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Facts
During a search and seizure operation in October 2009, unaccounted cash and incriminating documents were found. The assessee's key person offered undisclosed income, but later retracted the statement. The Assessing Officer made additions, and penalty proceedings were initiated under section 271(1)(c). The CIT(A) dismissed the assessee's appeal for non-prosecution due to non-compliance.
Held
The Tribunal found that the CIT(A) had not decided the appeal on merits due to the assessee's non-compliance. To provide an opportunity, the matter was remanded to the CIT(A) for a de novo adjudication, with a direction for the assessee to cooperate and produce evidence.
Key Issues
Whether the penalty levied under section 271(1)(c) is valid when the CIT(A) dismissed the appeal for non-prosecution without deciding on merits?
Sections Cited
250, 132, 132(4), 143(3), 153A, 69C, 271(1)(c), 274
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
Before: SHRI OM PRAKASH KANT, AM
O R D E R Per Kavitha Rajagopal, JM:
These are captioned appeals filed by the assessee, challenging the orders of the learned Commissioner of Income Tax (Appeals) (‘Ld. CIT(A)’ for short) passed u/s.250 of the Income Tax Act, 1961 (‘the Act'), pertaining to the Assessment Year (‘A.Y.’ for short) 2006-07, 2007-08, 2008-09 & 2009-10. As the facts are identical in all these appeals, we hereby pass a consolidated order by taking as a lead case.
The assessee has raised the following grounds of appeal:
, 6876, 6877 & 6878/Mum/2025 M/s. Bermaco Energy System Limited
“1. The learned CIT(A) erred in passing the order in the appeal filed by the Appellant Company against the penalty levied under section 271(1)(c) by holding that there was no compliance with the six notices issued.
2. The learned CIT(A) erred in upholding the penalty levied under section 271(1)(c) of the Act without appreciating that the notice issued under section 274 read with section 271(1)(c) was invalid, vague, and defective in law, as it did not specify whether the penalty proceedings were initiated for "concealment of particulars of income" or for "furnishing of inaccurate particulars of income."
3. The learned CIT(A) failed to appreciate that the addition sustained by the CIT(A) in the quantum proceedings was on an adhoc/estimated basis at 8% of alleged bogus purchases, which cannot be the basis for levy of penalty under section 271(1)(c) of the Act.
4. The Appellant craves leave to add to, alter or amend any ground before or at the time of hearing.”
Brief facts of the case are that the assessee company filed its return of income dated 17.09.2010 declaring total income at Rs.1,73,02,110/-. Pursuant to a search and seizure action u/s. 132 of the Act carried out at the residence and business premises of M/s.
Flemingo/Bermaco Group on 31.10.2009 unaccounted cash and incriminating doucments were found and seized and the assessee being a flagship company of the said group was also covered under the search action. Subsequent to the search and seizure operation Shri Viren Ahuja who is the key person controlling the group concern offered undisclosed income to the tune of Rs.38.90 crores u/s. 132(4) of the Act for various years in which there were discrepancies found in the books of accounts by way of bogus purchases, unaccounted cash etc. The statement of Shri Viren Ahuja recorded u/s. 132(4) of the Act was retracted subsequently on 24.11.2009. The Learned Assessing Officer (“Ld. AO” for short) completed the assessment u/s. 143(3) r.w.s. 153A of the Act dated 30.12.2011 determining the total income at Rs.2,44,17,800/- making various additions/disallowances. Against the , 6876, 6877 & 6878/Mum/2025 M/s. Bermaco Energy System Limited appeal filed by the assessee before the Ld. CIT(A) the same was dismissed vide order dated 04.01.2013 and thereafter the assessee filed appeal before the Tribunal which then set aside the issues to the file of the Ld. AO for passing a speaking order and for denovo assessment vide its order dated 31.05.2016. The Ld. AO completed the assessment u/s. 143(3) r.w.s.
254 of the Act determining the total income at Rs.2,37,76,690/- vide assessment order dated 26.12.2017 after making an addition of Rs.64,74,581/- u/s. 69C of the Act and also initiated penalty proceedings u/s. 271(1)(c) of the Act. The Ld. AO vide penalty order u/s. 271(1)(c) of the Act dated 16.03.2022 levied penalty of Rs.1,74,350/- being 100% of the minimum penalty on income sought to be evaded amounting to Rs.5,17,967/-.
Aggrieved by the penalty order, the assessee was in appeal before the first appellate authority, who vide an ex-parte order dated 30.08.2025 dismissed the appeal challenging the penalty levied by the Ld. AO on the ground that the assessee was non-compliant during the appellate proceedings.
Aggrieved, the assessee is in appeal before us, challenging the order of the Ld. CIT(A) on the abovementioned grounds.
We have heard the rival submissions and perused the materials available on record.
It is observed that the assessee has challenged the penalty levied u/s. 271(1)(c) of the Act where the Ld. CIT(A) vide an ex-parte order has dismissed the appeal filed by the assessee for non-prosecution.
, 6876, 6877 & 6878/Mum/2025 M/s. Bermaco Energy System Limited
Before us, the Learned Authorized Representative (“Ld. A.R.” for short) for the assessee contended that the non-compliance before the first appellate authority was due to the reasons which were beyond the control of the assessee and the same was not deliberate or due to negligence. The Ld. A.R. prayed that the assessee be given one more opportunity to present its case before the first appellate authority.
The Learned Departmental Representative (“Ld. D.R.” for short) vehemently opposed for setting aside the issue to the file of the Ld. CIT(A).
Though the assessee has raised various grounds both on legal issues as well as on the merits, it is observed that the Ld. CIT(A) has not decided the issue in hand on the merits of the case for the reason that in spite of six notices issued to the assessee on various dates the assessee was non-compliant throughout the appellate proceedings and has also failed to produce any documentary evidences neither to substantiate its claim nor for contradicting the findings of the lower authority. In order to extend the assessee with one more opportunity to present its case before the first appellate authority, we deem it fit to remand this issue back to the file of the Ld. CIT(A) with a direction that the assessee shall cooperate with the proceedings before the first appellate authority and to produce all relevant documentary evidences in support of its claim. The Ld. CIT(A) also is directed to adjudicate this issue denovo on the basis of the documentary evidences, if any, filed by the assessee and on the basis of the merits and in accordance with law.
In the result, the appeal filed by the assessee is allowed for statistical purpose.
, 6876, 6877 & 6878/Mum/2025 M/s. Bermaco Energy System Limited
The finding given in this appeal i.e. will apply mutatis 6877 & 6879/Mum/2025 as well. Accordingly, all the appeals filed by the assessee are hereby allowed for statistical purposes.
Order pronounced in the open court on 23.12.2025