2015 (1) TMI 1469 - AT - Income Tax

Setting aside of ex parte CIT(A) order for AY 2009-10 due to procedural fairness violation

The Tribunal set aside the ex parte order of the CIT(A) for AY 2009-10, as it violated principles of natural justice by not ensuring proper service of ... Ex-parte appeal decided by CIT-A - Violation of principle of natural justice - due service of notice or not? - HELD THAT:- We are unable to see any observation or conclusion of the CIT(A) that the notice issued to the assessee on 15.10.2012 for the date of hearing on 6.11.2012 was duly served upon the assessee and despite due service, neither the assessee nor his representative attended the proceedings nor any request for adjournment was made on behalf of the assessee. In this situation, it can safely be presumed that the CIT(A) ignored to appreciate this fact whether the last notice dated 15.10.12 was really served upon the assessee or not. In this situation, ex parte order passed by the CIT(A) is clearly violative of principles of natural justice. The present case is squarely covered in favour of the assessee by the order of the ITAT Ahmedabad Bench ‘C’ in the case of Gujarat Themis Biosyn Ltd. [1999 (8) TMI 109 - ITAT AHMEDABAD-C], hence, appeal of the assessee on this legal issue is allowed and thus, we hereby set aside the impugned order of the CIT(A) and direct the CIT(A) to dispose of the appeal of the assessee afresh after allowing proper opportunity of hearing in accordance with law. Appeal of the assessee is deemed to be allowed for statistical purposes Issues involved:- Ex parte order by CIT(A) without proper opportunity of hearing- Duty of CIT(A) to adjudicate all grounds raised by assessee- Violation of principles of natural justice in passing ex parte order- Reliance on legal precedents for setting aside CIT(A) orderAnalysis:Issue 1: Ex parte order by CIT(A) without proper opportunity of hearingThe appeal was filed by the assessee against the order of the CIT(A)-XXXII, New Delhi for AY 2009-10. The appellant contended that the CIT(A) passed an ex parte order without affording a due opportunity of hearing, based on a notice issued to the assessee fixing the date of hearing. The CIT(A) dismissed the appeal ex parte, stating that the appellant did not have any material evidence to challenge the decision of the AO. The appellant argued that even if they did not appear before the CIT(A), the grounds raised should have been adjudicated. The Tribunal observed that the ex parte order was violative of principles of natural justice as the CIT(A) failed to ascertain if the notice was duly served upon the assessee. The Tribunal set aside the CIT(A) order and directed fresh adjudication with proper opportunity for hearing.Issue 2: Duty of CIT(A) to adjudicate all grounds raised by assesseeThe Tribunal noted that the assessee had raised six grounds before the CIT(A), but the CIT(A) decided the appeal ex parte without adjudicating the grounds as required by the provisions of the Act. The Tribunal emphasized that the CIT(A) is duty-bound to consider and decide all grounds raised by the assessee, even if the assessee does not appear before the authority. Failure to adjudicate the grounds raised by the assessee amounted to a violation of procedural fairness and the principles of natural justice.Issue 3: Violation of principles of natural justice in passing ex parte orderThe Tribunal referred to a similar case where the CIT(A) had passed an order in violation of the provisions of section 250(6) by not stating the points arising in the appeal, the decision thereon, and the reasons for such decision. The Tribunal held that such orders are subject to further appeal and must embody the principles of natural justice. In the present case, the Tribunal found that the CIT(A) had not properly considered whether the notice was served on the assessee before passing the ex parte order. The Tribunal concluded that the ex parte order was violative of principles of natural justice and set it aside for fresh adjudication.Issue 4: Reliance on legal precedents for setting aside CIT(A) orderThe Tribunal considered legal precedents and observed that the reliance placed by the CIT(A) on certain cases was misplaced and did not support the view taken by the CIT(A). The Tribunal referred to a decision by the ITAT Ahmedabad Bench, which set aside a similar order of the CIT(A) and directed fresh adjudication after allowing proper opportunity in accordance with the law. Based on these legal precedents, the Tribunal allowed the appeal of the assessee and set aside the CIT(A) order, restoring the first appeal to the file of CIT(A) for fresh adjudication.