No party should be condemned unheard: ITAT Kolkata directs Fresh hearing

Littlestar Projects Pvt. Ltd Vs ITO (ITAT Kolkata)

The case of Littlestar Projects Pvt. Ltd vs. Income Tax Officer (ITO) at the Income Tax Appellate Tribunal (ITAT) Kolkata involves a dispute over the ex parte assessment and subsequent appeal decisions, emphasizing the importance of proper communication and the principles of natural justice. The ITAT Kolkata directed a fresh hearing, stressing that no party should be condemned unheard.

Background

The appellant, Littlestar Projects Pvt. Ltd, challenged the order dated October 19, 2023, issued by the National Faceless Appeal Centre (CIT(A)), which was passed under Section 250 of the Income Tax Act. The primary contention of the appellant was that both the assessment order and the appellate order were passed ex parte, meaning without their representation or hearing.

Key Issues

a. Incomplete and Incorrect Address:

• The appellant’s counsel pointed out that the notices of hearing were sent to an incomplete and incorrect address. The address used was “Littlestar Projects Private Ltd, Chandi Ghosh Road, Tollygunj, Kolkata-700007,” which was incorrect and led to the return of the notices marked ‘not known’.
• The correct address, as per Form 35 filed before the CIT(A), was “Ground Floor, Room No.106, 157, Rabindra Sarani, Burrabazar, Kolkata,” with an email address of cs.sjain.assoc@gmail.com.

b. Non-receipt of Email Notices: The counsel argued that the alleged email notice was never received by the assessee. The email address on record differed from the one mentioned in the return of income and Form 35.

c. Failure to Update Address:

• During the appellate proceedings, the appellant had further changed its address to “Shop No.C-12, F/F, Seth Deokaran Dass Commercial Complex, Kachery Road, Unit No.36, Uditnagar, Rourkela Town, Sundergarh, Odisha- 769012,” with a new email id littlestarproject2010@gmail.com.
• The appellant was accused of not updating the Assessing Officer and CIT(A) regarding their address changes, leading to non-service of notices.

Tribunal’s Observations and Directions

The ITAT Kolkata noted several critical aspects:

a. Incomplete Communication: The appellant’s claim of non-receipt of notices due to an incomplete address was acknowledged. The Tribunal emphasized that the appellant should have informed the authorities about the correct address and any changes.

b. Natural Justice:

• Highlighting the principle of natural justice that no one should be condemned unheard, the Tribunal decided to set aside the ex parte order of the CIT(A).
• It was directed that a fresh hearing be conducted, providing the appellant with a fair opportunity to present their case, including explanations and evidence.

c. Instructions for Fresh Hearing:

• The CIT(A) was instructed to re-evaluate the appeal on its merits, ensuring proper service of notice to the appellant.
• The appellant was directed to submit their correct address, email id, and phone number to both the Assessing Officer and CIT(A) within 60 days of receiving the Tribunal’s order.
• The CIT(A) was permitted to seek a remand report from the Assessing Officer regarding the evidence and explanations provided by the appellant.

d. Compliance and Consequences:

• The appellant was instructed to apply for a change of address in the PAN database according to the rules.
• Failure to provide the correct address within the stipulated time would result in the CIT(A) proceeding with the hearing based on the address and contact details mentioned in Form 36, with the appellant being estopped from later claiming non-receipt of notices.

Conclusion

The appeal was treated as allowed for statistical purposes, with the primary focus being on ensuring a fair hearing and proper communication between the parties involved. The ITAT Kolkata’s decision underscores the importance of accurate record-keeping and timely updates of contact information to avoid procedural lapses and uphold the principles of natural justice.

FULL TEXT OF THE ORDER OF ITAT KOLKATA

The present appeal has been preferred by the assessee against the order dated 19.10.2023 of the National Faceless Appeal Centre [hereinafter referred to as ‘CIT(A)’] passed u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’).

