Tax Appeals Granted Due to Natural Justice Violation by NFAC in Section 201(1A) Orders

The Tribunal allowed a bunch of appeals challenging orders of NFAC confirming AO's orders under section 201(1A) for six assessment years. The appellant's contention of a violation of natural justice by NFAC in passing the order before the due date for submission was upheld. The Tribunal ordered a remand for de-novo adjudication, emphasizing adherence to the principles of natural justice. The appeals were allowed for statistical purposes, and the matter was remanded back to NFAC for a fair hearing in accordance with the principles of natural justice.

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Issues:
Challenging orders of NFAC confirming orders of AO u/s 201(1A) for six AYs. Identical legal issue in appeals. Violation of natural justice by NFAC in passing order before due date for submission.

Analysis:
The judgment involves a set of six appeals challenging orders of the National Faceless Appeal Centre (NFAC) confirming orders passed by the Deputy Commissioner of Income Tax, TDS Circle Nashik, under section 201(1A) of the Income-Tax Act for six assessment years from 2014-15 to 2019-20. The legal issue in these appeals is identical, and with the agreement of parties, the matter was heard together for a consolidated order. The lead case's adjudication would apply mutatis mutandis to the other appeals.

The appellant raised three grounds in all the appeals. Ground one pertained to the treatment of the appellant as an assessee in default under section 201(1) of the Act, arguing for TDS deduction on a payment basis rather than an accrued basis. Ground two highlighted errors in treating the appellant as a defaulter for non-deduction of TDS on a monthly accrual basis due to commission payments made annually. Ground three alleged a violation of natural justice by NFAC in passing the order before the due date for submission, denying the appellant a fair opportunity to be heard.

As the appellant did not appear during the physical hearing, the Tribunal proceeded ex-parte following rule 24 of the ITAT-Rules, allowing decisions on merits when the appellant is absent, subject to certain exceptions. The Departmental Representative requested a remand of the case back to NFAC based on the alleged violation of the principle of "audi alteram partem."

After considering the contentions of both parties and examining the legal provisions and case laws, the Tribunal found merit in ground three raised by the appellant regarding the violation of natural justice by NFAC. The Tribunal noted that NFAC had adjudicated the matter before the appellant's opportunity to make representations expired, ordering a remand for de-novo adjudication with proper adherence to the principles of natural justice.

Consequently, the bunch of appeals by the appellant was allowed for statistical purposes, and the matter was remanded back to NFAC for a fair hearing in accordance with the principles of natural justice.

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