Ex-Parte CIT(A) order set aside despite non-compliance; One final opportunity granted for Natural Justice

By | December 11, 2025
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Ex-Parte CIT(A) order set aside despite non-compliance; One final opportunity granted for Natural Justice

Issue

Whether an appellate order passed by the Commissioner (Appeals) dismissing an appeal due to non-prosecution (failure to reply to notices) should be set aside to grant one more opportunity to the assessee, considering the principles of natural justice.

Facts

  • The Assessment: For AY 2014-15, the assessee filed a Nil return. The Assessing Officer (AO) scrutinized the case and made certain additions.

  • The Appeal: The assessee filed an appeal before the CIT(A).

  • The Default: The CIT(A) issued three notices requesting written submissions.

    • The assessee requested an adjournment, which was granted.

    • A “final opportunity” was provided, but the assessee failed to file any reply or documentary evidence.

  • The Dismissal: Observing that the assessee had failed to rebut the AO’s findings despite multiple opportunities, the CIT(A) dismissed the appeal (likely confirming the additions).

  • Assessee’s Plea: Before the higher forum (Tribunal), the assessee argued that they were not given adequate opportunity and requested one more chance to plead the case on merits.

Decision

  • Substantial Justice: The Tribunal held that while the assessee was negligent in not responding to the notices, the principles of natural justice demand that a litigant be heard before an adverse order is passed.

  • Merit over Technicality: Courts and Tribunals generally prefer that tax disputes be decided on merits rather than being dismissed for default or non-prosecution.

  • Ruling: The order of the CIT(A) was set aside. The matter was remitted (remanded) back to the CIT(A) with a specific direction to adjudicate the appeal afresh in accordance with the law, after granting the assessee adequate opportunity of being heard.

Key Takeaways

CIT(A) cannot dismiss “in limine”: Under Section 250(6), the Commissioner (Appeals) is required to pass a “speaking order” stating the points for determination and the reasons for the decision. Even if the assessee is absent, the CIT(A) should ideally examine the merits based on the available record rather than summarily dismissing the appeal for non-prosecution.

Second Chance Strategy: If your appeal has been dismissed ex-parte by the CIT(A), the ITAT is usually lenient in restoring the matter if you can show a reasonable cause (or simply plead natural justice), provided you express willingness to cooperate in the fresh proceedings.

