M/S SARDA ENERGY LTD., NAGPUR,NAGPUR V. ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1, RAIPUR, RAIPUR

ITA 134/RPR/2025

AI Insights

The case involves M/s. Sarda Energy Limited appealing against the order of the CIT(Appeals)-3/NFAC, Nagpur, which had dismissed their appeal due to non-compliance. The ITAT noted that the assessee had not responded to multiple notices and had not submitted any documents or explanations in support of their grounds of appeal. Despite these non-compliances, the ITAT decided to remand the case back to the CIT(Appeals) for a fresh adjudication on merits, citing the principles of natural justice and the need to provide a final opportunity to the assessee to present their case.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 298566 (ITAT-RAIPUR)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2015-2016
• Other Referred Cases: Brajesh Singh Bhadoria Vs. Dy./ACIT, Central Circle-2, Naya Raipur, Vijay Shrinivasrao Kulkarni Vs. Income-tax Appellate Tribunal, Delhi Transport Corporation vs. DTC Mazdoor Union, Commissioner of Income Tax Madras v. Chenniyappa Mudiliar
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASSESSEE GETTING; S.L ANURAGI
• Assessee Lawyers: ADARSH JAIN
• Keywords: Set aside; Opportunity of being heard; Rule of consistency; Principle of natural justice; Validity of assessment

Judgement Text

"आयकर अपीलȣय अͬधकरण Ûयायपीठ रायपुर मɅ। IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, RAIPUR BEFORE SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER AND SHRI ARUN KHODPIA, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.134/RPR/2025 Ǔनधा[रण वष[ / Assessment Year : 2015-16 M/s. Sarda Energy Limited 73-A, Central Avenue Road, Nagpur (MH)-440 018 PAN: AALCS8505J ........अपीलाथȸ / Appellant बनाम / V/s. The Assistant Commissioner of Income Tax, Central Circle-1, Naya Raipur (C.G.) ……Ĥ×यथȸ / Respondent Assessee by : Shri Adarsh Jain, CA Revenue by : Shri S.L Anuragi, CIT-DR सुनवाई कȧ तारȣख / Date of Hearing : 24.04.2025 घोषणा कȧ तारȣख / Date of Pronouncement : 24.04.2025 2 M/s. Sarda Energy Limited Vs. ACIT, Central Circle-1, Naya Raipur ITA No. 134/RPR/2025 आदेश / ORDER PER PARTHA SARATHI CHAUDHURY, JM: This appeal preferred by the assessee company emanates from the order of the Ld. CIT(Appeals)-3/NFAC, Nagpur dated 27.02.2025 for the assessment year 2015-16 as per the grounds of appeal on record. 2. Though the Ld. Counsel for the assessee has filed an adjournment application, however, it is noted that the Ld.CIT(Appeals)/NFAC vide an ex- parte order had dismissed the appeal of the assessee company due to non- compliance by the assessee. In this periphery of the facts, this bench following the rule of consistency enables one final opportunity to the assessee to represent its case on merits before the first appellate authority. Considering that non-compliance by the assessee due to circumstances beyond the control of the assesse and it is not deliberate, one final opportunity is provided to the assessee. Accordingly, the matter is heard and adjournment petition filed by the assessee is rejected. For the sake of clarity, the relevant Para 4 of the Ld. CIT(Appeals)/NFAC’s order is culled out as follows: “4. Appellate Proceedings: During the appellate proceedings, the appellant was issued notices of hearings, the details of which are tabulated as under: Sr. No. Date of notice Date of hearing Remarks 3 M/s. Sarda Energy Limited Vs. ACIT, Central Circle-1, Naya Raipur ITA No. 134/RPR/2025 1. 15.10.2024 28.10.2024 No response 2. 10.12.2024 20.12.2024 No response 3. 02.01.2025 09.01.2025 No response 4. 16.01.2025 28.01.2025 No response These notices were sent to specific email address given by the appellant in the appeal memo. All these notices have been delivered on the specified email addresses. However, the appellant had not responded to any of these notices issued. Vide notice dated 16.01.2025, the appellant was informed as under: -------------------------------------------------------------------- It has been observed that your appeal has been pending for more than 8 years and still no submission has been made by you till date. 3 Notices before this have been issued to you, the latest one being on 02/01/2025 and you have not yet filed any submission supporting the grounds of appeal. A last opportunity is being given to you to submit all