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Judgment
Per Raj Kumar Chauhan, Judicial Member:
The appeal is directed against the order dated 30.06.2025 of Learned Co mmissioner of Income Tax (Appeals)/National Facele ss Appeal Centre (hereinafter referred to as the “CIT(A)/NFAC”), passed u/s 250 of the Income T ax Act, 1961 (hereinafter referred to as “the Act”) wherein the addition made u/s 56(2) of the Act by assessment order dated 16.12.2018 were confirmed and appeal o f the assessee was dismissed ex-parte.
The brief facts as culled out from the order of the authorities below are that return of income was filed by the assessee declaring loss of Rs. 2,16,32 ,345/-. The case was selected under CASS and no tice u/s 143(2) dated 04.07.2017 was issued through ITBA portal followed by notice u/s 142(1) of the Act alongwith questionnaire. The assessee was invo lved in the business of developing ne eds of restaurant for home delivery business. The re aso n for selecting the case for scr utiny as me ntioned in para 4 of the impugned order are as under:
“Whet her funds received i n the for m of share pr emium are f rom disclos ed sources a nd hav e be en corr ectly offered to tax.”
The Assessing Officer observed that on examination of the details filed by the assessee, it was found that assessee company allotted share s at premium of Rs. 1.77 crore (premium per share of Rs. 7537, Rs. 7591, Rs. 14035, Rs.14007, Rs.7580 and Rs. 14035) to fo ur individuals. It was further noticed that the assessee has issued shares at two differe nt premium amounts given to the same person, namely Shri Rakesh Nagia and has not disclosed any business activity in IT R for Financial Year 2015-16. The FMV o f shares as on 31.10.2015 as per NAV metho d is quite low (in fact it is negative). The notice u/s 133(6) of the Act was issued to all the individ uals to whom share premium was issued. No reply from Ms. Suman Bansal and Sh. Rakesh Kumar Nagia was received whereas the notice issued to Ms. Nee tika Chhabra received back with the remarks “no such person”. Thus, no confirmatio n from the said person was received, accordingly show-cause no tice was issued to the assessee to submit confirmatio n from the parties along w ith copy of the ir ITR, books of accounts and proof o f residence. Further, detail was also called for from the asse ssee by issuing a no tice u/s 142(1). The asse ssee filed reply along with valuation report but the AO did not find the same satisfactory. Hence, the addition of Rs.1,77,41,272/- was made in terms of se ctio n 56(2)(viib) r.w.s. 2(24)(xvi) of the Act. Penalty proceedings were also initiated.
Aggrieved by the impugned order, assessee challenged the same before the ld. CIT(A) who has dismissed the same ex-parte as assessee/appellant has failed to make any submissio n or failed to file any docume nts called for.
Aggrieved by the impug ned order, the assesse e is in appeal before us and has raised the following grounds of appeal:
“1 . That on the facts and circumstanc es of t he cas e and in law, that the order passed by the Ld. CIT(A) is not legal and j usti fi ed.
2.That on the facts and circumstanc es of t he cas e and in law, the Appellant was prevented by sufficie nt caus e for not appear ing bef ore the Ld. CIT(A ).
3.That on the facts and circumstanc es of t he cas e and in law, the L d.AO err ed in ma ki ng an addition of t he share premi um amo unt under Section 56(2 )(vi ib) of t he Act t o the total i ncome of the A ppellant.
4.That on the facts and circumstanc es of t he cas e and in la w, t he L d. AO has erre d i n r ejecti ng the val uation report s ubmitt ed by the Appellant without poi nting out any specific discrepanc y o r i nc onsi st ency and recomputed the val ue of shares.
5.That on the facts and circumstanc es of t he cas e and in law, the L d. AO ignore d the fact that the val uation of shares is i n line with the provisi ons of S ection 56(2)(viib) of the Act read wit h Rul e 11UA of the Inco me Tax R ul es , 1962.
6.That on the facts and circumstanc es of t he cas e and in law, the Ld. AO er red i n i nitiati ng penalty proc eedi ngs under S ection 271(1 )(c) of t he Act. ”
We have he ard the ld. AR and the ld. DR. Ld. AR at the very outset submitted that no e ffective opportunity of hearing has been given as the notices sent allegedly on the e-mail of the assessee were never received and no proof of sending the notices as mentioned in p ara 5 of the impugned or der has been filed and in the absence of any proof in that regard, the impugned order has been passed which has resulted into miscarriage of justice. It is, therefore prayed that the matter be restored to the file of the ld. CIT(A) for decid ing the same afresh by giving effective opportunity of hearing.
Ld. DR, on the o ther hand, while supporting the judgment of lower authorities has left it to the discretion o f the Tribunal to consider the submissio ns for restoring the matter to the file of the ld. CIT(A) .
We have consid ered the submissions and examined the para 6.5 of the imp ugned order makes it clear that the same has been passed ex-parte without affording an effective opportunity of hearing. Sectio n 250(2)(a) lays dow n as under:
“250(2 ) The fol lo wing shall have the right to be heard at the heari ng o f the appeal-
(a)the appellant, either i n person or by an authori zed repres entative;”
Thus, the hear ing mandated by Section 250(2)(a) of the Act is no t a mere formality but a mandatory statutory requirement for following the principle of natur al justice by the quasi-judicial authority.
In view of the ab ove facts and circumstances, it is evident that the impugned order has been passed w ithout effective hearing and principle of natural justice has no t b een followed For these reaso ns, the impug ned order is not maintainable and according ly set aside. T he end of justice shall be met in case the matter is restored to the file of the Ld. CIT(A) for deciding the issue afresh by affording an effective o pportunity of hearing and considering the submissions to be made by the appellant/assessee. The assessee/appellant is also directed to make the necessary submissions/ detailed material before the Ld. CIT(A) w ithin the period of 60 days of this order.
In the result, the appeal of the assessee is allowed for statistical purposes.