Facts of the Case

The assessee, Mr. Pradeep Jain, filed his return of income for Assessment Year 2022-23 declaring total income of ₹44,91,930. The case was selected for complete scrutiny under CASS.

During assessment proceedings, notices under Sections 143(2) and 142(1) along with various show-cause notices were issued by the Assessing Officer. According to the assessment record, no effective response was received from the assessee. Consequently, assessment was completed under Section 143(3) read with Section 144B.

The Assessing Officer made the following additions:

  1. ₹25,00,000 under Section 68 on account of alleged unexplained unsecured loans.
  2. ₹10,29,47,014 under Section 68 on account of alleged unexplained increase in sundry creditors.
  3. ₹2,32,213 on account of difference between turnover reported in GST returns and Income Tax Return.

The assessee challenged the assessment order before the Commissioner of Income Tax (Appeals). However, the appeal was dismissed ex-parte on the ground that the assessee failed to respond to various notices issued during appellate proceedings.

Aggrieved by the ex-parte appellate order, the assessee filed an appeal before the Income Tax Appellate Tribunal.

Issues Involved

  1. Whether the ex-parte order passed by CIT(A) without granting effective opportunity of hearing violated Section 250(2)(a) of the Income Tax Act?
  2. Whether dismissal of appeal without considering the assessee's submissions amounted to violation of principles of natural justice?
  3. Whether the matter deserved restoration to the file of CIT(A) for fresh adjudication?

Petitioner’s (Assessee’s) Arguments

The assessee contended that:

  • Adequate and effective opportunity of hearing was not granted during appellate proceedings.
  • After seeking adjournment on 04.09.2025, no subsequent effective notice was received.
  • The ex-parte order resulted in serious miscarriage of justice.
  • The additions under Section 68 and taxation under Section 115BBE were confirmed without proper consideration of facts and evidence.
  • Principles of natural justice were violated as the assessee was denied a meaningful opportunity to present his case.

The assessee requested that the matter be restored to the file of CIT(A) for fresh adjudication.

Respondent’s (Revenue’s) Arguments

The Revenue relied upon the orders of the Assessing Officer and CIT(A).

The Revenue maintained that the assessee had failed to comply with notices issued during assessment as well as appellate proceedings and therefore the appellate authority was justified in passing the ex-parte order.

Court Order / Findings

The ITAT examined Section 250(2)(a) of the Income Tax Act, which grants an appellant the statutory right to be heard either personally or through an authorized representative.

The Tribunal observed that:

  • The right of hearing provided under Section 250(2)(a) is not a mere procedural formality.
  • It is a mandatory statutory requirement.
  • Compliance with this provision is essential for ensuring adherence to principles of natural justice.
  • The record indicated that effective hearing was not provided before passing the impugned appellate order.

The Tribunal held that the order of the CIT(A) was passed without granting an effective opportunity of hearing and therefore could not be sustained in law.

Accordingly, the ex-parte order was set aside and the matter was restored to the file of CIT(A) for fresh adjudication after granting adequate opportunity to the assessee.

The Tribunal further directed the assessee to submit necessary documents, explanations and supporting material before CIT(A) within 60 days from the date of the Tribunal's order.

Important Clarification

The Tribunal did not adjudicate the merits of additions made under Section 68 or the applicability of Section 115BBE.

The decision was confined to the issue of violation of natural justice and denial of effective hearing.

The order emphasizes that:

  • CIT(A) must provide a meaningful and effective opportunity of hearing before deciding an appeal.
  • Ex-parte dismissal of an appeal without ensuring compliance with Section 250(2)(a) may render the order unsustainable.
  • The appellate process must conform to principles of natural justice irrespective of the merits of the additions involved.

Final Outcome

Appeal Allowed for Statistical Purposes.

The ex-parte order of CIT(A) was set aside and the matter was remanded for fresh adjudication after granting proper opportunity of hearing to the assessee.

Relevant Sections Involved

  • Section 68 – Unexplained Cash Credits
  • Section 115BBE – Tax on Income Referred to in Sections 68 to 69D
  • Section 143(3) – Scrutiny Assessment
  • Section 144B – Faceless Assessment
  • Section 250(2)(a) – Right of Hearing Before CIT(A)
  • Principles of Natural Justice

Link to download the order -https://itat.gov.in/public/files/upload/1780643435-SQpj9j-1-TO.pdf  

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