2024 (5) TMI 1548 - AT - Income Tax

Ex-parte order passed by the CIT(E) was not served physically nor received on email - HELD THAT - We hold that the service of the notice/orders through the portal would also be required to be served either physically or postal address or other digital mode on the email address given in the profile of the appellant in Form 35 ensuring acknowledgement of delivery of such notices/orders upon the appellant assessee. Meaning thereby the impugned ex-parte order of the CIT(E) would be held in violation of principles of natural justice. Accordingly we consider it deem fit to restore back the matter to the file of the CIT(A) to examine and adjudicate the application of the appellant assessee file in clause (iii) to sub-section 5 to section 80G for grant of registration u/s 80G(5) of the Act afresh after granting adequate opportunity of being heard and considering the written submission filed on record. Appellant assessee shall co-operate in the fresh proceedings before the ld. CIT(E). Appeals filed by the assessee are allowed for statistical purpose.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal issues considered in this judgment include:

• Whether the delay of 291 days in filing the appeal by the assessee should be condoned.
• Whether the ex-parte order passed by the Commissioner of Income Tax (Exemptions) [CIT(E)] rejecting the application for approval under Section 80G(5) was valid, considering the principles of natural justice.
• Whether the service of notice/order solely through the Income Tax Portal constitutes valid service under the law.

2. ISSUE-WISE DETAILED ANALYSIS

Condonation of Delay

• Relevant Legal Framework and Precedents: The Tribunal considered the principles of natural justice and the requirement for a fair opportunity to be heard. The delay in filing appeals can be condoned if there is a reasonable cause.
• Court's Interpretation and Reasoning: The Tribunal noted that the assessee claimed ignorance of the ex-parte order due to non-receipt via physical or email service. The Tribunal acknowledged that the appellant's failure to update the email address on the Income Tax Portal contributed to the delay.
• Key Evidence and Findings: The appellant provided an affidavit explaining the delay, asserting that the order was discovered during a routine check of the Income Tax Portal.
• Application of Law to Facts: The Tribunal found that the delay was bona fide and not intended to defraud the Revenue or gain undue benefit.
• Treatment of Competing Arguments: The Department Representative objected to the delay condonation, arguing it was the appellant's duty to maintain updated contact information. However, the Tribunal focused on the principles of natural justice.
• Conclusions: The Tribunal condoned the delay, advising the appellant to ensure accurate contact details in future filings.

Validity of Ex-Parte Order and Service of Notice

• Relevant Legal Framework and Precedents: The principles of natural justice require that parties be given a fair opportunity to be heard. The Tribunal referenced a recent High Court decision emphasizing that service solely through a portal does not satisfy these principles.
• Court's Interpretation and Reasoning: The Tribunal held that the ex-parte order was in violation of natural justice principles, as there was no evidence of proper service of notice to the assessee.
• Key Evidence and Findings: The Tribunal noted the absence of proof that the notice was served physically or via email, as required.
• Application of Law to Facts: The Tribunal applied the High Court's reasoning that service through the portal alone is insufficient, requiring additional methods to ensure receipt.
• Treatment of Competing Arguments: The Department Representative had no objection to remanding the matter for reconsideration, acknowledging the lack of notice service evidence.
• Conclusions: The Tribunal restored the matter to the CIT(E) for fresh adjudication, ensuring the assessee receives adequate opportunity to present its case.

3. SIGNIFICANT HOLDINGS

• Preserve verbatim quotes of crucial legal reasoning: "The service of the notice/orders through the portal would also be required to be served either physically or postal address or other digital mode on the email address given in the profile of the appellant in Form 35, ensuring acknowledgement of delivery of such notices/orders upon the appellant assessee."
• Core Principles Established: The principles of natural justice necessitate proper service of notices/orders, not merely through a digital portal but also through physical or other verified digital means.
• Final Determinations on Each Issue: The delay in filing the appeal was condoned, and the ex-parte order was deemed invalid due to improper notice service. The matter was remanded to the CIT(E) for reconsideration, ensuring compliance with natural justice principles.