The Income Tax Appellate Tribunal, Delhi, has held that appellate authorities must provide a physical opportunity to be heard in income tax appeals, particularly when the assessee is a non-resident foreign national. The Tribunal set aside ex parte orders passed without physical notice and beyond statutorily mandated timelines, emphasizing that procedural fairness under the principle of audi alteram partem is non-negotiable even in tax matters.
The Verdict
The assessee won. The Income Tax Appellate Tribunal set aside the ex parte orders of the Commissioner of Income Tax (Appeals) for violating the fundamental principles of natural justice. The Tribunal held that failure to issue physical notices and delay beyond the 15-day CBDT mandate rendered the appellate orders invalid. The appeals were remanded for fresh adjudication with a fair opportunity to be heard.
Background & Facts
The appellant, Sushma Shrestha, is a senior citizen and permanent resident of the United States. She was assessed under Section 153A of the Income Tax Act, 1961, following a search operation conducted on her relatives in October 2018. The Assessing Officer issued a notice in December 2020, and she filed her return for Assessment Year 2014-15 on January 22, 2021, declaring herself as a non-resident and NIL income.
The Assessing Officer rejected her non-resident status based on TDS records and bank account details indicating resident status, and completed the assessment. The appellant filed an appeal before the Commissioner of Income Tax (Appeals), but the CIT(A) passed an ex parte order on March 15, 2025, dismissing the appeal without affording her a hearing.
The appellant claimed she never received the notice, as it was sent only via email to an employee of her family concern, who failed to bring it to her attention. No physical notice was issued to her local address in Delhi. The appeal before the Tribunal was filed 125 days late, but the delay was explained as bona fide due to her foreign residence and inadvertent oversight.
The Tribunal noted that similar cases involving other family members had already been remanded by a coordinate bench for identical procedural lapses.
The Legal Issue
Did the Commissioner of Income Tax (Appeals) violate the principles of natural justice by passing an ex parte order without issuing a physical notice and by exceeding the 15-day timeline mandated by CBDT instructions?
Arguments Presented
For the Petitioner
The appellant’s counsel argued that the CIT(A) violated audi alteram partem by failing to serve a physical notice, especially since the appellant was a non-resident foreign national with no regular access to the income tax portal. Notices sent via email to a family employee were not brought to her attention, and no physical notice was issued to her Delhi address. The counsel relied on the Supreme Court’s decision in Dhakeswar Cotton Mills Ltd. v. CIT, which mandates a full opportunity to be heard, and on Tribunal precedents in Noida v. Jayant Budhiraja and Durgesh Autofin Pvt. Ltd. v. ACIT, which held that delay beyond 15 days of the last hearing is a jurisdictional error. The counsel also invoked CBDT Instructions dated 23.12.2003, 19.06.2015, and 08.03.2018, which require appellate orders to be passed within 15 days of the last hearing.
For the Respondent
The Revenue did not contest the appellant’s submissions. The Departmental Representative acknowledged that the CIT(A) had failed to comply with procedural norms and did not oppose the request for remand.
The Court's Analysis
The Tribunal found that the CIT(A) had acted in clear violation of natural justice. The mere upload of notices on the e-filing portal was insufficient, particularly when the assessee was a non-resident with no obligation to monitor the portal regularly. The absence of a physical notice to her known local address rendered the opportunity to be heard illusory.
"The principle of audi alteram partem is not a mere formality but a substantive right that must be respected in all quasi-judicial proceedings, including those under the Income Tax Act."
The Tribunal emphasized that the CBDT Instructions are not advisory but binding, and their violation constitutes a jurisdictional defect. The Tribunal cited its own decisions in Noida v. Jayant Budhiraja and Durgesh Autofin Pvt. Ltd. v. ACIT, holding that orders passed beyond the 15-day window are ultra vires and void ab initio. The delay of four months was not merely procedural irregularity but a fundamental breach of statutory mandate.
The Tribunal also relied on the Supreme Court’s ruling in Dhakeswar Cotton Mills, which prohibits reliance on conjectures without affording the assessee a chance to rebut. The CIT(A) had mechanically replicated the Assessing Officer’s order without independent application of mind, further compounding the violation.
