2021 (11) TMI 43 - AT - Income Tax

Faceless proceedings - Violation of principles of natural justice - without issuing a notice of hearing to the assessee - HELD THAT - Under the new scheme of faceless proceedings before the CIT(A), there is no requirement of physical hearing unless and until it is considered as necessary but that does not mean that the right to have a proper opportunity of hearing is either forfeited or obliterated. It is pertinent to note that the CIT(A) has stated in the caption of the impugned order in the column of presence of appellant as well as presence of Department as not applicable. There is no mention about any notice issued by the CIT(A) before passing the impugned order. Even otherwise the impugned order was passed by the CIT(A) without considering any submissions including written submissions of the assessee. Therefore, it is manifest from the record that the CIT(A) has not granted even an opportunity to the assessee to file the written submissions as well as a documentary evidence in support of its claim. Accordingly in the facts and circumstances of the case we are of the considered view that the impugned order is passed by the ld. CIT(A) without giving an opportunity of hearing much less a sufficient opportunity of hearing to the assessee which has resulted violation of principles of natural justice rendering the impugned order as not sustainable in law. Hence, the impugned order is set aside and matter is remanded to the record of the ld. CIT(A) for deciding the same afresh after granting sufficient opportunity of hearing to the assessee.

Issues: Violation of principles of natural justice in passing the impugned order without granting an opportunity of hearing.

Detailed Analysis:
1. The appeal was against the order of the ld. CIT(A) arising from a rectification order under the Income Tax Act for the assessment year 2012-13. The assessee raised various grounds challenging the rejection of the application under section 154 by the AO, particularly related to disallowances/additions under section 40(a)(ia) for alleged non-deduction of TDS on interest payments.

2. The primary issue raised by the assessee was the violation of principles of natural justice, specifically the lack of notice and opportunity of hearing before passing the impugned order by the ld. CIT(A). The appellant contended that the absence of a notice rendered the order void ab initio and requested for the order to be quashed/set aside.

3. During the hearing, the ld. AR highlighted the failure of the ld. CIT(A) to issue a notice of hearing to the assessee, emphasizing the gross violation of natural justice principles. The ld. DR, on the other hand, argued that faceless proceedings did not require physical appearance, defending the impugned order.

4. The Tribunal acknowledged the absence of a notice of hearing to the assessee, deeming it a clear violation of natural justice principles. Despite the new faceless proceedings scheme, the right to a fair opportunity of hearing remained essential. The impugned order was passed without considering any submissions or written evidence from the assessee, leading to a lack of proper opportunity of hearing.

5. Consequently, the Tribunal held that the impugned order was unsustainable in law due to the violation of natural justice principles. The order was set aside, and the matter was remanded to the ld. CIT(A) for fresh adjudication after granting sufficient opportunity of hearing to the assessee. As a result, the other grounds raised in the appeal became irrelevant, and the appeal of the assessee was allowed for statistical purposes.

6. The judgment was pronounced in the open court on 26/10/2021, highlighting the importance of adherence to principles of natural justice in administrative proceedings, even in the context of evolving faceless processes.

← Previous Next →