2025 (1) TMI 1344 - AT - Income Tax

Validity of ex parte order passed by CIT(A) - as argued notice issued by the CIT(A) were never received or served upon the assessee and as such they could not present its case before the CIT(A) who proceeded ex parte and decided the appeal on merit without giving effective opportunity of hearing to the assessee - HELD THAT - As per Section 250 sub section 2(a) the hearing to be given is not a formality but an effective hearing is sine qua non for the purpose of upholding the principal of natural justice. Thus as no effective opportunity of hearing has been given and there is no proof that the notice sent on various dates were duly served or brought to the notice of the appellant/assessee. Matter needs to be restored to the file of the Ld. CIT(A) for giving effective hearing to the assessee who shall present its case before the Ld. CIT(A) within 60 days. Decided in favour of assessee for statistical purposes.

Summary

ISSUES PRESENTED and CONSIDERED

The core issues considered by the Tribunal were:

1. Whether the delay of 216 days in filing the appeal by the appellant/assessee should be condoned.

2. Whether the order passed by the CIT(A) without providing an effective opportunity of hearing to the assessee was justified and if the matter should be remanded for a fresh hearing.

ISSUE-WISE DETAILED ANALYSIS

Issue 1: Condonation of Delay

Relevant Legal Framework and Precedents

The Tribunal considered Section 253 of the Income Tax Act, 1961, which governs the filing of appeals. The appellant relied on the precedent set by the Supreme Court in Collector, Land Acquisition Vs. MST. Katiji & Ors., which emphasized a liberal approach towards condonation of delay to ensure substantial justice.

Court's Interpretation and Reasoning

The Tribunal noted that the delay was supported by an affidavit and no contradictory evidence was presented by the revenue to challenge the affidavit's contents. The Tribunal emphasized the principle that ordinarily, a litigant does not benefit from lodging an appeal late, and refusing to condone the delay could result in a meritorious matter being dismissed prematurely.

Key Evidence and Findings

The affidavit provided by the assessee explained the reasons for the delay, attributing it to inadvertent mistakes and circumstances beyond the appellant's control. The Tribunal found these reasons sufficient to constitute "sufficient cause" under the law.

Application of Law to Facts

The Tribunal applied the principle of substantial justice, as highlighted in the Supreme Court's decision, and found that the reasons provided by the appellant were adequate to condone the delay.

Treatment of Competing Arguments

The revenue's argument supporting the CIT(A)'s decision was considered but found insufficient to outweigh the appellant's reasons for delay, especially in the absence of contradictory evidence.

Conclusions

The Tribunal concluded that the delay in filing the appeal should be condoned in the interest of justice.

Issue 2: Effective Opportunity of Hearing

Relevant Legal Framework and Precedents

The Tribunal referred to Section 250(2)(a) of the Income Tax Act, which mandates that an appellant must be given the right to be heard, either in person or through an authorized representative.

Court's Interpretation and Reasoning

The Tribunal emphasized that the right to be heard is not merely a procedural formality but a fundamental requirement to uphold the principles of natural justice. The Tribunal scrutinized the CIT(A)'s order and found that the notices were sent via email but there was no evidence of effective service or acknowledgment by the appellant.

Key Evidence and Findings

The Tribunal noted that the CIT(A) proceeded ex parte due to the absence of submissions from the appellant, but there was no proof that the notices were effectively served. The Tribunal found this lack of effective communication to be a significant procedural lapse.

Application of Law to Facts

The Tribunal applied the principles of natural justice and found that the appellant was not given a fair opportunity to present its case, which warranted a remand for a fresh hearing.

Treatment of Competing Arguments

The revenue supported the CIT(A)'s decision, arguing that the appeal lacked merit. However, the Tribunal prioritized the procedural fairness and the appellant's right to a fair hearing over the substantive merits of the appeal.

Conclusions

The Tribunal concluded that the matter should be remanded to the CIT(A) to provide the appellant with an effective opportunity to present its case.

SIGNIFICANT HOLDINGS

The Tribunal held that:

1. The delay of 216 days in filing the appeal was condoned, emphasizing the importance of substantial justice and the principle that delays should not defeat meritorious claims.

2. The CIT(A) failed to provide an effective opportunity of hearing, violating the principles of natural justice. The Tribunal set aside the impugned order and remanded the case for a fresh hearing, instructing the CIT(A) to ensure that the appellant is given a fair chance to present its case within 60 days.

Core Principles Established

The judgment reinforced the principle that procedural fairness and the right to be heard are fundamental components of justice. It also underscored the judiciary's obligation to adopt a liberal approach towards condonation of delay to ensure that justice is served on merits rather than procedural technicalities.

Final Determinations on Each Issue

The Tribunal allowed the appeal for statistical purposes, remanding the matter to the CIT(A) for a fresh hearing and ensuring that the appellant is given an effective opportunity to present its case.