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Facts
The assessee, a partnership firm, did not file its return of income for AY 2018-19 due to partner disputes and business discontinuation. Notices regarding assessment and penalty were sent to incorrect email IDs, not reaching the assessee. The assessment order and penalty were passed without proper opportunity to be heard.
Held
The Tribunal held that both the Assessing Officer (AO) and the CIT(A) passed their orders without granting the assessee a reasonable opportunity to present its case, violating principles of natural justice. Notices were sent to incorrect email addresses, and orders were passed prematurely.
Key Issues
Whether the AO and CIT(A) violated principles of natural justice by issuing notices to incorrect email IDs and passing orders without granting a reasonable opportunity of being heard to the assessee.
Sections Cited
250, 271B, 275, 273B, 44AB, 148A, 148, 142(1), 144
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘A’ BENCH : BANGALORE
Before: SHRI LAXMI PRASAD SAHU & SHRI SOUNDARARAJAN K.
ORDER PER SOUNDARARAJAN K., JUDICIAL MEMBER
This is an appeal filed by the assessee challenging the order of the NFAC, Delhi dated 29/10/2024 in respect of the A.Y. 2018-19 and raised the following grounds of appeal:
1. The impugned order has been passed without appreciating the factual and the legal position in the proper perspective and also without looking into the provisions of the Act and hence the same is liable to be set aside in limine. 2.0 Under the facts and circumstances of the case, the appellant respectfully submits that the Honorable CIT(A) did not provide a reasonable opportunity for being heard Section 250(2) of the Income Tax Act. The Honorable CIT(A) issued a notice under Section 250 of the Act, directing the appellant to file a written submission on or before 29th October 2024. However, the impugned order under Section 250 was passed on 29th October 2024 itself, prior to the appellant filing the submission. Consequently, the appellant was deprived of a reasonable opportunity to present its case, contrary to the principles of natural justice. 3.0 Under the facts and circumstances of the case, the entire penalty proceedings is liable to be squashed for the matter of fact that the notice u/s 271B dt. 18.01.2024 was served on wrong e-mail ID: manikya@gmail.com and not to the appellant's e-mail ID: keshavapatali177@gmail.com, which was registered on the IT portal profile of the appellant and hence entire proceedings, is defective and liable to be squashed at the threshold.
4.0 Without prejudice to the above grounds, under the facts and circumstances of the case, the learned assessing officer has exceeded his jurisdiction while passing impugned penalty order u/s 271B dt. 24.06.2024 as there is a specific bar on levy of penalty when there is pending of appeal proceedings before the Hon'ble Commissioner of Income Tax u/s 275, especially the determination of turnover itself is the matter of dispute in the impugned assessment order dt. 18.01.2024. Hence, the entire penalty order is liable to be squashed as it has been passed without jurisdiction. 5.0 Without prejudice to the above grounds, under the facts 86 circumstances of the case, the lower authorities should have appreciated that the appellant was prevented by a reasonable cause within the meaning of section 273B of the Income Tax Act in not getting the audit as per the provisions of section 44AB of The Income Tax Act, therefore, there was no justification in the levy of penalty under section 271B of the Income Tax Act. 6.0 Without prejudice to the above grounds, under the facts and circumstances of the case, the learned assessing officer has erred in determination of turnover of the appellant. Hence, the penalty levied u/s 271B is not justified and liable to be deleted.
7.0 Without prejudice to the above grounds, the appellant submits that the levy of penalty is not justified in facts and circumstance and liable to be deleted. The appellant is aggrieved by the said order and hence this appeal. The Appellant craves to add, amend and/or rescind any of the above submissions before or at the time of hearing. The Appellant also crave leave to rely upon any judgment/case law as and when produced. In view of the above and other grounds that may be urged at the time of the hearing of the appeal, the appellant prays that the appeal may be allowed in the interest of justice and equity.”
The brief facts of the case are that the assessee is a partnership firm and during the relevant Assessment Year, the assessee had not filed their return of income since there were disputes between the partners. Moreover, the assessee also incurred heavy losses and the business was discontinued from the F.Y. 2018-19. Subsequently, the AO had issued a notice u/s. 148A(b) of the Act to the email ID gpseema@yahoo.co.in and thereafter order u/s. 148A(d) was issued for the reason that the assessee had not responded to the notices. Thereafter, notice u/s. 148 was issued to the email ID manikya@gmail.com . The assessee filed their return of income and claimed loss. Subsequently, the assessment proceedings were conducted by the AO and the 142(1) notice was issued to the email ID manikya@gmail.com which relates to the counsel who had represented the case. The assessee was not informed by the counsel since the above email IDs were not related to the assessee. The email ID of the assessee is keshavapatali177@gmail.com which is also registered in the IT portal whereas the said notices were issued to the email IDs which are not related to the assessee. Therefore the AO had made an assessment u/s. 144 in which the AO had estimated the income. Subsequently, a penalty notice u/s. 271B was issued to the email ID manikya@gmail.com but the said notice was also not brought to the notice of the assessee. The assessee came to know about the proceedings only when the AO had informed the assessee about the assessment order passed, Ld.CIT(A). The assessee also informed the AO that the appeal has been filed against the quantum appeal and requested the AO to keep the penalty proceedings in abeyance till the disposal of the appeal. The AO without considering the said request had passed the penalty order u/s. 271B against which the assessee filed an appeal before the Ld.CIT(A). The Ld.CIT(A) also issued a notice dated 22/10/2024 and granted time upto 29/10/2024. Before the assessee filed their written submissions within the stipulated time i.e. on 29/10/2024, the Ld.CIT(A) on 29/10/2024 itself at about 01:37 PM had passed the order dismissing the appeal for the reason that the assessee had not responded to the notice dated 22/10/2024. As against the said order, the assessee is in appeal before this Tribunal.
At the time of hearing, the Ld.AR field a paper book in which the copy of the notice issued by the Ld.CIT(A) and the screenshot of the portal in which the assessee’s email ID has been mentioned as keshavapatali177@gmail.com was mentioned and also the screenshot of the notice issued u/s. 271B were filed to show that the penalty notice was issued to a different email ID. The Ld.AR therefore submitted that no reasonable opportunity was granted before imposing the penalty as well as before the order passed by the Ld.CIT(A) and prayed an opportunity.
The Ld.DR relied on the order of the lower authorities and prayed to dismiss the appeal.
We have heard the arguments of both sides and perused the materials available on record.
We have perused the paper book submitted by the assessee in which in page 31, the screenshot of the penalty notice was enclosed which was sent to the email ID manikya@gmail.com whereas the assessee’s email ID as per the portal is keshavapatali177@gmail.com. Therefore the AO before imposing the penalty order, had not served the notice to the assessee and therefore we are of the view that no effective opportunity was granted. Further, we have perused the notice issued by the Ld.CIT(A) dated 22/10/2024 which was available in page 26 of the paper book from which we came to know that the Ld.CIT(A) had given time upto 29/ 10/2024 but unfortunately the Ld.CIT(A) without waiting for the office working hours, had passed the order on 29/10/2024 itself at about 01:37 PM. In similar circumstances, there are various High Court rulings which mandates that the authorities ought to have waited upto the office hours of the last day for filing the response otherwise the order passed by the authority on the last day would amounts to violating the principles of natural justice. We are also satisfied that both the assessment order as well as the appellate order were passed against the principles of natural justice without granting a reasonable opportunity to the assessee to submit their objections / written submissions and therefore we are setting aside the order of both the authorities and remit the issue to the file of the AO for deciding the issue afresh after hearing the assessee.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on 24th March, 2025.