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Income Tax Appellate Tribunal, “C” BENCH, MUMBAI
Before: SHRI ABY T. VARKEY, JM & SHRI S. RIFAUR RAHMAN, AM
O R D E R PER ABY T. VARKEY, JM: These are appeals preferred by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals)-50 Mumbai dated 21.03.2022 for the assessment year 2011-12 confirming both the quantum as well as penalty levied by the AO u/s 271(1)(c) of the Income Tax Act, 1961 (hereinafter “the Act”).
First we will take up the quantum appeal. At the outset, the Ld. AR of the assessee brought to our notice that the AO has framed the assessment order for AY. 2013-14 by order dated 11.03.2016 u/s 144 r.w.s. 143(3) of the Act (best judgment assessment). According to the Ld. AR, the assessee had handed over the entire case file to Mr. T. J. Sodha, Chartered Accountant (CA) to represent on behalf of the assessee. However, the assessee came to know about the best judgment assessment order passed u/s 144 of the Act only on 11.03.2016, and A.Y. 2013-1 Chevron Metal Products Pvt. Ltd. when the assessee confronted the Ld. AR as to why he did not represent the case before the AO, he pleaded that he will ensure that the appeal would be duly filed before the Ld. CIT(A); and later to the astonishment of the assessee when it inquired about the status of the appeal filed against the expert assessment order, it came to light that appeal was not filed by Ld. AR. Then the assessee persuaded and ensured filing of the appeal which was finally filed on 19.09.2017. Thus, there was delay of more than one (1) year. According to the Ld. AR, aforesaid facts are supported by a sworn affidavit of the managing director of the assessee. Therefore, the Ld. AR submitted that the assessee was kept in dark throughout the proceeding before the AO as well as before the Ld. CIT(A) which led to the case being decided without representation and resulted in ex-parte order being passed by the AO and Ld CIT(A). It was brought to our notice that despite the Ld. CIT(A) had called for the remand report from AO (remand report dated 13.05.2019 placed at page no. 14-19 of the PB), the Ld. CIT(A) without looking into the remand report was pleased to dismiss the appeal on the ground that there was no reasonable cause for condoning the delay. In the aforesaid factual scenario, the limited prayer of the Ld. AR is that, since the assessee did not get proper opportunity before the AO, as per the Hon’ble Supreme Court decision in the case of Tin Box Company Vs. CIT (249 ITR 216)(SC), since the assessee did not get proper opportunity before the AO, the matter may be restored back to the file of the AO for denovo assessment. A.Y. 2013-1 Chevron Metal Products Pvt. Ltd.
Per contra, the Ld. DR vehemently opposed such a plea and submits that the assessee could not be given a second innings.
We have heard both the parties and perused the records. We note that the AO had framed assessment u/s 144 of the Act [i.e. best judgment assessment] since none-appeared on behalf of assessee and produced any details called for by him. The assessee has filed an affidavit which states that the assessee had handed over the case file to Mr. T. J. Sodha, Chartered Accountant (CA). However, the Ld. AR did not appear before the AO which eventually led to the AO passing the best judgment assessment (exparte order). Before the Ld. CIT(A), there was delay which was caused also due to the negligence on the part of the AR. It was brought to our notice that even though the Ld. CIT(A) had called for the remand report from the AO (which was furnished by the AO vide letter dated 13.05.2019 found placed at page no. 14 to 19 of the PB) but, the Ld. CIT(A) without looking into the remand report, dismissed the appeal of assessee on the ground of delay, (in filing the appeal). The Ld. AR of the assessee, brought to our notice the decision of the Hon’ble Supreme Court in the case of Tin Box Company (supra) where in similar circumstances has held that if an assessee did not get proper opportunity before the AO, then the assessment should be remanded back to the AO for denovo assessment. For easy reference, the order of the Hon’ble Supreme Court in the case of Tin Box Company (supra) wherein the Hon’ble Supreme Court has held as under: - A.Y. 2013-1 Chevron Metal Products Pvt. Ltd. “ It is unnecessary to go into great detail in these matters for there is a statement in the order of the Tribunal, the fact-finding authority, that reads thus : "We will straightway agree with the assessee's submission that the ITO had not given to the assessee proper opportunity of being heard." That the assessee could have placed evidence before the first appellate authority or before the Tribunal is really of no consequence for it is the assessment order that counts. That order must be made after the assessee has been given a reasonable opportunity of setting out his case. We, therefore, do not agree with the Tribunal and the High Court that it was not necessary to set aside the order of assessment and remand the matter to the assessing authority for fresh assessment after giving to the assessee a proper opportunity of being heard. 2. Two questions were placed before the High Court, of which the second question is not pressed. The first question reads thus : Whether, on the facts and in the "1. circumstances of the case, the Tribunal was justified in not setting aside the assessment order in spite of a finding arrived at by it that the Income-tax Officer had not given a proper opportunity of hearing to the assessee ?" In our opinion, there can only be one answer to this question which is inherent in the question itself : in the negative and in favour of the assessee. 3. The appeals are allowed. The order under challenge is set aside. The assessment orders, that of the Commissioner (Appeals) and of the Tribunal are also set aside. The matter shall now be remanded to the assessing authority for fresh consideration, as aforestated. No order as to costs.” A.Y. 2013-1 Chevron Metal Products Pvt. Ltd.
Since we have found in the present case that no proper opportunity the assessee got before the AO, we relying on the aforesaid decision of the Hon’ble Supreme Court in the case of Tin Box Company (supra) set aside the impugned order of the Ld. CIT(A) and remand the same back to the file of the AO and direct the AO to frame the assessment de-novo after hearing the assessee in accordance to law. The assessee is at liberty to file documents/material/written submission before the AO to substantiate its return of income. And we direct the assessee to be diligent before the AO during the assessment proceedings as undertaken before us.
This is an appeal preferred by the assessee against the penalty levied by the AO dated 29.09.2016 pursuant to the quantum appeal for AY. 2013-14. Since the quantum appeal for AY. 2013-14 has been set aside back to the file of the AO for denovo assessment, the penalty confirmed by the Ld. CIT(A) also need to be set aside and we do so.