necessary documents in pursuance of your appeal so filed. If no submission is received on or before 28/01/2025 by 5 pm, it will be presumed that you have nothing more to say in this appeal and the appeal would be decided based on the material available on record and as per law. ------------------------------------------------------------------ However, even after this notice, the appellant chose to remain silent and it did not file any relevant detail/explanation or document in support of Grounds of appeal raised. In these circumstances, it was inferred that appellant is not interested in pursuing the appeal and the appeal is therefore adjudicated based on the material available on record.” 3. The Ld. CIT-DR has fairly conceded that the matter may be adjudicated denovo on merits before the first appellate authority providing one final opportunity to the assessee. 4 M/s. Sarda Energy Limited Vs. ACIT, Central Circle-1, Naya Raipur ITA No. 134/RPR/2025 4. We have carefully considered the contents in the documents /material available on record and submissions of parties herein. As per the aforesaid examination of the entire spectrum of the matter in the interest of natural justice, we deem it fit and proper to provide one final opportunity to the assessee to represent its case on merits before the Ld. CIT(Appeals)/NFAC. 5. At this stage, we herein observe that the ITAT, “Division Bench”, Raipur in the cases of Brajesh Singh Bhadoria Vs. Dy./ACIT, Central Circle-2, Naya Raipur, IT(SS)A Nos. 1 to 6, 8 & 9/RPR/2025, dated 20.03.2025 had dealt with similar issue on the same parameters of ex- parte order passed by the Ld. CIT(Appeals)/NFAC and remanded the matter back to the file of the Ld. CIT(Appeals)/NFAC observing as follows: “7. We have considered the submissions of the parties herein and analyzed the facts and circumstances involved in all the captioned appeals. After careful perusal of the documents on record, we find that the assessee had assailed the legal ground as aforestated, however, the fact of the matter is that on perusal of the respective orders of the Ld. CIT(Appeals) for all the years before us, it is also evident from Para 3 that there has been no compliance by the assessee before the said authority and as such, an ex-parte order was passed for the concerned years in appeal. Admittedly, as per record, sufficient opportunities had been provided to the assesse, however, there was no compliance by the assessee. In effect, rights and liabilities of the parties herein are yet to be adjudicated substantially at the level of the first appellate authority. Though in the impugned orders, discussion has been done as per material available on record by the Ld.CIT(Appeals) but they are only Form 35, statement of facts, grounds of appeal and the assessment order. However, due to non-compliance by the assessee, there are no submissions, evidence and documents submitted for adjudication by the assessee before 5 M/s. Sarda Energy Limited Vs. ACIT, Central Circle-1, Naya Raipur ITA No. 134/RPR/2025 the Ld. CIT(Appeals). That as per Para 3 of the Ld. CIT(Appeals) order, there has been no compliance on the part of the assessee for submitting detailed explanations regarding the grounds of appeal for the years under consideration which clearly shows that the grounds of appeal raised before the first appellate authority has not been substantiated on merits through corroborative evidence /submissions. 8. That in such scenario we are of the considered view that the Income tax Act is within the ambit of welfare legislation which are completely different from that of the penal legislation, therefore, benefit of doubt whenever arises, it has to be interpreted in favour of the assessee tax payer within the parameters of law and facts. There may be circumstances beyond control of the assessee because of which, the assessee may not have been able to represent his case on the given dates of hearing before the Ld. CIT(Appeals). Though it is correct that there was no compliance from the side of the assessee, however, nothing is there on record which suggests any deliberate non-compliance or malafide conduct of the assessee. That further, if one final opportunity is provided to the assessee to represent his case before the first appellate authority, the position of the revenue will also not be jeopardized. 