The Kerala High Court has reaffirmed that the right to be heard is non-negotiable under natural justice. In a decisive ruling, the Court set aside an Income Tax Appellate Tribunal order issued without any notice to the appellant, emphasizing that procedural fairness cannot be sacrificed for administrative convenience.
Background & Facts
The Dispute
The appellant, VeeYemar & Co., a partnership firm based in Calicut, Kerala, was subjected to an assessment order for the assessment year 2017-18 issued by the National Faceless Assessment Centre, Delhi, on 27.09.2021. The firm filed an appeal before the Income Tax Appellate Tribunal (ITAT), Cochin Bench, under ITA No. 370/Coch/2025. The Tribunal passed an order on 31.07.2025, which the appellant challenged before the High Court on the ground that it was passed without any opportunity to be heard.
Key Facts
- The appellant’s address and contact details were on record with the Income Tax Department
- The ITAT issued a Defect Memo dated 20.05.2025, citing six deficiencies including non-furnishing of email ID
- The appellant did not provide an email ID despite the Defect Memo
- A hearing notice dated 30.05.2025 was generated for a hearing scheduled on 02.06.2025
- The notice was not sent via email due to absence of email ID
- No postal notice was issued due to alleged short notice period
- The appellant claims to have received no notice whatsoever of the hearing or the final order
- The impugned order was passed on 31.07.2025 without any record of service on the appellant
Procedural History
- 27.09.2021: Assessment order issued by National Faceless Assessment Centre for AY 2017-18
- 02.11.2021: Appeal filed before ITAT, Cochin Bench (ITA No. 370/Coch/2025)
- 20.05.2025: Defect Memo issued by ITAT for non-furnishing of email ID and other deficiencies
- 30.05.2025: Hearing notice generated for 02.06.2025
- 02.06.2025: Hearing date lapsed without appellant’s appearance
- 31.07.2025: ITAT passed ex parte order dismissing the appeal
- 01.04.2026: Appellant filed ITA No. 48/2026 before Kerala High Court challenging the ITAT order
- 01.04.2026: High Court directed Registrar of ITAT to submit report on service of notice
- 08.04.2026: ITAT submitted report admitting non-service of notice by post or email
Relief Sought
The appellant sought setting aside of the ITAT order dated 31.07.2025, restoration of the appeal for fresh hearing with proper notice, and stay of all coercive recovery proceedings pending fresh adjudication.
The Legal Issue
The central question was whether an appellate tribunal can pass a final order dismissing an appeal without serving any notice on the appellant, even where service by email is not possible due to non-furnishing of details, and whether such an order violates the principles of natural justice.
Arguments Presented
For the Appellant
Counsel for the appellant relied on the foundational principle that no one shall be condemned unheard (audi alteram partem). He argued that the ITAT’s reliance on a defective email system, without attempting postal service despite having the appellant’s physical address on record, amounted to a gross violation of procedural fairness. He cited State of U.P. v. Mohammad Noor and K.S. Puttaswamy v. Union of India to underscore that the right to a fair hearing is an essential component of Article 14 and Article 21 of the Constitution. He emphasized that administrative convenience cannot override fundamental rights.
For the Respondent
The Revenue’s counsel conceded that no postal notice was issued but argued that the Defect Memo had been served and the appellant had been given an opportunity to rectify deficiencies. He contended that the appellant’s failure to provide an email ID was a deliberate act of non-cooperation, and that the ITAT acted within its procedural rules. He relied on CIT v. Sree Ramakrishna Mills Ltd. to argue that technical lapses should not invalidate orders if the substance of justice is served.
The Court's Analysis
The Court conducted a rigorous examination of the ITAT’s report and found it unequivocal: no notice was sent by post, and no email was delivered due to absence of an email ID. The Court rejected the Revenue’s argument that the Defect Memo constituted adequate notice.
"It is not enough to issue a defect memo and then rely on the appellant’s failure to comply with a technical requirement when the consequence is the deprivation of a statutory right to be heard."
The Court held that the right to be heard is not contingent on the appellant’s cooperation with digital systems. Where postal addresses are available, and where the stakes involve substantial tax liability, the tribunal has a duty to ensure service by post if electronic means fail. The ITAT’s failure to do so rendered the order a nullity.
The Court further clarified that the doctrine of waiver does not apply here, as the appellant had not been given any opportunity to waive his right. The absence of a hearing notice, regardless of cause, is fatal to the validity of the order.
The Court emphasized that procedural fairness is not a technicality - it is the very foundation of administrative justice. The ITAT’s reliance on internal procedural norms that disregard constitutional guarantees cannot be sustained.
The Verdict
The appeal was allowed. The Court set aside the ITAT order dated 31.07.2025 in ITA No. 370/Coch/2025. The matter was remanded to the ITAT for fresh consideration. The appellant was directed to appear before the ITAT on 30.04.2026 at 11 A.M. All coercive recovery actions based on the impugned assessment and appellate orders were stayed until the ITAT passes a fresh order. The ITAT was directed to conclude the fresh hearing expeditiously.
What This Means For Similar Cases
Service by Post Is Mandatory When Digital Channels Fail
- Practitioners must insist on proof of postal service in all tax appeals where email IDs are not provided
- Tribunals cannot rely solely on digital notices when physical addresses are available
- Failure to serve by post, even due to "short notice," renders orders voidable
Defect Memos Do Not Substitute for Hearing Notices
- A defect memo is procedural, not substantive
- It cannot be treated as notice of hearing or as waiver of right to be heard
- Tribunals must issue separate, distinct hearing notices with clear date, time, and venue
Stay of Recovery Is Automatic Upon Challenge to Procedural Violation
- Courts will grant automatic stay on recovery proceedings when a hearing violation is established
- Taxpayers need not file separate stay applications if the appeal challenges the absence of notice
- This judgment reinforces that procedural illegality trumps substantive correctness
