2023 (1) TMI 984 - AT - Income Tax

Validity of order passed by NFAC passed u/s 250 - Default u/s 201(1) - violation of principle of audi alteram partem for the reasons case deserves to be remanded back to the file of NFAC - HELD THAT - As perused the material placed on records and duly considered the facts of the case in the light of settled legal position and the case laws relied upon by the appellant assessee as well the respondent revenue. We note that, the Ld. NFAC by service of notice dt. 26/05/2022 called upon the appellant to substantiate its claim by 06/06/2022, however before the expiry of said notice period accorded to make representation, the Ld. NFAC adjudicated the matter by an order dt. 02/05/2022 i.e. well before the expiry of time period allowed to the appellant to refute its case on the basis of evidentiary documents, which evidently is violative of basic principle natural justice and for the reason concurring with DR, we find merit in the ground number 3 raised by the appellant; consequently the matter deserves to be remanded back to the file of Ld. NFAC for de-nova adjudication with a direction to observe the principle of natural justice by effectively providing reasonable opportunity to the appellant to make representation in rebuttal, ergo ordered accordingly. Appeals of the appellant assessee is allowed for statistical purposes.

Summary

Issues:
Challenging orders of NFAC confirming orders of AO u/s 201(1A) for six AYs. Identical legal issue in appeals. Violation of natural justice by NFAC in passing order before due date for submission.

Analysis:
The judgment involves a set of six appeals challenging orders of the National Faceless Appeal Centre (NFAC) confirming orders passed by the Deputy Commissioner of Income Tax, TDS Circle Nashik, under section 201(1A) of the Income-Tax Act for six assessment years from 2014-15 to 2019-20. The legal issue in these appeals is identical, and with the agreement of parties, the matter was heard together for a consolidated order. The lead case's adjudication would apply mutatis mutandis to the other appeals.

The appellant raised three grounds in all the appeals. Ground one pertained to the treatment of the appellant as an assessee in default under section 201(1) of the Act, arguing for TDS deduction on a payment basis rather than an accrued basis. Ground two highlighted errors in treating the appellant as a defaulter for non-deduction of TDS on a monthly accrual basis due to commission payments made annually. Ground three alleged a violation of natural justice by NFAC in passing the order before the due date for submission, denying the appellant a fair opportunity to be heard.

As the appellant did not appear during the physical hearing, the Tribunal proceeded ex-parte following rule 24 of the ITAT-Rules, allowing decisions on merits when the appellant is absent, subject to certain exceptions. The Departmental Representative requested a remand of the case back to NFAC based on the alleged violation of the principle of "audi alteram partem."

After considering the contentions of both parties and examining the legal provisions and case laws, the Tribunal found merit in ground three raised by the appellant regarding the violation of natural justice by NFAC. The Tribunal noted that NFAC had adjudicated the matter before the appellant's opportunity to make representations expired, ordering a remand for de-novo adjudication with proper adherence to the principles of natural justice.

Consequently, the bunch of appeals by the appellant was allowed for statistical purposes, and the matter was remanded back to NFAC for a fair hearing in accordance with the principles of natural justice.