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Facts
The assessee filed three appeals against ex-parte orders of the learned CIT (A)-NFAC Delhi, which dismissed the appeals for non-prosecution. These orders pertained to penalty proceedings under Section 270A of the Income Tax Act for AYs 2017-18 & 2018-19, and an assessment order under Section 144 for AY 2018-19. The assessee contended non-receipt of hearing notices and that penalties were not justified, especially where underlying additions were deleted or disallowances did not constitute 'misreporting' of income.
Held
The Income Tax Appellate Tribunal (ITAT) found that the CIT(A)'s ex-parte dismissal without considering the assessee's claims regarding non-receipt of notices and the merits of the penalty and disallowance issues was not justified. Consequently, the ITAT set aside the impugned orders and remanded all three matters back to the CIT(A) for fresh adjudication, ensuring the assessee is given a proper opportunity of hearing and speaking orders are passed.
Key Issues
Whether the CIT(A) erred in passing ex-parte orders without granting a reasonable opportunity of hearing, and whether penalties levied under Section 270A were justified despite the deletion of underlying additions or the nature of disallowances.
Sections Cited
270A, 144, 250, 14A, 270A(9)
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Income Tax Appellate Tribunal, Hyderabad ‘ DB-A ‘ Bench, Hyderabad
Before: Shri Vijay Pal Rao, Vice-Shri Manjunatha, G.
ORDER
Per Vijay Pal Rao, Vice President These 3 appeals by the assessee are directed against the 3 separate orders of the learned CIT (A)-NFAC Delhi, dated 21/02/2025 and 25/02/2025 arising from the penalty orders passed u/s 270A of the I.T. Act for the A.Ys.2017-18 & 2018-19 and assessment order u/s 144 of the Act for the A.Y 2018-19 respectively.
The assessee has raised the following grounds of appeals:
Page 1 of 5 “1. The Ld CIT (A) erred in passing an ex parte order without giving reasonable opportunity to the appellant. 2. The Ld CIT (A) erred failed to appreciate that the notice of hearing which was fixed by the appellate authority was not received by the appellant. 3. The Ld CIT(A) deleted the additions of Rs.10,44,000/- in the assessment order and passed order U/s.250 of the income tax Act. 4. The Ld CIT (A) erred in considering the documents submitted at the time of filing an appeal.”
“1. The Ld CIT (A) erred in passing an ex parte order without giving reasonable opportunity to the appellant.
2. The Ld CIT (A) erred failed to appreciate that the notice of hearing which was fixed by the appellate authority was not received by the appellant.
3. The Ld CIT(A) erred in considering un reasonable disallowance, fixed percentage of salaries without specific evidences, of Rs.8,45,124/- is illegal in the eyes of the law.
4. The Ld CIT (A) erred in considering the documents submitted at the time of filing an appeal for the actual payment of EPF challans Rs.29,85,450/- and disallowance of Rs.7,03,615/- is illegal and violation of principles of natural justice.
5. The Ld CIT (A) erred in considering penalty levied on the appellant under section 270A of the income tax act,1961 for mis-reporting of income due to disallowance of expenditure on its own estimation and enhanced the Assessed income from Rs.51,600/- to Rs.16,00,340/-. I further state that disallowance under section 14A of the income tax act 1961 does not fall in any limb of "Misreporting" of income under section 270A(9) of the income tax act”
“1. The Ld CIT (A) erred in passing an ex parte order without giving reasonable opportunity to the appellant.
2. The Ld CIT (A) erred failed to appreciate that the notice of hearing which was fixed by the appellate authority was not received by the appellant.
3. The Ld CIT(A) erred in considering un reasonable disallowance, fixed percentage of salaries without specific evidences, of Rs.8,45,124/- is illegal in the eyes of the law.
The Ld CIT (A) erred in considering the documents submitted at the time of filing an appeal for the actual payment of EPF challans Rs.29,85,450/- and disallowance of Rs.7,03,615/- is illegal and violation of principles of natural justice.”
None has appeared on behalf of the assessee when these appeals were called for hearing despite repeated notices issued to the assessee. Accordingly, the Bench proposes to hear and dispose of these appeals ex-parte.
4. In the grounds of appeal, the assessee has challenged the impugned orders passed by the learned CIT (A) without giving reasonable opportunity to the assessee. It is stated that the learned CIT (A) has failed to appreciate that notice of hearing were not received by the assessee. Further, in the penalty appeal, the assessee has also stated that for the A.Y 2017-18, the learned CIT (A) has deleted the addition made by the Assessing Officer in the quantum appeal, therefore, the confirmation of the penalty u/s 270A of the Act is not justified. For the A.Y 2018-19, the assessee has stated that apart from ex-parte orders passed by the learned CIT (A) the disallowance were made by the Assessing Officer on adhoc basis towards salaries, EPF payment and disallowance u/s 14A of the Act which do not invite the penal provisions u/s 270A of the Act.
On the other hand, the learned DR has submitted that there is non-compliance on the part of the assessee to the notices issued by the Assessing Officer as well as by the learned CIT (A). He has relied upon the impugned orders of the learned CIT (A).
Having considered the grounds of appeal, submissions of the learned DR and careful perusal of the orders of the learned CIT (A), at the outset, we note that the learned CIT (A) has passed all the three impugned orders ex-parte, and the appeals of the assessee were dismissed for non-prosecution. Further, once the assessee has raised the issue of non-receipt of the notices by the assessee and also penalty confirmed by the learned CIT (A) in respect of the disallowances made by the Assessing Officer which was deleted in the quantum proceedings and some of the disallowances are also claimed to be not falling in the category of understatement of the income or concealment of the income of the assessee, then the dismissal of the appeals by the learned CIT (A) without considering all these aspects in the ex-parte order is not justified. Accordingly, in the facts and circumstances of the case, we set aside the impugned orders passed by the learned CIT (A) arising from penalty orders passed u/s 270A of the Act for the A.Ys 2017-18 and 2018-19 as well as the assessment order arising u/s 144 of the Act for the A.Y 2018-19 and remand all these 3 matters to the record of the learned CIT (A) for fresh adjudication after giving an appropriate opportunity of hearing to the assessee by passing speaking orders.
In the result, all the 3 appeals filed by the assessee are allowed for statistical purposes.