SIVA PRASAD VEDULA, BHILAI,DURG V. INCOME TAX OFFICER, WARD 1(1), BHILAI, DURG

ITA 49/RPR/2024

AI Insights

The case involves Shri Siva Prasad Vedula, the appellant, contesting an order from the Income Tax Officer, Ward-1(1), Bhilai, for the assessment year 2017-18. The primary issue was the initiation of reassessment proceedings under Section 147 of the Income Tax Act, 1961, which the appellant claimed was illegal and without jurisdiction. The CIT(Appeals)/NFAC had initially dismissed the appeal ex-parte due to non-compliance by the assessee, without addressing the merits of the case. The High Court of Chhattisgarh, upon review, set aside the ITAT's earlier order and remanded the case for a fresh examination of all grounds raised by the appellant, emphasizing the need for a thorough consideration of the merits and adherence to the principles of natural justice.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 775296 (ITAT-RAIPUR)
• Duration Of Justice: 1 year(s) 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Appeal Filed On: 16-02-2024
• Other Referred Cases: CIT Vs. Premkumar Arjundas Luthra (HUF), Vijay Shrinivasrao Kulkarni Vs. Income-tax Appellate Tribunal, Delhi Transport Corporation vs. DTC Mazdoor Union, Commissioner of Income Tax Madras v. Chenniyappa Mudiliar, Brajesh Singh Bhadoria Vs. Dy./ACIT, Central Circle-2, Naya Raipur
• Laws Referred To: Income Tax Act of 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASSESSEE GETTING; MANISHA KINNU
• Assessee Lawyers: YOGESH SETHIA
• Keywords: Set aside; Opportunity of being heard; Reassessment proceedings; Question of law; Principle of natural justice; Validity of assessment
• Section: 147

