ITAT Remands Ex-Parte CIT(A) Order; Cites Potential Communication Gaps in Faceless Regime

ITAT Remands Ex-Parte CIT(A) Order; Cites Potential Communication Gaps in Faceless Regime

Issue

Whether an ex-parte appellate order passed by the CIT(A)/NFAC confirming tax additions should be set aside to grant the assessee a fresh opportunity of hearing, considering the potential for communication errors inherent in the electronic/faceless appeal system.

Facts

• Assessment Year: 2015-16.

• The Dispute: The assessee filed an appeal against the assessment order passed under Section 143(3).

• CIT(A)’s Action: The Commissioner of Income Tax (Appeals), operating under the National Faceless Appeal Centre (NFAC), passed a detailed order dismissing the appeal and confirming the additions.

• Ex-Parte Nature: The order was passed ex-parte (without the presence or participation of the assessee).

• Revenue’s Stance: The Department argued that the CIT(A)’s order was justified because the assessee had failed to file any explanation or evidence to support their case despite being given the opportunity.

Decision

• The ITAT Delhi Bench allowed the appeal for statistical purposes and remanded the matter back to the CIT(A).

• Reasoning: The Tribunal observed that since the proceedings were ex-parte, the possibility of “communication gaps” between the taxpayer and their counsel/department involving the “newly introduced system of faceless hearings” could not be ruled out.

• Relief Granted: In the “larger interest of justice,” the Tribunal deemed it appropriate to restore the appeal for fresh adjudication.

• Conditions: The CIT(A) was directed to provide three effective opportunities to the assessee. The Tribunal clarified that the assessee must plead and prove the case at their own risk and responsibility in the fresh proceedings.

Key Takeaways

• Faceless System Challenges: The Tribunal took judicial notice of the practical difficulties taxpayers face in the faceless appeal regime, where missed email notices or portal glitches can lead to non-representation.

• Natural Justice: The ruling prioritizes the principle of audi alteram partem, ensuring that a substantial tax demand is not confirmed solely due to procedural non-compliance or communication errors.

• Statistical Allowance: When a Tribunal remands a case back to the lower authority without deciding the merits itself, the appeal is technically marked as “allowed for statistical purposes.”

• Burden of Proof: The remand is not an exoneration; the assessee still bears the full burden of producing evidence to delete the additions during the fresh hearing.

THE INCOME TAX APPELLATE TRIBUNAL,
DELHI BENCH: ‘G’ NEW DELHI
Sh. Sandeep,
Bahalgarh, Sonepat,
Haryana-131021
Vs.
Income Tax Officer,
Delhi
ITA No.2960/Del/2024
Date of pronouncement 03.11.2025