In a landmark decision that underscores the critical importance of procedural accuracy in digital communications, the Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) has taken a compassionate stance. The tribunal has chosen to restore an income tax appeal filed by a Non-Resident Indian (NRI) living in the United States, even though it was submitted with a significant delay of 621 days.
The Core of the Case: A Missed Email and an Ex-Parte Order
The case revolves around an NRI taxpayer who was contesting an order related to the assessment year 2012-13. The matter had been selected for a scrutiny assessment, leading the Assessing Officer to make an addition of Rs 15.47 lakh to the taxable income in 2019. The assessee initially challenged this order before the Commissioner of Income Tax (Appeals) or CIT(A) in 2020.
However, the proceedings took an unfortunate turn. In 2023, the National Faceless Appeal Centre (NFAC)-CIT(A) passed an ex-parte order, dismissing the appeal because the required documents and evidence were not submitted. The crucial detail that emerged later was the reason for this non-submission: the taxpayer never received the notices.
At the ITAT, the assessee clarified, "From the records, it appears that the CIT (A) has not issued notices on the provided email but were issued on the wrong email id and thus I have not received any of the notices issued." This admission formed the bedrock of the tribunal's subsequent ruling.
ITAT's Rationale: Emphasizing Fair Procedure in the Digital Age
The ITAT bench carefully considered the circumstances. Normally, an assessee must file an appeal within 60 days of the disputed order. The delay of over 600 days was undeniably substantial. However, the tribunal found merit in the appellant's argument that the entire faceless appeal process was vitiated because the department used an incorrect email address for communication.
This failure on the part of the tax authorities meant the NRI was completely unaware of the developments in his case, depriving him of a fair chance to present his side. Acknowledging this lapse, the ITAT decided to set aside the 2023 order passed under section 250 of the Income Tax Act, 1961. The case has been sent back, or "restored," to the Commissioner of Income Tax (Appeals) for a fresh hearing on its merits.
Broader Implications for India's Faceless Appeal Mechanism
Tax experts are viewing this judgment as a significant precedent. It powerfully reinforces the principle that the efficiency and fairness of India's faceless appeals process are heavily dependent on the accuracy of the digital infrastructure supporting it. For the system to function justly, ensuring that notices and communications reach the correct digital doorstep—the valid email address—is not just a formality but a fundamental requirement.
The ruling sends a clear message to the tax department to maintain meticulous records and verify contact details. It also offers reassurance to taxpayers, especially those residing abroad, that technical glitches or administrative errors will not automatically extinguish their right to be heard, provided they can demonstrate genuine hardship caused by such errors.
This case highlights the evolving challenges in a digitized taxation system and sets a benchmark for balancing procedural discipline with substantive justice.
