The Income Tax Appellate Tribunal has reaffirmed that even in cases of persistent non-appearance by an assessee, statutory rights and procedural safeguards under the Income Tax Act and the Indian Evidence Act cannot be bypassed through ex parte adjudication. This ruling restores the foundational principle that administrative finality must yield to due process when statutory compliance is in question.
Background & Facts
The Dispute
The appellant, M/s AK Landcon Pvt. Ltd., was assessed under Section 153C of the Income Tax Act, 1961, following a search operation. The Assessing Officer made additions to the income, which the appellant contested. The appellant failed to appear before the Assessing Officer and later before the First Appellate Authority (CIT(A)), despite receiving ten notices. The CIT(A) proceeded ex parte, relying on CIT v. B.N. Bhattacharjee, and upheld the assessment without examining the merits of the appellant’s contentions.
Procedural History
- 2020-21: Assessment initiated under Section 153C following search and seizure
- 15.02.2024: Assessment order passed by DCIT, CC-28
- 14.08.2025: CIT(A) passed ex parte order, dismissing appeals without addressing merits
- 11.02.2026: Appeal filed before ITAT Delhi; appellant did not appear
Relief Sought
The appellant sought setting aside of the ex parte order on grounds that: (1) the assessment lacked mandatory approval under Section 153D, and (2) digital evidence was admitted without compliance with Section 65B of the Indian Evidence Act, 1872.
The Legal Issue
The central question was whether an appellate authority may uphold an assessment order ex parte, without examining substantial legal objections concerning compliance with Section 153D and Section 65B of the Indian Evidence Act, merely because the assessee failed to appear.
Arguments Presented
For the Appellant
Though absent, the appellant’s grounds raised before the Tribunal included: (1) the assessment was invalid due to absence of prior approval under Section 153D, which is mandatory for search-based assessments; and (2) digital records relied upon by the department were not authenticated as required under Section 65B, rendering them inadmissible. These are not mere technicalities but go to the root of legality.
For the Respondent
The Revenue, represented by the DR, argued that the appellant’s repeated non-appearance and failure to respond to notices justified the ex parte disposal. The department contended that the CIT(A) had adequately reviewed the record and that procedural lapses by the assessee waived any substantive objections.
The Court's Analysis
The Tribunal rejected the notion that non-appearance equates to waiver of statutory rights. It emphasized that Section 153D requires prior written approval from a designated authority before an assessment can be made under search provisions. The absence of such approval, if proven, renders the assessment void ab initio. Similarly, Section 65B mandates a certificate for admissibility of electronic records, and failure to comply renders evidence legally unusable.
"The failure of the assessee to appear does not absolve the revenue authorities or appellate forums from ensuring that statutory mandates are not violated. The law does not permit ex parte adjudication on issues that strike at the validity of the entire assessment process."
The Tribunal distinguished CIT v. B.N. Bhattacharjee, noting that case dealt with procedural default in routine assessments, not where fundamental statutory compliance is in question. The CIT(A) had merely noted the appellant’s non-cooperation but failed to analyze whether the assessment itself was legally sustainable. This constituted a failure to discharge the duty of a quasi-judicial authority.
The Verdict
The appellant prevailed. The Tribunal set aside the ex parte order of the CIT(A) and remanded the matter for fresh hearing, directing that the appellant be given a fair opportunity to substantiate its claims regarding non-compliance with Section 153D and Section 65B.
What This Means For Similar Cases
Procedural Compliance Is Non-Negotiable
- Practitioners must raise statutory non-compliance (e.g., lack of Section 153D approval) even if the client is absent
- Appellate forums cannot dismiss such objections as waived due to non-appearance
- Failure to verify mandatory approvals before passing assessment orders invites reversal
Digital Evidence Requires Strict Adherence to Section 65B
- All electronic records submitted by the department must be accompanied by a valid Section 65B certificate
- Objections to digital evidence must be formally raised and preserved
- Tribunals and courts will not admit electronic records without certification, regardless of relevance
Ex Parte Orders Are Not a Shortcut to Finality
- Ex parte orders are permissible only when no substantial legal issue remains unaddressed
- Where statutory validity of the assessment is challenged, remand is mandatory
- Practitioners should file written submissions even if unable to appear, to preserve rights
