ITAT Quashes Ex-Parte Order Lacking Personal Hearing, Remands Matter for Fresh Adjudication

The Income Tax Appellate Tribunal (ITAT), Delhi, quashed an ex parte order passed by CIT(A) in the absence of the assessee’s submissions.

A search was conducted on a Rajasthan-based land aggregator, during which the tax authorities seized various land agreements, linking the assessee, Blue Breeze Trading LLP, with various companies, including those associated with Robert Vadra. As a result, proceedings under section 153C were initiated for AY 2010-11 to 2019-20.

The Income Tax department had issued a notice under section 153C, asking the assessee LLP to submit an income tax return (ITR) for these assessment years. However, despite multiple reminders, the assessee failed to file the ITR. The assessee only filed its response against a show cause notice, based on which the AO concluded that the company had sold the land purchased from the associates at higher prices. Therefore, he made an addition of Rs 19,80,000 under section 69 of the Income Tax Act, in an order passed under section 153C r.w.s 144 of the Act.

The assessee filed an appeal before the CIT(A), but since the assessee LLP did not attend the hearings, the appeal was rejected, resulting in an ex parte order. Therefore, the LLP approached the Income Tax Appellate Tribunal (ITAT).

Before ITAT, the assessee argued that the order was passed ex parte and the assessee was not given an effective opportunity of hearing. It further contended that the CIT(A) dismissed the appeal in the absence of any submissions filed by the assessee.

The ITAT reviewed the order and observed that the assessment order was passed without allowing a hearing. The ITAT observed that the CIT(A) had violated the principles of natural justice by not giving an effective hearing to the appellant. The tribunal set aside the ex parte order and restored the matter to the AO for fresh consideration.