ITAT Restores Appeal After NFAC Order Lacks Natural Justice

In a significant judgment upholding the principles of natural justice, the Patna Bench of the Income Tax Appellate Tribunal (ITAT) recently condoned a delay of 11 days in filing an appeal and restored the matter for fresh adjudication. The case pertains to an appeal filed by Chandra Deep Kumar against an order passed by the National Faceless Appeal Centre (NFAC) for the Assessment Year (AY) 2017-18.

Background of the Case

The appellant, Chandra Deep Kumar, approached the ITAT challenging an ex-parte order passed by the NFAC, Delhi. According to the assessee, the order was passed without giving him a fair opportunity of being heard — a clear violation of the principles of natural justice.

During the proceedings, the counsel for the assessee brought to the ITAT’s notice that there was an 11-day delay in filing the appeal. This delay occurred because the assessee was completely unaware of the NFAC proceedings, including the issuance of hearing notices and the subsequent ex-parte appellate order.

The key point made by the assessee’s counsel was that no notice or order was received either by post or through the registered email ID, leaving the assessee uninformed and helpless during the appeal window.

Reasonable Cause for Delay

The ITAT took note of the fact that the delay was not due to negligence or any mala fide intention, but was the result of a genuine and reasonable cause beyond the control of the assessee. The Tribunal emphasized that justice should not be denied merely on technical grounds if a party was prevented by sufficient cause from appearing within the stipulated time.

In line with this principle, the Tribunal accepted the explanation furnished by the assessee and held that the delay of 11 days was condonable. The ITAT further stated that denying the appeal hearing on such grounds would amount to a miscarriage of justice, especially in the absence of proper notice from NFAC.

Fresh Adjudication Ordered

After condoning the delay, the ITAT restored the appeal for fresh adjudication. It directed the concerned authority to hear the matter on its merits, giving the assessee an opportunity to present his case.

This order essentially resets the clock, allowing the appellant to defend himself in a matter that was previously decided without his knowledge or participation.

Importance of the Order

This judgment is a crucial reminder of the importance of procedural fairness in income tax proceedings, especially in the context of faceless assessments and appeals introduced in recent years. While faceless systems aim to reduce corruption and increase efficiency, they must also ensure that taxpayers are not left in the dark due to communication gaps.

The ITAT's order reinforces the position that the right to a fair hearing is a fundamental aspect of tax adjudication. Even minor lapses in following due process — like the failure to serve notices — can result in an entire appellate process being deemed invalid.

Key Takeaways for Taxpayers

1. Always keep contact details updated on the Income Tax portal, especially registered email and communication addresses.

2. Regularly check email (including spam folders) for any communication from the tax department.

3. Consult with a tax professional immediately upon receiving any intimation, notice, or order to avoid procedural delays.

4. If unaware of any order and delay occurs, be prepared to justify the delay with reasonable and valid explanations.

Conclusion

The ITAT’s decision in Chandra Deep Kumar vs. NFAC is a win for fairness in tax proceedings. It demonstrates that even within a faceless system, natural justice cannot be compromised. The Tribunal’s readiness to condone delays arising from lack of notice sets a reassuring precedent for taxpayers and emphasizes the judiciary’s commitment to upholding fairness over formality.

For any taxpayer dealing with faceless assessments or appellate issues, this case serves as a reminder that legal remedies are available — especially when your right to be heard has been denied.

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