IN THE ITAT SURAT BENCH
Coper Co-operative Sugar Ltd.
v.
Income-tax Officer*
Dinesh Mohan Sinha, Judicial Member
and BIJAYANANDA PRUSETH, Accountant Member
IT Appeal No.24 (SRT) of 2025
[Assessment year 2014-15]
NOVEMBER  3, 2025
Akshay M. Modi, CA for the Appellant. Ravi Kant Gupta, CIT-DR for the Respondent.
ORDER
Bijayananda Pruseth, Accountant Member.- This appeal by the assessee emanates from the order passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’) dated 20.02.2024 by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [in short, ‘CIT(A)’] for the assessment year (AY) 2014-15.
2. The grounds of appeal raised by the assessee are as under:
“LEGAL:
1. The orders of the authorities below in so far as they are against the appellant-society are opposed to law, equity, weight of evidence, probabilities, facts and circumstances of the case.
2. On the facts and in the circumstances of the case as well in law, the CIT (Appeals), NFAC, Delhi (for the sake of brevity “CIT (Appeals)”) passed ex parte order in violation of principles of natural justice and hence, the CIT (Appeals)’s order being not passed as per mandate of provisions of section 250(6) of the Act is liable to be struck down.
3. On the facts and in the circumstances of the case as well in law, the learned CIT (Appeals), NFAC, Delhi has erred both on facts and in law in deciding the appeal ex parte in violation of the principle of natural justice and without granting to the appellant a fair, proper and meaningful opportunity and the findings of the CIT (Appeals) that the appellant-society has not responded to the notice of hearing, is wholly incorrect, misleading and in disregard of the records of appeal proceedings demonstrating that the appellant-society had duly complied with the notice of hearing served on the registered email address and hence, liable to be set aside.
MERITS:
4. Without prejudice to the above,
On the facts and in the circumstances of the case as well in law, the CIT (Appeals), NFAC, Delhi has erred in confirming the AO’s order without any adjudication of the grounds raised in the appeal making –
(i) Addition of Rs. 15,83,47,480/- on account of alleged suppression of yield
(ii) Disallowance of additional depreciation claimed of Rs. 52,41,227/-
(iii) Disallowance of transportation expenses to the extent of Rs. 18,55,856/-
(iv) Disallowance of cane development expenses claimed of Rs. 29,34,014/-
(v) Addition of interest income to the extent of Rs. 89,041/-
(vi) Addition of Rs. 21,046/ on account of alleged unexplained income
EVIDENCES IGNORED:
5. On the facts and in the circumstances of the case as well in law, the authorities below have erred in overlooking and summarily rejecting the detailed various submissions made during the course of assessment proceedings including the Statutory Audit reports of the Govt. Auditors, the Statement of Accounts, audited Balance Sheet and Manufacturing reports, book records, audited books of accounts and hence, the order passed by the CIT (Appeals) confirming the AO’s order making various additions/disallowances for the aggregate amount of Rs. 16,84,89,164/-arbitrarily, capriciously and based on lopsided, imaginary and factually incorrect inferences, deserves to be annulled or nullified.
GENERAL:
6. Your appellant further reserves its rights to add, alter, amend or modify any of the aforesaid grounds before or at the time of hearing of an appeal.
PRAYER
It is therefore, respectfully submitted that taking into account various submissions written as well as oral made in the course of assessment proceedings and/or appeal proceedings before the CIT (Appeals), NFAC, the entire addition/disallowances to the extent of Rs. 16,84,89,164/- be deleted in toto especially in view of the appellant’s various submissions filed with the AO and CIT (Appeals), which form part of statement of facts, along with submissions to be filed before the Hon’ble ITAT, Surat and the appeal of the appellant be allowed in full as prayed for.”
3. Brief facts of the case are that assessee filed its return of income for AY 2014-15 on 26.09.2014, declaring total income at Rs. Nil (Loss of Rs.40,183/-). The case was selected for scrutiny under CASS. Various notices u/s 143(2) and 142(1) of the Act along with questionnaires were issued and served on the assessee. The assessee was asked to submit details and explanation on various issues. The assessee submitted its details/explanation through its Managing Director on 27.06.2016, 03.11.2016 and 16.12.2016. The AO found that the assessee had shown purchase of sugarcane of 32,59,360 quintal whereas he claimed total purchase of sugarcane of 32,60,015.15 quintal in the audit report and profit and loss account. The assessee was asked as to clarify the discrepancy in the purchase quantity of sugarcane. The AO raised query on suppression of yield, claim of additional depreciation, additional transport expenses and claim of cane development expenses. After hearing the assessee, the AO passed order u/s 143(3) of the Act on 23.12.2016 by making the following additions: (i) suppression of yield Rs.15,83,47,980/-, (ii) disallowance of additional depreciation Rs.54,41,227/-, (iii) disallowance of additional transport expenses Rs.18,55,856/-, (iv) disallowance of cane development expenses Rs.29,34,014/-, (v) interest income of Rs.89,041/- and (vi) difference in creditor of Rs.21,046/-. The total income was determined at Rs.16,84,48,981/-. After set off of brought forward unabsorbed depreciation, total income was determined at Rs.16,38,15,260/- as against returned loss of Rs.40,183/-.
4. Aggrieved by the order of AO, the assessee filed this appeal before the CIT(A). The CIT(A) has issued three notices dated 23.12.2020, 24.08.2022 and 21.10.2022, requesting assessee to furnish written submission in support of the grounds of appeal on or before 07.01.2021, 01.09.2022 and 07.11.2022 respectively. The assessee responded only on 22.11.2022 and requested for adjournment. The request was accepted and final opportunity of hearing vide notice dated 19.04.2023 was given, requesting the assessee to file submission on or before 04.05.2023. However, the appellant did not file any reply. The CIT(A) observed that despite multiple opportunities, assessee did not file any submission or documentary evidence against the observation of the AO or in support of the grounds of appeal. In absence of documentary evidence, the appeal could not be decided. Thereafter, the CIT(A) relied upon the decisions of Hon’ble Supreme Court in case of CIT v. B. N. Bhattachargee (1979] 118 ITR 461 (SC) and the decision of Hon’ble Madhya Pradesh High Court in case of Estate of Late Tukojirao Holkar v. CWT [1997] 223 ITR 480 (Madhya Pradesh) where the Hon’ble Court dismissed the reference file at the instance of the assessee for default and not taking necessary steps. The CIT(A) has also referred to the decision of the ITAT, Ahmedabad in case of Amitkumar H. Shah v. ACIT [IT Appeal No. 2985(Ahd) of 2010, dated 31-12-2013] and the ITAT, Delhi in case of CIT v. Multiplan India (P.) Ltd. [1991] 38 ITD 320 (Delhi) and dismissed the appeal of the assessee.
5. Aggrieved by the order of CIT(A), the assessee filed appeal before the Tribunal. The learned Authorized Representative (ld. AR) of the assessee filed a small paper book containing copy of notices issued by CIT(A) and request for adjournment by the assessee. He also filed a copy of the profile of the appellant on the portal of the Income-tax Department. He submitted that the assessee could not appear before the CIT(A) due to circumstances beyond its control. He also submitted that adequate opportunity of hearing was not given to the assessee; therefore, one more opportunity should be given to the assessee to plead its case before the CIT(A).
6. On the other hand, the learned Senior Departmental Representative (ld. Sr. DR) of the revenue supported the order of lower authorities. He submitted that during the appellate proceedings, the assessee was negligent and noncooperative, due to which the additions were confirmed by CIT(A). However, he did not have any objection if the matter is restored to the file of CIT(A).
7. We have heard both the parties and perused the materials available on record. It is an undisputed fact that assessee has been totally non-cooperative during the appellate proceedings. The ld. AR submitted that adequate opportunity was not provided by the CIT(A). He submitted that appellant is ready with all details and, therefore, he requested one more opportunity to plead its case on merit. The ld. CIT-DR also did not object if the matter is set aside for fresh adjudication. We are of the view that the principles of natural justice would call for giving another opportunity of hearing to the assessee. Accordingly, we set aside the order of CIT(A) and remit the matter to the file of CIT(A) for fresh adjudication in accordance with law after granting adequate opportunity of hearing to the assessee. The assessee is directed to be more vigilant and diligent and to furnish all the details and explanations as needed by the CIT(A) by not seeking adjournment without valid reasons.
8. In the result, appeal of the assessee is allowed for statistical purpose.