The Tribunal rejected the notion that the appellant’s foreign residence absolved the authorities of their duty to ensure effective notice. The law requires reasonable steps to be taken to ensure actual notice, not just technical compliance.
What This Means For Similar Cases
This judgment reinforces that physical notice is mandatory in income tax appeals when the assessee is not a regular user of digital portals, particularly non-residents or elderly individuals. Practitioners must now insist on physical service in all cases where digital notice may be ineffective. The ruling also elevates CBDT’s 15-day timeline from a guideline to a jurisdictional requirement. Any appellate order passed beyond this period is now liable to be set aside as ultra vires.
This precedent applies to all cases where the CIT(A) relies on e-notice alone, especially when the assessee is outside India or lacks digital access. It also empowers taxpayers to challenge delayed orders on grounds of jurisdictional invalidity, not merely procedural lapse. Practitioners should file applications for remand in all pending cases where the CIT(A) order was passed beyond 15 days or without physical hearing.
The Tribunal’s direction to the appellant to be more vigilant does not diminish the State’s primary duty to ensure procedural fairness. The burden remains on the revenue to prove actual notice, not on the assessee to monitor portals.
What This Means For Similar Cases
This judgment reinforces that physical notice is mandatory in income tax appeals when the assessee is not a regular user of digital portals, particularly non-residents or elderly individuals. Practitioners must now insist on physical service in all cases where digital notice may be ineffective. The ruling also elevates CBDT’s 15-day timeline from a guideline to a jurisdictional requirement. Any appellate order passed beyond this period is now liable to be set aside as ultra vires.
This precedent applies to all cases where the CIT(A) relies on e-notice alone, especially when the assessee is outside India or lacks digital access. It also empowers taxpayers to challenge delayed orders on grounds of jurisdictional invalidity, not merely procedural lapse. Practitioners should file applications for remand in all pending cases where the CIT(A) order was passed beyond 15 days or without physical hearing.
The Tribunal’s direction to the appellant to be more vigilant does not diminish the State’s primary duty to ensure procedural fairness. The burden remains on the revenue to prove actual notice, not on the assessee to monitor portals.
What This Means For Similar Cases
This judgment reinforces that physical notice is mandatory in income tax appeals when the assessee is not a regular user of digital portals, particularly non-residents or elderly individuals. Practitioners must now insist on physical service in all cases where digital notice may be ineffective. The ruling also elevates CBDT’s 15-day timeline from a guideline to a jurisdictional requirement. Any appellate order passed beyond this period is now liable to be set aside as ultra vires.
This precedent applies to all cases where the CIT(A) relies on e-notice alone, especially when the assessee is outside India or lacks digital access. It also empowers taxpayers to challenge delayed orders on grounds of jurisdictional invalidity, not merely procedural lapse. Practitioners should file applications for remand in all pending cases where the CIT(A) order was passed beyond 15 days or without physical hearing.
The Tribunal’s direction to the appellant to be more vigilant does not diminish the State’s primary duty to ensure procedural fairness. The burden remains on the revenue to prove actual notice, not on the assessee to monitor portals.
What This Means For Similar Cases
This judgment reinforces that physical notice is mandatory in income tax appeals when the assessee is not a regular user of digital portals, particularly non-residents or elderly individuals. Practitioners must now insist on physical service in all cases where digital notice may be ineffective. The ruling also elevates CBDT’s 15-day timeline from a guideline to a jurisdictional requirement. Any appellate order passed beyond this period is now liable to be set aside as ultra vires.
This precedent applies to all cases where the CIT(A) relies on e-notice alone, especially when the assessee is outside India or lacks digital access. It also empowers taxpayers to challenge delayed orders on grounds of jurisdictional invalidity, not merely procedural lapse. Practitioners should file applications for remand in all pending cases where the CIT(A) order was passed beyond 15 days or without physical hearing.
The Tribunal’s direction to the appellant to be more vigilant does not diminish the State’s primary duty to ensure procedural fairness. The burden remains on the revenue to prove actual notice, not on the assessee to monitor portals.