Judgement Text

"आयकर अपीलȣय अͬधकरण Ûयायपीठ “एक-सदèय” मामला रायपुर मɅ IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH “SMC”, RAIPUR Įी पाथ[ सारथी चौधरȣ, ÛयाǓयक सदèय क े सम¢ BEFORE SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER आयकर अपील सं./ITA No.49/RPR/2024 Ǔनधा[रण वष[ /Assessment Year : 2017-18 Shri Siva Prasad Vedula House No.376/6, Street No.7, Pragati Nagar, Risali, Bhilai-490 006 PAN: ADGPV7445M .......अपीलाथȸ / Appellant बनाम / V/s. The Income Tax Officer, Ward-1(1), Bhilai (C.G.) ……Ĥ×यथȸ / Respondent Assessee by : Shri Yogesh Sethia, CA Revenue by : Ms. Manisha Kinnu, CIT-DR सुनवाई कȧ तारȣख / Date of Hearing : 11.09.2025 घोषणा कȧ तारȣख / Date of Pronouncement : 11.09.2025 Printed from counselvise.com 2 Siva Prasad Vedula Vs. ITO, Warrd-1(1), Bhilai ITA No.49/RPR/2024 आदेश / ORDER PER PARTHA SARATHI CHAUDHURY, JM This is a remand matter from the Hon’ble Jurisdictional High Court vide TAXC No.55 of 2025, dated 31.07.2025, wherein the Hon’ble High Court has held and observed as follows: “6. In case at hand, a careful perusal of the record would show that the appellant had raised five grounds before the learned ITAI and, out of which, the first ground relates to initiation of reassessment proceedings under Section 147 of the Act of 1961 without fulfilling all necessary conditions stipulated under the Act of 1961, being illegal and without jurisdiction. However, the learned ITAI in Para-10 of the impugned order has duly recorded that no submission has been made on behalf of the appellant with regard to the merits of the case. But, in the considered opinion of this Court once grounds have been raised in the memo of appeal on behalf of the assessee, all the grounds ought to have been considered by the learned ITAT, which the learned ITAT has failed to do in the present case. As such, the impugned order dated 24.05.2024, passed by the learned ITAT is hereby set aside. The matter is remitted to the learned ITAT, Raipur for fresh consideration of the matter/all the grounds raised by the appellant on merits after providing due opportunity of hearing to the appellant/assessee in accordance with law expeditiously. The parties are directed to appear before the learned ITAT, Raipur on 28.08.2025 for the said purpose. Hence, the substantial question of law is answered in favour of the appellant/assessee.” 2. At the very outset, it is noted that as evident from Para 4 of the impugned order, the Ld.CIT(Appeals)/NFAC vide an ex-parte order had dismissed the appeal of the assessee due to non-compliance by the assessee without dealing with the merits of the case. For the sake of Printed from counselvise.com 3 Siva Prasad Vedula Vs. ITO, Warrd-1(1), Bhilai ITA No.49/RPR/2024 clarity, the Para 4 of the Ld.CIT(Appeals)/NFAC’s order is culled out as follows: “4. NON-ATTENDENCE:- In this case, it is seen that the appeal was filed on 22.10.2021 and the first notice of hearing was issued on 14.11.2023, fixing the date of hearing on or before 20.11.2023. However, there was neither any response on the prescribed date nor any submission was filed. In fact, the appellant has not at all complied during the appellate proceedings other than filing an adjournment letter in response to notice dated 30.11.2023. The appellant sought time till 14.12.2023, which was duly granted. Vide notice dated 08.12.2023, he was provided final and last opportunity to file any submission in support of his case by 13.12.2023. However, in the interest of justice, since he had sought time till 14.12.2023, further period of six days was granted, however, there was no compliance till the date of passing of order. Following notices of hearing/opportunities were given to appellant to represent his case: S. No. Date of issue Date of compliance Remarks 1. 14.11.2023 20.11.2023 No response or submission received. 2. 21.11.2023 28.11.2023 No response or submission received. 3. 30.11.2023 07.12.2023 Appellant sought an adjournment. 4. 08.12.2023 13.12.2023 No response or submission received. As can be seen from the above table the appellant was given ample opportunities by way of notices issued as narrated above. However, the appellant/AR has refrained from Printed from counselvise.com 4 Siva Prasad Vedula Vs. ITO, Warrd-1(1), Bhilai ITA No.49/RPR/2024 attending to the appellate proceedings and has not furnished any submission.” 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. I have carefully considered the contents in the documents/material available on record and submissions made by the parties herein. As per the aforesaid examination of the entire spectrum of the matter in the interest of natural justice, I deem it fit and proper to provide one final opportunity to the assessee to represent his case on merits before the Ld. CIT(Appeals)/NFAC. 5. On a perusal of the order of the Ld.CIT(Appeals)/NFAC, it is observed that the Ld.CIT(Appeals)/NFAC dismissed the appeal of the assessee in limine for non-compliance without dealing with the merits of the case. In my considered view, once an appeal is preferred before the CIT(Appeals)/NFAC, it becomes obligatory on his part to dispose off the same on merit and it is not open for him to summarily dismiss the appeal on account of non-prosecution of the same by the assessee. In fact, a perusal of Sec.251(1)(a) and (b), as well as the “Explanation” to Sec.251(2) of the Act reveals that the CIT(Appeals)/NFAC remains under a statutory obligation to apply his mind to all the issues which arises from the Printed from counselvise.com 5 Siva Prasad Vedula Vs. ITO, Warrd-1(1), Bhilai ITA No.49/RPR/2024 impugned order before him. As per the mandate of law the CIT(Appeals)/NFAC is not vested with any power to summarily dismiss the appeal for non-prosecution. The aforesaid view is fortified by the judgment of the Hon'ble High Court of Bombay in the case of CIT Vs. Premkumar Arjundas Luthra (HUF) (2017) 297 CTR 614 (Bom). In the aforementioned case the Hon’ble High Court had observed as under: \"8. From the