PARULBEN JAYKANTBHAI SHAH,VADODARA vs. INCOME TAX OFFICER, WARD-1(3)(8), SURAT

At the outset itself, Shri Rajesh Upadhyay, ld. Counsel for the assessee assailed the impugned order by contending that the assessee could not represent his case before Ld. CIT(A) and the order being an ex-parte order, stood vitiated on account of violation of principle of natural justice. The ld. Counsel for the assessee contended that in the interest of justice, another opportunity to contest the appeal before the Ld. first appellate authority may be granted to the assessee. The Ld.Counsel pleads before the Bench that known appearance by the assessee, before the Ld.CIT(A) was neither intentional nor deliberate. The ld Counsel contends that assessee has good case on merit, that is, substantial additions on the basis of which penalty under section 271(1) (c) were levied by assessing officer, have already been deleted either by the Ld.CIT(A) or by Tribunal. The Ld.Counsel further submits

On the other hand, the ld.Departmental Representative submits that no doubt, assessee is having good case but has not explained as to why he has not appeared before the First Appellate Authority [CIT(A)] and why he has not explained to ld CIT(A) that quantum additions were deleted so penalty under section 271(1) (c) should not be levied. Hence, matter may be remitted back to the file of ld CIT(A).

The Ld.Counsel submits before us that some quantum additions were deleted by ld CIT(A) and some quantum additions were deleted by Tribunal. Therefore, penalty under section 271(1)(c) of the Act should be deleted in respect of those quantum additions which were deleted.

Considering the above facts, we note that assessee has not given sufficient opportunity of being heard and could not plead his case successfully before the ld. CIT(A). We note that the ld. CIT(A) did not discuss the assessee’s case on merits based on the material available before him hence it is a violation of principle of natural justice. We note that it is settled law that principles of natural justice and fair play require that the affected party is granted sufficient opportunity of being heard to contest his case. If the quantum is deleted, the penalty would not survive. Therefore, ld CIT(A) is directed to examine the quantum additions deleted by first appellate authority and by Tribunal and then quash the penalty under section 271(1) (c) of the Act in respect of those additions which were deleted by ld CIT(A)/Tribunal. Hence, we deem it fit and proper to set aside the order of the ld. CIT(A) and remit the matter back to the file of the ld. CIT(A) to adjudicate the issue afresh on merits. For statistical purposes, the appeal of the assessee is treated as allowed.

In the result, the appeal of the assessee is allowed for statistical purposes.