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Facts
The assessee, an illiterate farmer, failed to file his return of income and comply with notices. Consequently, ex-parte assessment and penalty orders were passed, disallowing significant claims and levying penalties.
Held
The Tribunal, considering the assessee's illiteracy and lack of awareness, decided to restore the assessment and penalty orders to the jurisdictional AO for fresh adjudication. The assessee was directed to cooperate with the AO.
Key Issues
Whether the assessment and penalty proceedings were validly initiated and conducted, given the assessee's illiteracy and non-compliance, and whether a remand for fresh adjudication is appropriate.
Sections Cited
144, 147, 148, 142(1), 154, 271(1)(c), 274, 250
AI-generated summary — verify with the full judgment below
Before: SHRI PAWAN SINGH & SMT. RENU JAUHRI
Appellant by : Ms. Ritika Agarwal Respondent by : Shri Swapnil Choudhary- Sr. AR Date of Hearing 29.09.2025 Date of Pronouncement 30.09.2025 आदेश / O R D E R PER RENU JAUHRI [A.M.] :-
This appeal is filed by the assessee against the order of the Learned Commissioner of Income-tax (Appeals), Mumbai/National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”] dated 21.02.2025 passed u/s. 250 of the Income-tax Act, 1961 [hereinafter referred to as “Act”] for the Assessment Year [A.Y.] 2013-14.
& 1955/mum/2025. 2. The grounds of appeal are as followed: “ The Appellant individual is aggrieved by the assessment order dated 28/08/2017 passed u/s. 144 r w.s. 147 of the Income Tax Act, 1961 and order dated 10/10/2019 passed u/s. 154 of the Income-Tax Act. 1961 by the Income Tax Officer Ward- 28(1)(2), Mumbai (AO) and is in appeal
1. BECAUSE, the impugned proceedings are void ab initio since notice u/s. 148 has not been validly served on the Appellant, thereby making entire proceedings null and void 2 BECAUSE, the impugned assessment order could not have been passed u/s. 144 of the Act in absence of valid service of notice u/s 142(1) and section 144 of the Act. 3 BECAUSE, the AO was duty bound to serve the notice by hand delivery or affixture as per CPC where the notices were not being served through post. Addition of Rs. 126,00,000/- under the head Short term Capital Gain ("STCG) 4 BECAUSE, the AO has erred in law and on facts in making the addition of Rs. 126,00,000/- as short term capital gain on assignment of leasehold rights in said plot to Mr. Habib Umer Khan (Prop. M/s. Planet Builders and Developers).
5. BECAUSE, while calculating the short term capital gain of Rs.1,26,00,000/-, the AO has erred in law and on facts in considering the cost of acquisition of "leasehold rights" in the said plot as nil instead of Rs.1,98,00,000/- and indexation thereto.
6. BECAUSE in any case, the amount received on assignment of award received on compulsory acquisition of the original land is exempt from tax. Unexplained cash credit Rs.24,50,000/- and accrued interest on it Rs. 155,167/-: 7. BECAUSE, the AO has erred in law and on facts in treating an amount of Rs. 24,50,000/- as unexplained cash credit.
8. BECAUSE, the AO has erred in law and on facts in calculating Rs.155,167/- as accrued interest @ 9.5% on deposit of Rs.24,50,000/- and treated it as income of the Appellant.
BECAUSE, the AO has erred in law and on facts in duplicating the income and the application to the tune of Rs 24,50,000/-. The Appellant firm craves leave to add, alter, amend, modify, withdraw or delete any grounds of appeal.
1. BECAUSE, the Impugned penalty proceedings are vold ab initio since notice dated 28/08/2017 issued u/s. 274 r.w.s. 271(1)(c) for initiation of penalty has not been validly served on the Appellant, thereby making entire proceedings null and void. 2. BECAUSE, the notice for initiation of penalty is invalid and vague since the AO has not mentioned whether the penalty is for "concealment" or for "furnishing inaccurate particulars of income". & 1955/mum/2025.
BECAUSE, the AO has erred in initiating penalty for "concealment of income" but levying penalty amounting to Rs.45,18,148/- on the ground that the assessee had filed "Inaccurate particulars of income" amounting to Rs.152,05,167/-.
4. BECAUSE, the AO has not considered that the conditions prescribed u/s 271(1)(c) were not fulfilled for levy of penalty for the additions made.
5. BECAUSE, the AO has erred in levying penalty amounting to Rs.45,18,148/-on the ground that the assessee had filed "inaccurate particulars of income" amounting to Rs.152,05,167/-. The Appellant firm craves leave to add, alter, amend, modify, withdraw or delete any grounds of appeal.”
As common facts are involved in both the appeals, these are being disposed off by a common order. 3. Brief facts of the case are that the assessee, was a farmer, and had not filed his return of income. Subsequently, on the basis of information available with the department, the ld. AO issued a notice u/s. 148 on 04.11.23016 requiring him to file return of income for A.Y. 2013-14.
As no compliance was made to any of the notices, the assessment was completed ex-parte u/s. 144 r.w.s 147 of the Act, computing income at Rs. 15,20,51,167/- comprising of capital gains and unexplained cash credit. He also initiated penalty u/s. 271(1)(c) of the Act.
Aggrieved, by the assessment order the assessee filed an appeal before Ld. CIT(A). Subsequently, due to non-compliance by the assessee during penalty proceedings also, ld. AO levied a penalty of Rs. 45,18,148/- u/s. 271(1)(c) for furnishing inaccurate particulars of income. Aggrieved, the assessee preferred appeals before ld. CIT(A) against the assessment as well as the penalty order.
& 1955/mum/2025. Due to non-compliance during the appellate proceedings as well, ld CIT(A) dismissed both the appeals ex-parte vide orders dated 21.02.2025. Against these orders, the assessee has filed appeals before the Tribunal.
Before us, Ld. AR has submitted that the assessee was an illiterate farmer who is no more now and the appeal is filed by this legal heir. It has been further explained that due to lack of awareness, proper compliance could not be made during the assessment, penalty and appellate proceedings. He has, therefore, requested for remanding both the orders to ld. AO for fresh adjudication on merits. Ld. DR has not controverted the above proposition.
We have heard the rival submissions and perused the material on record. After considering the facts and circumstances of the case, in the interest of justice, we deem it appropriate to restore the assessment order as well as the penalty order to ld. jurisdictional AO for fresh adjudication on merits after giving due opportunity to the assessee. The assessee is also directed to make requisite compliance before the ld. AO.
In the result, both the appeals are allowed for statistical purposes.
Order Pronounced in Open Court on 30.09.2025