The Income Tax Appellate Tribunal, Delhi Bench 'C', has reaffirmed that ex-parte assessment orders violating the principles of natural justice cannot stand, even if the assessee is labeled a chronic defaulter. The Tribunal ordered a de-novo assessment with a mandatory opportunity of hearing, reinforcing procedural fairness as non-negotiable in tax adjudication.
Background & Facts
The Dispute
The appellant, M/s Bridgecon Infra, challenged an assessment order passed under Section 147 read with Section 144 of the Income Tax Act, 1961, which made additions to its income without providing it any opportunity to be heard. The assessment was initiated on 18.12.2019, and the appellant did not participate in the proceedings before the Assessing Officer (A.O.) or the Commissioner of Income Tax (Appeals) [CIT(A)].
Key Facts
- The assessment order was passed on 18.12.2019 under Section 147 r.w.s. 144, which permits best judgment assessment in cases of non-cooperation or failure to file returns or respond to notices.
- The appellant did not file any reply, appear before the A.O., or submit any documents during the assessment proceedings.
- The CIT(A) upheld the A.O.'s order on 06.10.2025, without addressing any of the grounds of appeal filed by the appellant.
- The appellant filed the present appeal before the ITAT on grounds that both orders were ex-parte and violated principles of natural justice.
- The appellant was represented by Shri Kailash Khemani, Chartered Accountant.
- The Revenue was represented by Shri Om Prakash, Senior DR.
Procedural History
- 18.12.2019: Assessment order passed by A.O. under Section 147 r.w.s. 144, ex-parte.
- 06.10.2025: CIT(A) dismissed the appeal without adjudicating any grounds, relying solely on the A.O.'s order.
- 25.03.2026: ITAT Delhi delivered judgment on appeal.
The Parties' Positions
Relief Sought
The appellant sought setting aside of the orders passed by the A.O. and CIT(A), and restoration of the case for a fresh assessment with proper opportunity of hearing.
The Legal Issue
The central question was whether an assessment order passed ex-parte, and an appellate order that fails to adjudicate the grounds of appeal, violates the principles of natural justice and warrants setting aside.
Arguments Presented
For the Appellant
The appellant’s counsel argued that both the A.O. and CIT(A) passed orders without affording the assessee any opportunity of hearing, in clear violation of audi alteram partem. The CIT(A) did not examine any of the grounds raised in the appeal, rendering the appellate order a mere affirmation without reasoning. Reliance was placed on settled jurisprudence that procedural fairness is mandatory even in cases of non-cooperation.
For the Respondent
The Revenue contended that the appellant was a chronic defaulter who had consistently failed to participate in proceedings before lower authorities. It argued that the A.O. was justified in proceeding ex-parte under Section 144, and the CIT(A) was entitled to uphold the order without re-examining grounds due to the assessee’s non-participation.
The Court's Analysis
The Tribunal observed that while Section 144 permits ex-parte assessment, it does not absolve the tax authorities of their duty to ensure compliance with natural justice. The CIT(A), as an appellate forum, has an independent obligation to examine the merits of the appeal, regardless of the assessee’s prior conduct.
"Both the order of the A.O. as well as order of the Ld. CIT(A) are ex-parte, wherein the Assessee has not participated in any of the proceedings. Even the Ld. CIT(A) has not decided all the grounds of Appeal on its merits."
The Tribunal emphasized that the failure to consider grounds of appeal is not a mere procedural lapse but a substantive denial of justice. The Revenue’s argument that the assessee was a "chronic defaulter" cannot override the fundamental right to be heard. The Tribunal held that the interests of justice require the matter to be remanded for a fresh assessment, with a clear opportunity to the assessee to present its case.
The Verdict
The appeal was partly allowed for statistical purposes. The orders of the A.O. and CIT(A) were set aside. The case was restored to the file of the A.O. for de-novo assessment. The A.O. was directed to provide a full opportunity of hearing to the assessee before passing a fresh order. The assessee was directed to participate in the proceedings without fail.
What This Means For Similar Cases
Procedural Fairness Overrides Past Non-Compliance
- Practitioners must argue that even if an assessee has defaulted in prior proceedings, the tax authority cannot bypass the requirement of a fair hearing in the current assessment.
- The burden is on the department to prove that a notice was properly served and that the assessee wilfully avoided participation - mere non-response is insufficient.
Appellate Authorities Must Decide on Merits
- CIT(A) orders that merely endorse the A.O.’s order without addressing grounds of appeal are legally unsustainable.
- Every ground of appeal must be individually addressed, even if the appellant is unrepresented or absent.
De-Novo Assessment Is the Correct Remedy
- Setting aside and restoring for fresh assessment is the preferred remedy over merely remanding for reconsideration.
- This ensures the assessee gets a clean slate with full procedural rights, not a rehearing of the same flawed process.
