Invalid service of appellate notices vitiated hearing, leading to remand for fresh adjudication and linked penalty proceedings.

Invalid service of appellate notices denied the assessee a reasonable opportunity of hearing before the first appellate authority, because notices were not served in the manner elected in Form No. 35 and the alternative address was not effectively used for the relevant dates. The appellate order was therefore set aside and the matter remanded to the CIT(A) for fresh adjudication after granting a proper hearing. The consequential penalty appeal was also set aside to await the outcome of the quantum appeal.

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Issues: Whether the assessee was denied a reasonable opportunity of hearing before the first appellate authority on account of invalid service of notices, warranting setting aside of the appellate order and consequential disposal of the quantum and penalty appeals.

Analysis: The appeals arose from additions and disallowances made in the quantum assessment and the consequential penalty under section 270A. The record showed that the assessee had opted out of service of notices through email in Form No. 35 and had specified an alternative address, yet the appellate notices were not served in the manner opted by the assessee for the relevant hearing dates. Although one notice dated 30/07/2025 was received, the matter was thereafter disposed of within a short span. In these circumstances, the assessee was found to have been deprived of an effective and sufficient opportunity to participate in the proceedings before the first appellate authority.

Conclusion: The appellate order was set aside and the matter was remanded to the CIT(A) for fresh adjudication after granting a reasonable opportunity of hearing. The penalty appeal was also set aside to await the result of the quantum appeal. The assessee succeeded.

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