aforesaid provisions, it is very clear once an appeal is preferred before the CIT(A), then in disposing of the appeal, he is obliged to make such further inquiry that he thinks fit or direct the AO to make further inquiry and report the result of the same to him as found in Sec. 250 of the Act. Further, Sec. 250(6) of the Act obliges the CIT(A) to dispose of an appeal in writing after stating the points for determination and then render a decision on each of the points which arise for consideration with reasons in support. Sec. 251(1)(a) and (h) of the Act provide that while disposing of appeal the CIT(A) would have the power to confirm, reduce, enhance or annul an assessment and/or penalty. Besides Explanation to sub- s. (2) of s. 251 of the Act also makes it clear that while considering the appeal, the CIT(A) would be entitled to consider and decide any issue arising in the proceedings before him in appeal filed for its consideration, even if the issue is not raised by the appellant in its appeal before the CIT(A). Thus once an assessee files an appeal under s. 246A of the Act, it is not open to him as of right to withdraw or not press the appeal. In fact the CIT(A) is obliged to dispose of the appeal on merits. In fact w.e.f. 1st June, 2001 the power of the CIT(A) to set aside the order of the AO and restore it to the AO for passing a fresh order stands withdrawn. Therefore, it would be noticed that the powers of the CIT(A) are co-terminus with that of the AO i.e. he can do all that A.O could do. Therefore, just as it is not open to the AO to not complete the assessment by allowing the assessee to withdraw its return of income, it is not open to the assessee in appeal to withdraw and/or the CIT(A) to dismiss the appeal on account of non-prosecution of the appeal by the assessee. This is amply clear from the s. 251(1)(a) and (b) and Explanation to Sec. 251(2) of the Act which requires the CIT(A) to apply his mind to all the issues which arise from the impugned order before him whether or not the same has been raised by the appellant before him. Accordingly, the law does not empower the Printed from counselvise.com 6 Siva Prasad Vedula Vs. ITO, Warrd-1(1), Bhilai ITA No.49/RPR/2024 CIT(A) to dismiss the appeal for non-prosecution as is evident from the provisions of the Act.” 6. Another aspect is that legal issue has been raised before this Bench. That since it is an ex-parte order passed by the Ld. CIT(Appeals)/NFAC due to non-compliance by the assessee in spite of reasonable opportunity being provided, in such scenario, in the same spectrum of facts, I refer to the decision of 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, wherein it is held that even if legal ground has been raised by the assessee before this Bench, but since there has been no compliance by the assessee and an ex-parte order has been passed by the First Appellate Authority, in such scenario, as per the mandate of the Act, the assessee needs to prosecute the matter on merits before the Ld. CIT(Appeals)/NFAC and it is only after proper adjudication by the First Appellate Authority in terms with Section 250(4)& (6) of the Act further process of law, if any, would continue. Once there has been no compliance before the First Appellate Authority there cannot be any easy route for the assessee to just assail the legal ground before the Tribunal and get relief without even bothering to respond to the hearing notices from the office of the Ld.CIT(Appeals)/NFAC. The assessee cannot be allowed to dismantle the structure of the Act as had been envisaged by the legislature. In the cases of Brajesh Singh Bhadoria Vs. Printed from counselvise.com 7 Siva Prasad Vedula Vs. ITO, Warrd-1(1), Bhilai ITA No.49/RPR/2024 Dy./ACIT, Central Circle-2, Naya Raipur (supra), the ITAT, “Division Bench”, Raipur 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 and therein had also dealt with issue of raising legal ground before Tribunal when ex-parte order is passed by the first appellate authority and the relevant paras are extracted 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 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 Printed from counselvise.com 8 Siva Prasad Vedula Vs. ITO, Warrd-1(1), Bhilai ITA No.49/RPR/2024 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, 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 Printed from counselvise.com 9 Siva Prasad Vedula Vs. ITO, Warrd-1(1), Bhilai ITA No.49/RPR/2024 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. 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 Printed from counselvise.com 10 Siva Prasad Vedula Vs. ITO, Warrd-1(1), Bhilai ITA No.49/RPR/2024 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, 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.” Printed from counselvise.com 11 Siva Prasad Vedula Vs. ITO, Warrd-1(1), Bhilai ITA No.49/RPR/2024 7. Respectfully following the aforesaid judgment, the order of Ld. CIT(Appeals)/NFAC is set-aside and the matter is remanded back to its file for denovo adjudication while complying with the principles of natural justice. 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. 8. As per the aforesaid terms, the grounds of appeal raised by the assessee stands allowed for statistical purposes. 9. In the result, appeal of the assessee is allowed for statistical purposes. Order pronounced in open court on 11th day of September, 2025. Sd/- (PARTHA SARATHI CHAUDHURY) ÛयाǓयक सदèय/JUDICIAL MEMBER रायपुर / Raipur; Ǒदनांक / Dated : 11th September, 2025. SB, Sr. PS आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant. 2. Ĥ×यथȸ / The Respondent. 3. The Pr. CIT-1, Raipur (C.G.) 4. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण, “एक-सदèय” बɅच, रायपुर / DR, ITAT, “SMC” Bench, Raipur. 5. गाड[ फ़ाइल / Guard File. Printed from counselvise.com 12 Siva Prasad Vedula Vs. ITO, Warrd-1(1), Bhilai ITA No.49/RPR/2024 आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलȣय अͬधकरण, रायपुर / ITAT, Raipur Printed from counselvise.com "