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Facts
The assessee, engaged in a travel agency business, did not file a return of income for AY 2018-19 as their income was below the threshold. Subsequently, a notice under Section 148 was issued for reopening the assessment. Due to technical glitches, the assessee could not upload submissions, leading the AO to pass an ex-parte order. Similar issues arose with penalty proceedings under Sections 270A and 272A(1)(d).
Held
The Tribunal held that the assessee was not given a proper opportunity of being heard by the AO, which is a mandatory requirement for a valid assessment order. Therefore, the assessment order, the order of the CIT(A), and the Tribunal's earlier order were set aside.
Key Issues
Whether the ex-parte assessment and penalty orders passed by the AO without providing a proper opportunity of hearing to the assessee are sustainable in law.
Sections Cited
148, 148A, 144, 270A, 272A(1)(d), 142(1)
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Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI
Before: SHRI ABY T. VARKEY & SHRI JAGADISH
आदेश / O R D E R
PER ABY T. VARKEY, JM:
1. These are appeals preferred by the assessee against three separate orders of the Learned Commissioner of Income Tax (Appeals)-/NFAC, Delhi (hereinafter in short ‘the Ld.CIT(A)’), all dated 09.08.2024 for the Assessment Year 2018-19 (hereinafter in short ‘AY’). to 2594/Chny/2024 (AY 2018-19) Shri Niyamathullah Syed :: 2 ::
2. At the outset, the Ld.AR of the assessee drew our attention to Ground No.1 preferred by assessee and contended that the Ld.CIT(A) as well as AO erred in passing ex-parte orders without hearing the assessee. According to Ld.AR, the assessee was running a travel agency during AY 2018-19 and since his income was below the threshold limit, the assessee didn’t file any return of income (RoI); And later, the assessee received a notice u/s.148 of the Income Tax Act, 1961 (hereinafter the ‘Act’) dated 30.04.2021, for re-opening the assessment for AY 2018-19, pursuant to which, assessee filed RoI declaring total income of Rs.2,18,730/- and claimed refund of Rs.72,820/-. Then, pursuant to the Hon’ble Supreme Court order in Ashish Aggarwal case, fresh notices were issued by AO u/s.148A(b) and pursuant to which, assessee again filed RoI (supra); and then AO passed order u/s.148A(d) & issued notice u/s 148 of the Act on 27.07.2022 and then, AO passed ex-parte order on 25.05.2023 adding the entire purported contract receipt of Rs.1,26,65,249/-. The Ld.AR assailing the action of AO, drew our attention to the first page of the Assessment Order, and showed us that the AO has passed the assessment order ex-parte on 25.05.2013 u/s.144 of the Act, i.e. best to 2594/Chny/2024 (AY 2018-19) Shri Niyamathullah Syed judgment assessment because assessee couldn’t upload the written submissions (WS) due to technical glitches; and therefore, the AO presumed that assessee was not interested in responding to the queries raised by him, which led him to pass the ex-parte order on 25.05.2023. Further, the Ld.AR pointed out that us that assessee got a letter dated 17.01.2023 from Department stating that proceeding initiated on 30.04.2021 u/s.148 of the Act has been closed. So, assessee was confused about the contradicting actons taken for AY 2018-19, i.e. on one hand the AO making addition and on the other hand dropping the proceedings against the assessee. Be that as it may be, the main grievance of the assessee is against the action of both authorities passing orders without hearing the assessee. According to assessee, he was in the dark about the assessment proceedings and hence couldn’t upload the relevant documents called for by AO due to technical glitches which led the AO to pass ex-parte assessment order.
Therefore, Ld.AR citing the decision of the Hon’ble Supreme Court in the case of TIN Box Company v. CIT reported in [2001] 249 ITR 216 (SC), prayed that one more opportunity be granted to assessee, since he didn’t get proper opportunity before the AO. The Hon’ble Supreme Court in the case of TIN Box (supra) held as under: to 2594/Chny/2024 (AY 2018-19) Shri Niyamathullah Syed :: 4 ::
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 straightaway agree with the assessee's submission that the Income-tax Officer 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 selling 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.
Two questions were placed before the High Court, of which the second question is not pressed.
The first question reads thus:
"1. Whether, on the facts and in the 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 asses-see.
The appeals are allowed. The order under challenge is set aside. The assessment order, 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.
3. Since, we note that despite assessee filing RoI pursuant to notice u/s.148A(b) of the Act, due to technical glitches on the digital system, assessee wasn’t able to upload his written submissions which led the AO to presume that assessee wasn’t interested in answering his queries and therefore, he passed the ex-parte Assessment Order by adding the entire contract receipt (supra). Therefore, since assessee didn’t get proper opportunity before AO, we set aside the impugned to 2594/Chny/2024 (AY 2018-19) Shri Niyamathullah Syed order of the Ld.CIT(A) and restore the assessment back to the file of the AO for de novo assessment. Needless to say that assessee be given proper opportunity of hearing. And the Ld.AR, Advocate Shri Anandh.S has undertaken to appear / participate in the assessment proceedings and it is clarified that the assessee is at liberty to file relevant documents as well as written submissions on the issue raised by the AO and we expect the assessee/Ld AR to be diligent and file relevant documents before AO without seeking any adjournment without just cause. And the AO is directed to frame fresh assessment order in accordance to law.
4. This is an appeal filed by the assessee against the order of the Ld.CIT(A) confirming the penalty levied by AO u/s.270A of the Act.
Since, we have set aside the quantum assessment, supra, back to the file of the AO, consequentially this penalty appeal also has to be set aside back to the file of the AO to de novo initiate if it is found necessary after the assessment order has been framed as directed (supra).
5. This is an appeal filed by the assessee against the order of the Ld.CIT(A) confirming the penalty levied by AO u/s.272A(1)(d) of the to 2594/Chny/2024 (AY 2018-19) Shri Niyamathullah Syed :: 6 ::
Act. Brief facts are that the assessee didn’t respond to the notices issued u/s.142(1) of the Act dated 02.01.2023 & 23.01.2023; and the AO issued notice of penalty u/s.270A(1)(d) of the Act for non- compliance of notices issued u/s.142(1) of the Act and thereafter, levied penalty of Rs.10,000/- for each default and thus, levied penalty of Rs.20,000/-. The Ld.AR explained that the assessee’s omission to respond/reply was not intentional but was because of technical glitches. Be that as it may, considering the Ld.AR’s undertaking that he will be diligent and ensure that such actions/omissions in future doesn’t happen, we reduce the penalty imposed of Rs.20,000/- to Rs.10,000/-, which will be remitted within 30 days from receipt of this order and produce proof of it to AO, before the assessee participate in the proceedings before the AO as directed by us (supra)
In the result, appeal filed by the assessee in is partly-allowed and the other two appeals in & 2593/CHNY/2024 are allowed for statistical purposes.
Order pronounced on 14th February, 2025 at Chennai.