Ex parte appellate orders require remand when reasonable hearing was denied and merits must be reconsidered afresh.

An ex parte appellate order passed without a meaningful opportunity of hearing is liable to be set aside where the record shows reasonable cause for non-appearance and prior directions required a fresh merits-based examination. The claims relating to transfer to reserve fund, education reserve and gratuity were therefore not finally adjudicated at that stage, and the matter was restored for de novo consideration under section 40A(9), section 37(1) and the doctrine of diversion of income by overriding title. The result was a remand to the Commissioner (Appeals) for fresh decision after affording reasonable opportunity to the assessee.

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Issues: Whether the ex parte appellate orders deserved to be set aside and the matters restored for fresh adjudication, and whether the claims relating to transfer to reserve fund, education reserve and gratuity required consideration on merits under section 40A(9), section 37(1) and the doctrine of diversion of income by overriding title.

Analysis: The assessee's non-appearance before the first appellate authority was found to be on reasonable grounds, and the record indicated that adjournment requests had been sent. The controversy in the relevant years was linked to the earlier revisional and appellate proceedings in the assessee's own case, where the Tribunal had already directed that the claims should be examined afresh in accordance with law after giving reasonable opportunity. The appellate orders under challenge were passed without proper consideration of those directions and without a meaningful opportunity to the assessee. In these circumstances, the merits of the disallowances could not be finally determined at that stage.

Conclusion: The ex parte orders were set aside and the matters were restored to the Commissioner (Appeals) for fresh decision on merits after giving reasonable opportunity to the assessee.

Final Conclusion: The assessee obtained a remand for fresh appellate adjudication, and the additions were not finally sustained at this stage.

Ratio Decidendi: An appellate order passed ex parte without affording a reasonable opportunity of hearing, especially where earlier binding directions require merits-based examination, is liable to be set aside and remanded for de novo consideration.

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