2. At the outset, the ld. counsel for the assessee invited our attention to the impugned order of the CIT(A) to submit that the same is an ex parte order passed by the CIT(A). The ld. counsel has also invited our attention to the assessment order to submit that the same is also an ex parte order passed by the Assessing Officer u/s 144 of the Act. The ld. counsel has further invited our attention to the opening lines of the assessment order, wherein, it has been mentioned that the notices of hearing were issued to the assessee through registered post as well as through email. That the letter sent to the assessee through registered post got returned with postal comment ‘not known’. However, there was no response to notice sent through email. The ld. counsel invited our attention to the address mentioned in the assessment order, which is as ‘Littlestar Projects Private Ltd, Chandi Ghosh Road, Tollygunj, Kolkata-700007’. The ld. counsel in this respect has submitted that firstly the address mentioned in the assessment order was incomplete address. Further that the address mentioned in the assessment order otherwise was a wrong address. That because of the aforesaid facts, the notices sent through registered post were not served upon the assessee. The ld. counsel has further submitted that even the alleged email sent to the assessee has never come to the notice of the assessee. The ld. counsel has further invited our attention to Form 35 filed before the CIT(A), wherein, the address of the assessee has been mentioned as Littlestar Projects Private Limited, Ground Floor, Room No.106, 157, Rabindra Sarani, Burrabazar, Kolkata and the email of the assessee has been mentioned as cs.sjain.assoc@gmail.com. It is to be noted that the email address mentioned in the return of income is different to that has been mentioned in appeal Form 35 before the CIT(A). The ld. counsel has further invited our attention to the impugned order of the CIT(A), wherein, the address of the assessee is same as that has been mentioned in the assessment order. The ld. CIT(A) failed to take notice of the address and email-id mentioned in the appeal opening form i.e. Form No.35.

3. A perusal of the Form No. 36 filed before this Tribunal shows that the appellant/assessee has further changed its address, which is mentioned as Shop No.C-12, F/F, Seth Deokaran Dass Commercial Complex, Kachery Road, Unit No.36, Uditnagar, Rourkela Town, Sundergarh, Odisha- 769012 and email-id as littlestarproject2010@gmail.com. It seems in this case that the notices could not be served upon the assessee during the appellate proceedings because of the change of address of the assessee. However, it is also pertinent to note here that the assessee has further changed its address and the assessee is required to duly brought to the knowledge of the Assessing Officer/CIT(A) regarding the change in address. However, considering the fact that the assessee could not present its case before the CIT(A) for want of service of notice and further considering the principles of natural justice that nobody should be condemned unheard, we set aside the order of the CIT(A) with a direction to decide the appeal of the assessee afresh on merits. The ld. CIT(A) will give proper opportunity to the assessee to present its case before him including the explanations and evidences relating to the issue under consideration. The ld. CIT(A) may call upon a remand report from the Assessing Officer in respect of evidences/explanations furnished by the assessee and thereafter, to pass a speaking order in accordance with law. It is also directed that the assessee will furnish its correct address before the competent authority i.e. Assessing Officer as well as CIT(A) along with email-id, phone no. etc. upon which the notice will be duly served by the Ld. CIT(A) or the Assessing Officer, as the case may be. The assessee will make an application for change of address in the PAN Database as per rules. The assessee will comply with the aforesaid directions of providing correct address, email-id, phone no. etc. to the CIT(A) as well as to the Assessing Officer within 60 days of the receipt of the copy of this order, thereafter, the ld. CIT(A) will fix the appeal for fresh hearing. If the assessee fails to furnish correct address as directed above, the ld. CIT(A) will proceed to decide the appeal by serving notice at the address, email-id as mentioned in Form 36 filed before us as reproduced above and in that event, the assessee will be estopped from saying that the notices have not been served at the correct address.

4. With the above observations, the appeal of the assessee is treated as allowed for statistical purposes.