Ex-parte order passed on public holiday Holi deemed invalid for violating natural justice principles

ITAT Chandigarh set aside CIT(A)'s ex-parte order dated 18.03.2022 as invalid since it was passed on a public holiday (Holi). The order violated natural justice principles by denying adequate hearing opportunity and refusing inspection of assessment records. CIT(A) had issued notice on 11.03.2022 requiring written submissions by 21.03.2022 but passed the order before the deadline. The tribunal held that CIT(A) cannot determine document relevance for the assessee or deny certified copies of assessment records. Matter remanded to CIT(A) for fresh decision within three months. Appeal allowed for statistical purposes.

---

---

Issues Involved:
1. Dismissal of appeal in limine by CIT(A).
2. Jurisdiction and validity of the reassessment order.
3. Additions and disallowances made by the Assessing Officer (AO).
4. Opportunity of being heard and principles of natural justice.

Detailed Analysis:

1. Dismissal of Appeal in Limine by CIT(A):
The primary issue was the CIT(A)'s dismissal of the appeal in limine without adjudicating the merits. The assessee contended that the CIT(A) erred by dismissing the appeal ex-parte without affording an adequate opportunity of being heard and denying inspection of the assessment records, violating principles of natural justice. The Tribunal had previously remitted the matter to the CIT(A) for a fresh decision on merits, emphasizing that rejection of an adjournment application does not automatically result in dismissal of the appeal. The CIT(A) was directed to decide the appeal on merits after giving the assessee an opportunity to be heard. However, the CIT(A) again dismissed the appeal, claiming the assessee failed to furnish documents and sought unnecessary adjournments.

2. Jurisdiction and Validity of the Reassessment Order:
The assessee challenged the reassessment order under Section 143(3) read with Section 147 of the Income Tax Act, arguing it was without jurisdiction and beyond the period of limitation prescribed under Section 153(2). The assessee also contended that the reassessment proceedings were initiated without "reason to believe" that income had escaped assessment, making the order illegal. Furthermore, the reassessment was based on information received without independent application of mind by the AO, and additions were made on issues not forming the basis of reopening the assessment.

3. Additions and Disallowances Made by the AO:
The AO assessed the income of the assessee at Rs. 100,29,36,642 against the declared income of Rs. 2,99,46,380, making several additions and disallowances:
- Addition of Rs. 88,11,84,963 on account of alleged undisclosed profits from the sale of land.
- Disallowance of Rs. 7.03 crores as non-compete fees.
- Disallowance of Rs. 1,74,23,151 as 'Biana Forfeiture Expenses'.
- Disallowance of Rs. 40,82,148 as interest on capital raised for business purposes.
The assessee argued that these additions and disallowances were made without appreciating the facts and relevant documents.

4. Opportunity of Being Heard and Principles of Natural Justice:
The Tribunal found that the CIT(A) violated the principles of natural justice by dismissing the appeal without providing an adequate opportunity for the assessee to be heard. The CIT(A) assumed that the documents requested by the assessee were either already in possession or irrelevant, without material evidence to support this conclusion. The Tribunal noted that the order dated 18.03.2022 was passed on a public holiday (Holi), and the assessee was given a deadline of 21.03.2022 to submit written submissions, which was not adhered to by the CIT(A).

Conclusion:
The Tribunal set aside the order of the CIT(A) and remanded the matter for a fresh decision on merits, directing the CIT(A) to provide due, adequate, and effective opportunity of hearing to the assessee. The CIT(A) was instructed to pass the order expeditiously within three months and supply the certified copies of the assessment records to the assessee. The remaining grounds raised by the assessee were not addressed at this stage. The appeal was treated as allowed for statistical purposes.

---