ITAT Restores Appeal for Fresh Hearing as Notices Were Sent Only on Email

The assessee filed a return declaring income of Rs.13,160/-. During assessment proceedings, the Assessing Officer found Multi Commodity Exchange transactions aggregating to Rs.75,97,21,755/-. As the assessee could not furnish a satisfactory explanation for these transactions, the AO estimated net profit at 0.5% of turnover and made an addition of Rs.37,98,608/- to the assessee’s income.

On appeal, the first appellate authority (CIT(A), NFAC) had recorded an ex parte order. The assessee had, in Form No.35, specifically requested that notices/communications of hearing should not be sent by email; despite this, the record shows that all hearing notices were issued only by email and therefore remained uncomplied with, leaving the assessee unheard before the CIT(A).

Issue Raised: Whether an ex parte dismissal by the CIT(A) (NFAC) was viable where the assessee had specifically directed in Form 35 that notices were not to be served by email, but all notices were sent only over email, leading to a denial of an effective opportunity of hearing under Section 250.

ITAT’s Ruling: The Tribunal noted that the assessee remained unheard before the first appellate authority because notices of hearing were recorded as sent only via email despite the assessee’s explicit instruction in Form 35. The Departmental Representative did not dispute this position. In view of this procedural lapse and resultant denial of opportunity of hearing, the ex parte order could not be sustained; the Tribunal therefore remanded the matter to the CIT(A) for fresh consideration after affording adequate opportunity of hearing. The appeal was allowed for statistical purposes.

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