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Income Tax Appellate Tribunal, JODHPUR BENCH, JODHPUR
Before: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM
This appeal is filed by assessee and is arising out of the order of the National Faceless Appeal Centre (NFAC), Delhi dated 25.01.2023 [here in after (NFAC)] for assessment year 2015-16 which in turn arise from the order dated 22.09.2022 passed under section 271(1)(c) of the Income Tax Act, by the ITO, Ward-1, Barmer.
The Jaisalmer Central Co-operative Bank Ltd., 2. The assessee has marched this appeal on the following grounds:-
“1. That the ld. CIT(A) NFAC factually and legally erred in confirming the penalty of Rs. 1690138/- under S. 271(1)(c) imposed by ld. AO in a mechanical manner without properly appreciating facts of the case. The penalty in question was imposed just for the reason that addition of Rs. 962723/- was made in reassessment proceeding. for which penalty proceedings were initiated. That the appellant was not allowed to put forward its case and thus was condemned unheard.
That the ld. CIT(A) NFAC factually and legally erred in confirming the penalty of Rs. 1690138/- under S. 271(1)(c) imposed by ld. AO in a mechanical manner without properly appreciating facts of the case. The penalty in question was imposed just for the reason that addition of Rs. 962723/- was made in reassessment proceeding, for which penalty proceedings were initiated. That the appellant was not allowed to put forward its case and thus was condemned unheard.
That the Id. CIT(A) NFAC factually and legally erred in not considering the ground of the appellant that the minimum penalty being 100 percent of tax sought to be evaded determined and levied by the ld. AO under S. 271(1)(c) against the addition of Rs. 962723/- made in reassessment proceedings, is patently incorrect and substantially higher. Thus the penalty amount was not worked out as per law. The appellant condemned unheard on this issue.
4. That the appellant craves leave to add, alter or amend the grounds of appeal before or at the time of hearing of appeal.”
3. The assessee has also raised the following additional legal ground for deciding the grievance on legal front, the prayer of the assessee reads as under :
“We humbly submit that we have filed the appeal before the Hon'ble Bench on 24-03-2023 and same is now fixed for hearing on 14-07-2023. In connection with the aforesaid appeal, we wish to take a specific legal ground as an additional ground as under though such ground has been taken in a general manner with other grounds of appeal:-
The Jaisalmer Central Co-operative Bank Ltd., "That under the facts and circumstances of the case, the ld. CIT(A) NFAC legally erred in confirming the penalty of Rs. 16,90,138/- imposed by the Id. AO under S. 271(1)(c) of the Income-tax Act, 1961 because no hearing notice u/s 250(1) was issued to the appellant to put forward its case. Therefore, the appellate order so passed is patently against the provisions of S. 250(1) and 250(2) of the Income-tax Act and is also against the fundamental principle of nature justice."
Your honour, the additional ground taken is purely a legal ground which goes to the root of the matter and for which no fresh facts or materials are to be brought on record. We, therefore, very humbly pray that permission may very kindly be accorded to raise the additional ground of appeal in view of decision of Hon'ble Supreme Court in the case of M/s National Thermal Power Co. Ltd. Vs. CIT 229 ITR 383.”
Considering the peculiar facts and prayer of the assessee the additional ground raised by the assessee is admitted and considered while deciding the appeal of the assessee.
The fact as culled out from the records is that the assessee is a Co-operative Bank and engaged in business of providing credit facility to its member and loans to staff members and all banking business.
Assessee has filed its original Return of Income for AY 2015-16 on 31.10.2015 declaring income at Rs. 1,00,86,960/-. The case has been reopened u/s 147 by recording reasons that the Income chargeable to Tax for the Assessment Year 2015-16 has escaped Assessment. The case has been reopened by recording the reasons. Notice u/s 148 was issued on 30/03/2021 requesting the assessee to file its Return of The Jaisalmer Central Co-operative Bank Ltd., Income u/s 148. In response to notice u/s 148, assessee has filed its return of income on 29/04/2021 declaring returned income at Rs. 1,00,86,960/- same as declared in return filed u/s 139(1) of the Act.
Subsequently, notice u/s 143(2) has been issued to assessee on 16.11.2021. The case has been transferred to NeAC on 08/12/2021.
Subsequently, Notice u/s 142(1) of the Act was issued to the assessee on 24/12/2021 requesting assessee to furnish the necessary information. In response to notice u/s 142(1), assessee has filed his reply on 07.01.2022 along with documentary evidence. In the assessment proceeding the ld. AO noticed that assessee has not incurred PAC’s development fund in the year under consideration and therefore, ld. AO hold that assessee has concealed the particulars of income to the tune of Rs. 9,62,723/- which liable for levy of penalty and accordingly penalty order was passed.
Aggrieved from the order of the ld. AO levying penalty the assessee has preferred an appeal before the ld. CIT(A)/NFAC. A propose to the grounds so raised the relevant finding of the ld. CIT(A)/NFAC is reiterated here in below:
“2.0 It is noted that the appellant opted for the Vivid se Vishwas Scheme vide application dated 26.01.2021. Pursuant thereto, the PCIT-1, Jodhpur
The Jaisalmer Central Co-operative Bank Ltd., has certified the full and final payment of Rs. 256500/- as taxes in terms of Form No. 5 dated 16.06.2021 (Certificate No. 248107930100221). In view of the above, the appeal is treated as infructuous as per clause sub section (2) of section 4 of the Direct Tax Vivid Se Vishwas Act, 2020. 3.0 Accordingly, the appeal is treated as dismissed for statistical purposes.”
The ld. AR appearing on behalf of the assessee has placed on record the extract of the screen shot regarding the appeal filed by the assessee and the same is extracted here in below :
From the above screen shot it is evident that the window for submitting the reply was opened on 17.01.2023 and finally the same was closed on 25.01.2023 and in between no notice of hearing is issued to the assessee and therefore, the fundamental right of hearing before the ld. CIT(A) is not granted and therefore, the ld. AR of the assessee argued
The Jaisalmer Central Co-operative Bank Ltd., before us that the order of dismissal passed by the ld. CIT(A) be quashed and the matter be set a side to decide the issue a fresh on merits.
The ld DR is heard who has relied on the findings of the lower authorities but did not object to the prayer of the assessee setting a side the order to the file of the ld. CIT(A) to decide a fresh based on the merits of the case.
We have heard the rival contentions and perused the material placed on record. As it is evident the window for filling the response was opened on 17.01.2023 and finally was closed on 25.01.2023 and on that day the order is passed. In between there is no notice of hearing issued to the assessee which is nothing but the violation of the fundamental right of the assessee of being heard before dismissing the appeal of the assessee. Even the ld. DR did not object to the specific request of the assessee. Considering these peculiar circumstances argued before us we are of the considered view that the ld. CIT(A) should hear the assessee’s submission on merits after affording proper opportunity of being heard and pass speaking order in The Jaisalmer Central Co-operative Bank Ltd., the matter and therefore, the matter is set a side to the file of the learned CIT(A). At the same time assessee is directed to represent and present all the facts before the ld. CIT(A) and should not ask for the adjournment on frivols grounds. The assessee is also directed to participate in the hearing granted by the ld. CIT(A). At this stage we remand back the issue without commenting upon the merits of the case and the ld. CIT(A) is directed to decide the issue raised by the assessee in accordance with the law.
In the result, appeal of the assessee is allowed for statistical purpose.
Order pronounced under rule 34(4) of the Appellate Tribunal Rules, 1963, by placing the details on the notice board.