9. Recently, the Hon’ble High Court of Bombay in the case of Vijay Shrinivasrao Kulkarni Vs. Income-tax Appellate Tribunal (2025) 171 taxmann.com 696 (Bom.), dated 04.02.2025 observed that in the case the Assessing Officer had passed an ex-parte order and when the matter went on appeal before the Ld. CIT(Appeals)/NFAC, it had also dismissed the matter ex-parte due to non-compliance by the assessee’s authorized representative, when the matter came up before the ITAT, it had failed to address the infirmity regarding the fact that the assessee was not afforded proper opportunity of being heard and the matter was dismissed ex-parte by the Ld. CIT(Appeals)/NFAC which amounted to violation of principles of natural justice, and instead ITAT decided the case on merits, in such circumstances, the Hon’ble High Court of Bombay held that passing of an order on merits by the ITAT even when the impugned order was passed ex-parte amounts to violation of principles of natural justice and accordingly, the said matter was remanded to ITAT for passing a fresh order in accordance with law after hearing the parties. The legal principle as enshrined in the present judgment is crystal clear that the principles of natural justice i.e. the right to be heard is to be provided and accordingly, the matter had to be substantially adjudicated by the appellate authority. Therefore, 6 M/s. Sarda Energy Limited Vs. ACIT, Central Circle-1, Naya Raipur ITA No. 134/RPR/2025 if the impugned order of the Ld. CIT(Appeals)/NFAC is an ex- parte order, the only recourse in conformity with the aforesaid judicial pronouncement is to remand the matter back to the file of the Ld. CIT(Appeals)/NFAC for fresh adjudication in terms with the principles of natural justice providing one final opportunity to the assessee. 10. In the aforesaid case, the Hon’ble High Court of Bombay had referred to a judgment of the Hon’ble Supreme Court in the case of Delhi Transport Corporation vs. DTC Mazdoor Union AIR 1999 SC 564, wherein the Supreme Court inter-alia held that Article 14 guarantees a right of hearing to a person who is adversely affected by an administrative order. The principle of audi-alteram partem is a part of Article 14 of the Constitution of India. In light of such decision, the petitioner ought to have been granted an opportunity of being heard which, partakes the characteristic of the fundamental right under Article 14 of the Constitution of India. 11. The Hon’ble High Court of Bombay in the aforesaid case had referred to a decision of the Hon’ble Supreme Court in the case of Commissioner of Income Tax Madras v. Chenniyappa Mudiliar 1969 1 SCC 591, wherein the Supreme Court in interpreting the section 33(4) of the Income Tax Act, 1922 has held that the appellate tribunal was bound to give a proper decision on question of fact as well as law, which can only be done if the appeal is disposed off on merits and not dismissed owing to the absence of the appellant. Reverting to the facts of the present case the grounds of appeal were simply filed before the Ld.CIT(Appeals) they were not substantiated or corroborated through submissions and filing of documentary evidences since the assessee had not complied before the Ld.CIT(Appeals) on the dates of hearing. Therefore, as per framework of the Act there must be adjudication on merits by the first appellate authority and one final opportunity be provided to the assessee to represent his matter on merits in the interest of natural justice. 12. There may even be a situation where the Ld. Counsel for the assessee may assail a legal ground before the Tribunal following the decision of the Hon’ble Supreme Court in the case of National Thermal Power Company Ltd. Ltd. Vs. CIT (1998) 229 ITR 383 (SC) with a contention that irrespective of the order of the Ld. CIT(Appeals) being ex-parte, the Tribunal may decide the legal issue that has been raised by the Ld. Counsel. In our view, the decision of the Hon’ble Supreme Court in the case of National Thermal Power Company Ltd. 7 M/s. Sarda Energy Limited Vs. ACIT, Central Circle-1, Naya Raipur ITA No. 134/RPR/2025 Ltd. Vs. CIT (supra) provides that any legal issue which goes to the root of the matter and is established through legal principles, the assessee can take up and raise such legal issue at any appellate forum irrespective of whether the assessee had raised such legal issue