsideration and does not amount to relief on merits.

Link to download the order - https://itat.gov.in/public/files/upload/1611138979-125%20Alld%20Prakash%20Mohan%20Sadh.pdf

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