Adrem India (P) Ltd. Vs DCIT (ITAT Delhi)
Adjournments ≠ Lack of Interest: CIT(A) Must Grant Effective Hearing, Rules ITAT
Delhi ITAT ‘A’ Bench in Adrem India (P) Ltd vs DCIT, Central Circle-20, Delhi (ITA No.5246/Del/2024, AY 2022-23, order dated 24-12-2025) set aside the ex-parte appellate order and remanded the matter to CIT(A), holding that deciding an appeal on merits without granting effective opportunity of hearing violates section 250(2) and principles of natural justice.
Assessee, engaged in furniture and modular kitchen business, was subjected to search u/s 132 on 09-02-2022, during which a hand-written sheet allegedly quantifying unaccounted cash receipts for multiple years was seized. Based on this document and the statement of a director (later retracted by affidavit), AO rejected books partially and made an estimated addition of ₹1.49 crore u/s 28, applying 15% net profit on alleged unaccounted cash receipts of ₹9.94 crore for AY 2022-23. CIT(A) confirmed the addition ex-parte, observing repeated adjournments by the assessee.
ITAT noted that section 250(2) mandates an effective hearing, not a mere formality. Seeking adjournments for justifiable reasons cannot be equated with non-interest in pursuing the appeal. The Tribunal found that the ex-parte disposal on merits resulted in miscarriage of justice, particularly in a search-based estimation case involving retraction, evidentiary compliance (incl. section 65B), and rejection of books.
Accordingly, ITAT set aside the impugned order and restored the appeal to CIT(A) with a direction to decide afresh after granting effective opportunity of hearing. The assessee was directed to present its case within 60 days. Appeal allowed for statistical purposes.
Effective hearing is sine qua non. Even in search cases with repeated adjournments, CIT(A) cannot decide on merits ex-parte; natural justice must prevail
FULL TEXT OF THE ORDER OF ITAT DELHI
