Appeals allowed for statistical purposes after natural justice violation in section 153A search assessments

ITAT Jodhpur allowed appeals filed by assessee for statistical purposes after finding violation of natural justice. The case involved search assessments under sections 153A and 144 following investigation at business premises. CIT(A) decided appeals without considering assessee's evidence or providing reasonable opportunity of hearing. ITAT held that assessee was deprived of chance to present claims before first appellate authority, constituting denial of opportunity and violation of natural justice principles. Matters remanded back to CIT(A) for fresh consideration of assessee's plea with proper hearing opportunity.

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1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Appellate Tribunal (AT) in the appeals arising from assessment years 2016-17 to 2018-19 are:

• Whether the delay of 15 days in filing the appeals before the AT should be condoned given the circumstances stated by the assessee.
• Whether the Learned Commissioner of Income-tax (Appeals) [Ld.CIT(A)] committed a violation of principles of natural justice by passing ex parte orders without providing the assessee a reasonable opportunity of hearing.
• Whether the addition of Rs. 1,44,00,000/- made by the Assessing Officer (AO) and confirmed by the Ld.CIT(A) was justified, particularly in the context of assessments completed under section 153A read with section 143(3) and section 144 of the Income Tax Act, 1961, following a search operation.
• Whether the matter should be remanded back to the Ld.CIT(A) for fresh adjudication to allow the assessee to present his case fully and fairly.

2. ISSUE-WISE DETAILED ANALYSIS

Delay in Filing Appeals and its Condonation

Legal Framework and Precedents: The Income Tax Act and procedural rules allow for condonation of delay in filing appeals if the delay is shown to be unintentional and reasonable cause is established. Courts have consistently held that procedural delays should not be allowed to defeat substantive rights if sufficient cause is shown.

Court's Interpretation and Reasoning: The registry reported a 15-day delay in filing the appeals. The assessee submitted an affidavit explaining the delay was unintentional, caused by non-receipt of the CIT(A)'s order on proper email addresses and preoccupation with multiple litigations and family issues. The Ld.DR did not oppose the condonation.

Application of Law to Facts: Given the absence of objection and the reasonable explanation, the Tribunal exercised discretion to condone the delay and admit the appeals for adjudication.

Conclusion: The delay of 15 days in filing the appeals was condoned in the interest of justice.

Violation of Principles of Natural Justice by Ld.CIT(A)

Legal Framework and Precedents: It is a settled principle that an appellate authority must provide a reasonable opportunity of hearing to the appellant before passing an order. Ex parte orders without hearing the appellant violate the principles of natural justice and render the order liable to be set aside.

Court's Interpretation and Reasoning: The assessee contended that the Ld.CIT(A) passed the order ex parte without considering the submissions, thereby denying a reasonable opportunity. The Tribunal examined the record and found that the appeal decision was indeed made without considering the assessee's evidence.

Key Findings: The Tribunal observed that the assessee was deprived of the chance to present his claim before the first appellate authority, which constitutes denial of natural justice.

Treatment of Competing Arguments: The Ld.DR did not strongly oppose the request for remand or the contention regarding denial of opportunity.

Application of Law to Facts: The Tribunal held that to ensure fair adjudication, the matter must be remanded to the Ld.CIT(A) so that the assessee can be heard properly.

Conclusion: The ex parte order by the Ld.CIT(A) was set aside for violation of natural justice and the matter was remanded for fresh adjudication with due opportunity to the assessee.

Validity of Addition of Rs. 1,44,00,000/- Confirmed by Ld.CIT(A)

Legal Framework and Precedents: The additions were made pursuant to a search operation carried out by the Investigation Wing under the Income Tax Act, specifically under section 153A (assessment following search) and section 144 (best judgment assessment). The law mandates that any addition must be supported by evidence and the assessee must be given an opportunity to explain.

Court's Interpretation and Reasoning: The Tribunal noted that the addition was made in connection with the search at the residential and business premises of the related group in August 2017. The assessments for A.Ys 2016-17 and 2017-18 were completed under section 153A, and for A.Y. 2018-19 under section 144.

Key Evidence and Findings: The addition was confirmed by the Ld.CIT(A) without hearing the assessee's submissions, which the Tribunal found improper. However, the Tribunal did not express any opinion on the merits of the addition itself.

Application of Law to Facts: Since the assessee was denied a hearing, the Tribunal refrained from adjudicating on the correctness of the addition and directed the Ld.CIT(A) to reconsider the matter after hearing the assessee.

Conclusion: The Tribunal did not disturb the addition but remanded the matter for fresh adjudication on merits with proper opportunity of hearing.

Remand for Fresh Adjudication

Legal Framework and Precedents: When principles of natural justice are violated, appellate authorities have the power to set aside orders and remand the matter for fresh consideration. This ensures fairness and adherence to due process.

Court's Interpretation and Reasoning: The Tribunal emphasized that the interest of justice requires that the assessee be given a reasonable opportunity to present his case before the Ld.CIT(A). It also cautioned the assessee to be diligent and cooperative to ensure expeditious disposal of the remanded appeals.

Application of Law to Facts: The Tribunal remanded all appeals to the Ld.CIT(A) for de novo adjudication after providing a reasonable opportunity of hearing.

Conclusion: The appeals were allowed for statistical purposes with directions for fresh adjudication by the Ld.CIT(A).

3. SIGNIFICANT HOLDINGS

The Tribunal held

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