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Facts
The assessee incurred a penalty of ₹38,93,400/- under Section 271(1)(c) of the Income Tax Act for unexplained cash credits of ₹1,20,00,000/- added to income under Section 68 r.w.s. 115BBE. The CIT(A) dismissed the assessee's appeal against this penalty ex parte due to non-prosecution.
Held
The Tribunal noted that both the penalty imposition by the AO and the appeal before the CIT(A) were decided ex parte. To ensure natural justice, the Tribunal set aside the CIT(A)'s order and remitted the appeal for fresh adjudication, directing the CIT(A) to grant the assessee a proper opportunity of being heard.
Key Issues
Whether the CIT(A) correctly dismissed the penalty appeal ex parte, thereby denying the assessee a proper opportunity of being heard.
Sections Cited
250, 271(1)(c), 68, 147, 144, 144B, 115BBE, Rule 46A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, KOLKATA ‘A’ BENCH, KOLKATA
Before: SHRI SONJOY SARMA & SHRI RAKESH MISHRA
PER RAKESH MISHRA, ACCOUNTANT MEMBER:
This appeal filed by the assessee is against the order of the Commissioner of Income Tax (Appeals)-NFAC, Delhi [hereinafter referred to as Ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for AY 2014-15 dated 01.10.2024, which has been passed against the penalty order u/s 271(1)(c) of the Act, dated 26.03.2024. I.T.A. No.: 2426/KOL/2024 Assessment Year: 2014-15 Rahul Springs Private Limited.
The assessee is in appeal before the Tribunal raising the following grounds of appeal:
“1. That the Ld. CIT(Appeals) erred in considering the facts and circumstances of the case and also in law in invoking penal section of Section 68 and imposed penalty u/s 271(1)(c) while not giving proper opportunity to the appellant for explaining the issues related to the additions.
That the Appellant craves leave to add any additional grounds or modify, withdrew any grounds as made hereinabove at the time of hearing proceeding.”
Brief facts of the case are that the assessee is a company engaged in the business of manufacturing & Tele Network etc. during the FY 2013-14. It filed its return of income for the AY 2014-15 showing total income at ₹ ‘NIL’. The Assessing Officer (hereinafter referred to as Ld. 'AO') noted that the assessee had failed to explain the credits in his bank account amounting to ₹1,20,00,000/- received from paper entities during the year and added the same to the total income of the assessee under the head ‘income from other sources’ and passed an assessment order u/s 147 r.w.s. 144 r.w.s. 144B of the Act assessing the total income at ₹1,20,00,000/- and also initiated penalty proceeding u/s 271(1)(c) of the Act and the penalty was imposed at ₹38,93,400/-. Aggrieved with the penalty order, the assessee filed an appeal before the Ld. CIT(A) who vide order dated 01.10.2024 dismissed the appeal of the assessee ex parte. Aggrieved with the order of the Ld. CIT(A), the assessee has filed the appeal before this Tribunal.
Rival contentions were heard and the record and the submissions made have been examined.
The Ld. AR requested that proper submission could not be made before the appellate authority and another opportunity may be granted I.T.A. No.: 2426/KOL/2024 Assessment Year: 2014-15 Rahul Springs Private Limited. as sufficient evidence is available with the assessee for the relief claimed. The Ld. DR relied upon the order of the Ld. CIT(A) and requested that the same may be upheld.
We have considered the submissions made, gone through the facts of the case and perused the record and the order of the Ld. CIT(A). We find that at both the stages of the penalty order before the Ld. AO as well as before the Ld. CIT(A) in the appeal, proper representation was not made on behalf of the assessee. The Ld. AO imposed the penalty by holding as under: “As per information available to this office, in this case the assessee has received accommodation entries from various entities amounting to Rs. 1,20,00,000/- during the F.Y. 2013-14 relevant to A.Y. 2014-15. The assessee has not submitted satisfactory reply on this issued therefore that AO was made addition of Rs. 1,20,00,000/- u/s 68 r.w.s. 115BBE of the I.T. Act treated unexplained money. Therefore, the assessing officer passed the assessment order u/s 144 r.w.s. 147 of the Act on 12.05.2023 on assessed income at Rs. 1,20,00,000/-. Thus, on these additions, penalty proceedings u/s 271(1) (c) were initiated vide notice dated 12.05.2023. The assessee is non responsive.”
The Ld. AO also noted that during the assessment proceedings it was established that the assessee had concealed his income of Rs. 1,20,00,000/- as discussed both in the penalty as well as the assessment orders and the assessee apparently had not filed any appeal before any appellate authority against the assessment order and therefore, imposed the penalty of Rs. 38,93,400/-. The Ld. CIT(A) dismissed the appeal filed against the penalty order by observing as under:
“7. During the course of appellate proceedings, no reply has been filed by the appellant. I have perused the order of the Assessing Officer and considered the facts of the case. The Assessing Officer has passed a speaking order with detailed discussion on the issues involved therein. The appellant has not pursued the appeal despite being granted several opportunities through notices u/s 250 of the I.T. Act. No details, documents or submissions have been I.T.A. No.: 2426/KOL/2024 Assessment Year: 2014-15 Rahul Springs Private Limited. provided by the appellant substantiating its grounds of appeal. Moreover, mere facts mentioned in Form No. 35 cannot be considered in the absence of any supporting documentary evidence and submissions. The AO has passed a reasoned and speaking order considering all the facts and the circumstances of the case. Also, the appellant has failed to bring anything on record to support its grounds of appeal and to counter the additions made by the AO. Therefore, there is no reason to interfere with the order passed by the AO. Hence, the appeal filed by the appellant is dismissed.
In result, the appeal filed by the appellant is dismissed.”
There is both the penalty as well as the appeal against the penalty were decided ex parte, primarily on account of non-prosecution on behalf of the assessee by the Ld. AR. Therefore, we deem it appropriate in the interest of justice and fair play that another opportunity needs to be provided to the assessee to represent his case properly before the Ld. CIT(A). We, therefore, set aside the order of the Ld. CIT(A) and remit the appeal to him to be decided afresh, who shall allow an opportunity of being heard to the assessee and also grant an opportunity of representing the case and be heard to the Ld. AO as per rule 46A of the Income Tax Rules, 1962, if required, and thereby pass an order in accordance with law. For statistical purposes, the appeal of the assessee is allowed.
In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on 6th August, 2025. [Sonjoy Sarma] [Rakesh Mishra] Judicial Member Accountant Member Dated: 06.08.2025 Bidhan (Sr. P.S.) I.T.A. No.: 2426/KOL/2024 Assessment Year: 2014-15 Rahul Springs Private Limited. Copy of the order forwarded to:
Rahul Springs Private Limited, Panagarh Bazar, Gt Road Panagarh, West Bengal, 713148. 2. Commissioner of Income Tax (Appeals).
CIT(A)-NFAC, Delhi.
CIT-
CIT(DR), Kolkata Benches, Kolkata.
Guard File. //// By order