Right to be heard upheld where electronic notice non-response is plausibly explained; merits to be examined and documents verified.

Examine validity of an ex-parte appellate order issued after non-receipt/non-response to electronic notices and apply the principle of right to be heard and procedural fairness; the article concludes that where non-receipt is plausibly explained and no mala fide is shown, merits must be adjudicated rather than finalising by default. It prescribes verification of housing loan sanction letters, bank certificates and interest certificates and granting a final reasonable opportunity to produce evidence, warning that continued non-cooperation may attract adverse inference; the appellate order is therefore set aside and the matter restored for fresh adjudication on merits.

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Issues: (i) Whether the ex-parte appellate order passed by the Commissioner of Income-tax (Appeals) without affording effective opportunity of hearing should be set aside and the matter restored for fresh adjudication so that the assessee can substantiate claims of housing loan (section 69A) and interest expenditure disallowed under assessment completed u/s 143(3) for A.Y. 2020-21.

Analysis: The Tribunal examined the facts that electronic notices issued in the faceless appellate regime were not responded to by the assessee due to asserted illiteracy and unfamiliarity with digital communication. The Tribunal balanced the need for procedural discipline against the constitutional and statutory principle of the right to be heard and the judicial principle that substantial justice should prevail over mere technical lapses. Considering the assessee's plausible explanation for absence of documentary proof at earlier stages and the materiality of the disputed amounts (alleged housing loan of Rs.1.75 crore and interest expenditure of Rs.12,79,748), the Tribunal found that merits ought to be examined rather than permitting a final adjudication to rest on non-receipt of electronic notices, provided there is no mala fides. The Tribunal therefore directed verification of loan sanction letters, bank certificates and interest certificates and granted the assessee a final reasonable opportunity to produce evidence, warning that further non-cooperation may attract adverse inference.

Conclusion: The appellate order of the Commissioner of Income-tax (Appeals) is set aside and the matter is restored to the Assessing Officer for fresh adjudication on merits with directions to verify the housing loan documents and interest certificates and to allow the assessee a reasonable opportunity to produce documentary evidence; the relief is granted in favour of the assessee (allowed for statistical purposes).

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