Medway Educational Consultant Ex Parter order set aside

The dispute arose from assessment proceedings against Medway Educational Consultant Pvt. Ltd. for AY 2020-21. The assessee had filed its return declaring income of approximately Rs. 6.83 lakhs, following which the case was selected for scrutiny primarily because the net profit disclosed in the return was only 0.33%.

The Assessing Officer completed assessment under Sections 143(3) read with 144B and made substantial additions including disallowance of unexplained expenditure under Section 69C exceeding Rs. 2 crores and unexplained cash credit addition under Section 68 amounting to Rs. 35 lakhs.

The assessee carried the matter before the National Faceless Appeal Centre. However, since the assessee allegedly failed to participate in appellate proceedings despite opportunities, the NFAC dismissed the appeal ex parte.

Before the Tribunal, the assessee argued that adequate opportunity of hearing had not been granted and that the appeal ought to have been adjudicated on merits. The Tribunal accepted the assessee’s contention and held that Section 250 obligates the appellate authority to decide the appeal on merits even in the absence of participation by the assessee.