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Income Tax Appellate Tribunal, BANGALORE BENCHES “C”, BANGALORE
Before: Shri George George K, JM & Ms.Padmavathy S, AM
Appellant by : Sri.Rajinish Rama Rao, AR Respondent by : Sri.Praveen Karanth, CIT -DR Date of Pronouncement : 15.06.2022 Date of Hearing : 13.06.2022 O R D E R
Per George George K, JM :
This appeal at the instance of the assessee is directed against CIT(A)’s order dated 15.09.2021. The assessee has also preferred stay application seeking to stay outstanding demand. The relevant assessment year is 2013-2014.
The solitary issue raised is whether the CIT(A) is justified in confirming the penalty imposed u/s 271(1)(c) of the I.T.Act.
The brief facts of the case are as follow:
2 & SA No.113/Bang/2021 M/s.Kshema Geo Holdings Private Limited. The assessee is a private limited company engaged in the business of investment in real estate. For the assessment year 2013-2014, the return of income was filed on 28.09.2013 declaring loss of Rs.4,26,678. There was a survey u/s.133A of the I.T.Act conducted in the business premises of the assessee on 17.02.2017. During the course of survey proceedings, the Director of the assessee-company was asked to explain the information with regard to the purchase of shares by the assessee-company from M/s.Zebra Cross Resorts Pvt. Ltd. A statement was recorded from the Director of the assessee-company, wherein he admitted an additional income of Rs.72.19 lakh for the relevant assessment year as taxable u/s 56(2)(viia) of the I.T.Act. Consequent to the survey proceedings to bring to tax the admitted additional income of Rs.72.19 lakh, the assessment for the relevant assessment year was reopened by issue of notice u/s 148 of the I.T.Act. In response to the notice, the assessee filed a return on 20.03.2017 declaring the same income as per its original return of income. Thereafter, notice u/s 143(2) of the I.T.Act was issued and served on the assessee. During the course of reassessment proceedings, the assessee filed revised return on 10.05.2017 declaring total income of Rs.56,09,642. The assessee’s AR vide its letter dated 13.06.2017 submitted that the undervaluation of the shares was only in respect of 24,340 shares and not 29,110 shares as admitted during the course of survey and the remaining shares have been valued at premium paid. The assessee’s AR furnished the necessary evidences in this regard to support the additional income of Rs.60,36,320 declared in the revised return as against the 3 & SA No.113/Bang/2021 M/s.Kshema Geo Holdings Private Limited. admitted additional income of Rs.72.19 lakh during the course of survey. After the due verification, the A.O. accepted the additional income at Rs.60,36,320 and initiated penalty proceedings u/s 271(1)(c) of the I.T.Act for concealment of income of Rs.60,36,320 by issue of notice u/s 274 r.w.s. 271(1)(c) of the I.T.Act. The A.O. vide order dated 29.05.2018, imposed a penalty of Rs.18,65,223, i.e., 100% of the tax sought to be evaded.
Aggrieved by the order imposing penalty u/s 271(1)(c) of the I.T.Act amounting to Rs.18,65,223, the assessee filed an appeal before the first appellate authority. The CIT(A) rejected all the contentions of the assessee and upheld the penalty imposed by the A.O.
Aggrieved, the assessee has filed this appeal before the Tribunal. The learned AR submitted that as on the date of hearing before the first appellate authority (i.e., on 14.05.2018), the assessee’s authorized representative appeared and furnished the proof of payment of tax, however, did not furnish any written submission against the proposed levy of penalty, since he was not sure to which year penalty notice has been issued. It was stated that the A.O. instead of giving another hearing passed an order u/s 271(1)(c) of the I.T.Act. Therefore, it was submitted that the assessee was not given an opportunity to present its case and it is against all the principles of natural justice.
The learned Departmental Representative had produced the assessment records. It was submitted by the learned DR
4 & SA No.113/Bang/2021 M/s.Kshema Geo Holdings Private Limited. that in the penalty notice issued u/s 274 r.w.s. 271(1)(c) of the I.T.Act, the assessment year is clearly mentioned, hence, the contention of the assessee that the relevant assessment year is not mentioned in notices is incorrect.
We have heard rival submissions and perused the material on record. The assessee was directed to show cause why penalty should not be imposed and the case was fixed for hearing on 14.05.2018. The authorized representative of the assessee appeared on the said date and furnished the proof of payment of tax that is declared in the revised return filed pursuant to notice u/s 148 of the I.T.Act. However, the authorized representative did not furnish any written submission against the proposed levy of penalty. Thereafter, the A.O. passed penalty order without giving any other hearing date. In the interest of justice and equity, we are of the view that the assessee should be given one more opportunity to present its case as regards the imposition of penalty. Therefore, the order passed by the A.O. imposing penalty and the order of the CIT(A) sustaining the same are set aside. The matter is restored to the files of the A.O. for de novo consideration of imposition of penalty. The assessee shall furnish necessary explanation in defence of its case. Needless to say, the A.O. shall afford a reasonable opportunity of hearing to the assessee before a decision is taken in the matter. It is ordered accordingly.
SA No.113/Bang/2021 8. Since the appeal is disposed of, the stay application becomes infructuous and the same is dismissed.
In the result, the appeal filed by the assessee is allowed for statistical purposes and the stay application is dismissed.
Order pronounced on this 15th day of June, 2022.