An appellate order passed without a hearing, violating court directions, is legally unsustainable.

Issue

Is a final appellate order passed by the National Faceless Appeal Centre (NFAC) legally valid if it is issued without providing an opportunity of hearing to the assessee, particularly when a High Court had already given specific directions regarding the disposal of the appeal?

Facts

An assessee’s appeal for the assessment year 2017-18 was pending before the National Faceless Appeal Centre (NFAC).
A coordinate Bench of the High Court had previously intervened and, on February 13, 2025, issued specific directions on how the NFAC should proceed with and dispose of this appeal.
Despite these directions, the NFAC passed a final appellate order on March 17, 2025.
This final order was passed without granting the assessee an opportunity of being heard, which was also in direct violation of the High Court’s earlier directions.

Decision

The High Court ruled in favour of the assessee and remanded the matter.

It held that the appellate order could not be sustained in law because it was passed in violation of the principles of natural justice (by denying a hearing) and in direct contravention of the binding directions issued by a coordinate Bench of the High Court.
The impugned order was set aside.
The matter was remanded back to the NFAC with a clear instruction to dispose of the appeal strictly in accordance with the original directions issued by the court on February 13, 2025.

Key Takeaways

Right to a Hearing is Fundamental: The principle of audi alteram partem (the right to be heard) is a non-negotiable aspect of judicial and quasi-judicial proceedings. An order passed in violation of this principle is legally invalid.
Court Directions are Mandatory: Orders and directions issued by a High Court are binding on all subordinate authorities and tribunals, including the NFAC. Failure to comply with such directions is a serious procedural error that will vitiate any subsequent order.
Faceless is Not a Bar to a Fair Hearing: The faceless appeal scheme is designed to change the mode of communication, not to eliminate the fundamental requirement of providing a fair hearing to the assessee.
Violation Leads to Remand: When an order is passed in violation of both natural justice and specific court directions, the standard legal remedy is to set the order aside and remand the case for a fresh and proper hearing in compliance with the law.

HIGH COURT OF CALCUTTA

Nazirpur Large sized Multipurpose Co-op Society

Union of India

Raja Basu Chowdhury, J.

WPA No. 7054 of 2025

JULY 23, 2025

Himangshu Kumar Ray, Subhasis Poddar, Ms. Shiwani Shaw, Gaurav Chakraborty and Amit Saha for the Petitioner. Prithu Dudharia for the Respondent.

ORDER

1. Upon hearing the learned advocates appearing for the respective parties on 25^th June, 2025, this Court was pleased to pass the following order.

“The affidavit-of-service filed in Court today be taken on record.

The petitioners complain that despite the order dated 13^th February, 2025 passed by the coordinate Bench of this Court in WPA 5351 and 5348 of 2020, no opportunity of hearing was granted to the petitioner before passing the final order under Section 250 of the Income Tax Act 1961 (hereinafter referred to as the “said Act”) on 17^th March, 2025.

Having heard the learned advocates appearing for the respective parties, the proceedings prima facie appears to have been concluded by the National Faceless Appeal Centre(NFAC) without adhering to the above direction passed on 13^th February, 2025.

Having regard thereto, the order dated 17^th March, 2025 passed by the appellate authority under Section 250 of the said Act for the assessment year 2017-2018, shall remain stayed until further order of this Court.

The Jurisdictional Commissioner of Income Tax (Appeals) Income Tax Department is directed to file an affidavit to explain the circumstances under which the appeal was disposed of without affording opportunity of hearing to the petitioner.

Let such affidavit be filed on or before the matter is taken up next.

List this matter for further consideration under the same heading on 2^nd July, 2025.

Liberty is granted to the petitioners’ advocate-on-record to communicate this order to the concerned authority.”

2. When the matter came up for further consideration on 2^nd July, 2025, an extension was sought for on behalf of the learned advocate representing the respondents. Accordingly, the matter was adjourned and is taken up for further consideration today.

3. Mr. Dudhoria, learned advocate representing the respondents, at the very outset, by placing before this Court, an affidavit affirmed in terms of the direction dated 25^th June, 2025, would submit that the jurisdictional appellate authority has affirmed the affidavit and has acknowledged the fact that no opportunity of hearing was granted to the assessee. It is submitted that by reasons of huge pendency of cases and oversight, the order has been passed without affording opportunity of hearing. The same is unintentional.

4. Having heard the learned advocates appearing for the respective parties and noting the fact that the deponent of the affidavit has tendered his apology, though the grounds for not affording opportunity of hearing does not appear to be proper, however, the apology appears to be sincere. In view thereof by accepting the apology, this Court is of the view that the order dated 17^th March, 2025 passed without adhering to the directives of the Coordinate Bench of this Court in Banshihari Large Sized Multipurpose Co-op Society Ltd. v. ITO [WPA No. 5351 and 5348 of 2020, dated 13-2-2025] cannot be sustained. The same is accordingly set aside. Accordingly, all consequential demands are also set aside.

5. The matter is remanded back to the NFAC with a direction upon the concerned appellate authority (NFAC) to dispose of the appeal under Section 250 of the Income Tax Act, 1961 filed by the petitioners in accordance with the directives issued by the Coordinate Bench of this Court in WPA 5351 of 2020 and WPA 5348 of 2020 on 13th February, 2025.

6. It is made clear that appropriate opportunity of personal hearing must be afforded to the petitioners. The proceedings must be disposed of by the NFAC within a period of 16 weeks from the date of communication of this order.

7. With the above observations and directions, the writ petition is disposed of.