ITAT Delhi on Natural Justice: Invalid Service of Notice Leads to Remand for Fresh Hearing.

Headnote:

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) set aside the order of the Commissioner of Income Tax (Appeals) [CIT(A)] and remanded the matter for fresh adjudication after finding that the assessee was denied a fair opportunity of hearing. The Tribunal held that the mere uploading of notices on the income tax portal, without proper service or communication to the assessee, violated the principles of natural justice.

Background:

• The assessee, Raas Infratech Private Limited, declared ₹26,17,065 as exempt agricultural income for AY 2017–18.

• The Assessing Officer (AO) treated the claimed agricultural income as “income from other sources” due to non-submission of supporting evidence.

• He further added ₹11,70,000 as unexplained cash deposits made during the demonetization period (09.11.2016–30.12.2016).

• The CIT(A), New Delhi, partly upheld the AO’s additions through an ex parte order dated 28.03.2025.

• The assessee contended before the Tribunal that the last two notices (dated 11.12.2024 and 07.03.2025) were not validly served and were only posted on the portal without direct intimation, depriving it of the opportunity to respond.

Court’s Observations:

• The Tribunal found merit in the assessee’s submission that valid service of notice is essential for compliance with natural justice.

• The CIT(A) proceeded ex parte based solely on portal uploads, without ensuring actual notice service or participation of the assessee.

• The ITAT observed that the absence of proper communication prevented the assessee from presenting its case and supporting documents for both the agricultural income and cash deposit issues.

• Considering these facts, the ITAT restored the matter to the CIT(A) for de novo adjudication after granting due opportunity to the assessee.

Legal Provisions Discussed:

• Section 143(3), Income Tax Act, 1961 – Scrutiny assessment.

• Principles of Natural Justice – Right to fair hearing.

• Section 250(6), Income Tax Act, 1961 – Requirement for reasoned order by CIT(A).

Decision:

The order of the CIT(A) dated 28.03.2025 was set aside. The case was remanded to the CIT(A) for fresh adjudication after granting a fair opportunity of hearing to the assessee.

Result: Appeal allowed for statistical purposes.

Citation: ITA No. 3497/Del/2025

Case: Raas Infratech Private Limited v. Income Tax Officer

Court: Income Tax Appellate Tribunal, Delhi Bench ‘E’, New Delhi

Coram: Shri S. Rifaur Rahman (Accountant Member) & Shri Sudhir Kumar (Judicial Member)

Date of Decision: 1 October 2025

Assessment Year: 2017–18