at the sub-ordinate level or not, however, it always depends on facts and circumstances of each case whether the Tribunal would decide the legal ground or in a case where the question is of natural justice and ex-parte order by the Ld. CIT(Appeals) the Tribunal would remand it back to Ld.CIT(Appeals) providing final opportunity to a bonafide assessee. The Tribunal as the highest fact finding authority must be certain enough that the impugned order before it has been passed on merits and is a speaking order where the assessee has also complied during the process of litigation. In case, where the order of the Ld. CIT(Appeals) itself is ex-parte and some legal ground is raised and if the Tribunal decides such legal ground where in fact principles of natural justice is left unanswered due to the fact that the impugned order before the Tribunal is ex-parte and there was no compliance by the assessee in such scenario the Tribunal would also be usurping the power of the Ld. CIT(Appeals) which is also a statutory authority as per the Act. This is due to the reason that as per framework of the Act, Ld.CIT(Appeals) is the first appellate authority where an appeal by assessee it would be substantially decided through a speaking order by the Ld.CIT(Appeals). When this part is over and either party is aggrieved second appeal lies before the ITAT. Now if for every ex-parte order passed by the Ld. CIT(Appeals), of course due to non-compliance by the assessee, if the Tribunal adjudicates a legal ground, for instance validity of assessment or reassessment order and answers it in favour of the assessee then it would create an easy route for assessee getting redressal from Tribunal even without bothering to comply with hearing notices before the Ld. CIT(Appeals). This would dismantle the structure of the Act which is definitely not the intention of the legislature. Here in this situation, where the benefit of doubt is given to the assessee since he had not complied with the hearing notices before the Ld. CIT(Appeals) which resulted in passing of an ex-parte order by the Ld. CIT(Appeals), in such scenario, as per the scheme of the Act and following the principles of natural justice, the only course of action is to remand the matter back to the file of the Ld. CIT(Appeals) for adjudication on merits providing one final opportunity to the assessee. 13. In view thereof, we set aside the respective orders of the Ld. CIT(Appeals) for all the years and remand the same to their file for denovo adjudication on merits. At the same time, 8 M/s. Sarda Energy Limited Vs. ACIT, Central Circle-1, Naya Raipur ITA No. 134/RPR/2025 we direct the assessee that this being the final opportunity, there must be compliance on merits before the first appellate authority. Needless to say, the Ld. CIT(Appeals) shall provide reasonable opportunity of being heard to the assessee and pass an order in terms of Section 250(4) and (6) of the Act within three months from receipt of this order.” 6. Respectfully following the aforesaid order, we set-aside the order of the Ld. CIT(Appeals)/NFAC and remand the matter back to its file for denovo adjudication while complying with the principles of natural justice as per similar terms. At the same time, it is directed that this being the final opportunity, the assessee shall duly comply with the hearing notices from the Ld. CIT(Appeals)/NFAC. The Ld. CIT(Appeal)/NFAC shall accordingly pass order in terms with Section 250(4) & (6) of the Act within three months from receipt of this order. 7. As per the aforesaid terms, the grounds of appeal raised by the assessee stands allowed for statistical purposes. 8. In the result, appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 24th April, 2025. Sd/- Sd/- ARUN KHODPIA PARTHA SARATHI CHAUDHURY (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) रायपुर/ RAIPUR ; Ǒदनांक / Dated : 24th April, 2025. SB, Sr. PS आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of the Order forwarded to : 9 M/s. Sarda Energy Limited Vs. ACIT, Central Circle-1, Naya Raipur ITA No. 134/RPR/2025 1. अपीलाथȸ /The Appellant. 2. Ĥ×यथȸ /The Respondent. 3. The Pr. CIT-1, Raipur (C.G.) 4. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण, रायपुर बɅच, रायपुर / DR, ITAT, Raipur Bench, Raipur. 5. गाड[ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलȣय अͬधकरण, रायपुर / ITAT, Raipur. "