ITAT Restores Taxpayer's Appeal In Interest of Natural Justice After CIT(A)'s Failure to Decide Appeal on Merits:

The ITAT Mumbai has restored the appeal of Mukesh Mishra to the first appellate authority for fresh consideration. Since the CIT(A) had dismissed the assessee's appeal ex parte without deciding the case on merits, the tribunal held that the assessee should be given another opportunity to present his side.

Mishra earns income from salary and capital gains; however, he had not initially filed any income tax return (ITR) for the Assessment Year 2020-21 under Section 139 of the Income Tax Act. In conclusion, the Assessing Officer (AO) issued a notice under Section 148 of the Act based on the information available on the portal under RMS. In response to the notice, the assessee filed his ITR, declaring an aggregate income of Rs 23.38 lakh.

However, during the course of reassessment proceedings, he failed to respond to most notices issued by the Assessing Officer (AO). Consequently, the AO made certain additions relating to short-term capital gains on securities, unexplained investments in securities and immovable property, and salary income. The AO also disallowed deductions claimed towards housing loan interest and investments under Chapter VI-A.

Mishra subsequently appealed against the assessment order before the CIT(A). The CIT(A) had noted that "neither any adjournment letter nor any written submission was furnished by the assessee, though, notices were issued on the email available in the ITBA module and provided in form No. 35, i.e. [email protected]. Thus, after affording sufficient opportunities, learned CIT(Appeals) disposed ex-party appeal, without decision on merits of the case." Therefore, the appeal was dismissed ex parte without examining the grounds of appeal on merit.

Before the ITAT, the assessee argued that "ex-party dismissal of appeal is contrary to the provisions of section 250(6) of the Income tax Act and in violation of principles of natural justice ex-party dismissal of appeal is contrary to the provisions of section 250(6) of the Income tax Act and in violation of principles of natural justice." Accordingly, the assessee requested a remittance of the case to the CIT(A) and a grant of one more opportunity to contest the additions. The revenue opposed the request, arguing that the assessee had repeatedly failed to comply with the proceedings.

When the tribunal heard arguments from both sides, it noted that despite the fact that the assessee had failed to participate adequately in the earlier proceedings, the CIT(A) had not decided the appeal on merit, and the order passed was ex parte (meaning without considering the assessee's view), which is an explicit contravention of the principles of natural justice. Accordingly, in the interest of justice, the tribunal remands the case back to the CIT(A) for fresh adjudication, providing the assessee a second opportunity. The CIT(A) has been instructed to issue a fresh notice to an email address to be communicated by the assessee.

The assessee has also been directed to cooperate with the concerned appellate authority during the proceedings and furnish written explanations and supporting evidence for his grounds of appeal. Accordingly, the appeal was allowed for statistical purposes, without deciding the underlying tax disputes on merit. The order was pronounced on October 8, 2026.