RAM GOPAL VARMA PENUMATSA,HYDERABAD vs. INCOME TAX OFFICER, WARD-14(1), HYDERABAD

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ITA 826/HYD/2024Status: DisposedITAT Hyderabad16 January 2025AY 2008-096 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the Ld. CIT(A) passed the impugned order on 27.06.2024 without considering the submissions filed by the assessee on the same date. The Tribunal noted that the assessee does not stand to gain by not producing documents and is now ready to produce all documentary evidence. Considering the principle of natural justice, the Tribunal decided to grant one last opportunity to the assessee. Accordingly, the impugned order of the Ld. CIT(A) was set aside, and the issue was restored to the file of the Ld. CIT(A) for passing a fresh order on merits after affording an opportunity of hearing to the assessee. The grounds of appeal were answered accordingly. The Tribunal did not decide the substantive issues of penalty or the merits of the assessee's claim but remanded the matter for a fresh adjudication.

What were the facts?

The assessee, Shri Ram Gopal Varma Penumatsa, an individual and film director, filed his return for AY 2008-09 declaring an income of Rs.60,64,590. His case was selected for scrutiny, and notices under sections 143(2) and 142(1) were issued. The Assessing Officer (AO) also issued summons under section 131 on six occasions, to which the assessee made no response. Consequently, the AO levied a penalty of Rs.60,000 under section 272A(1)(c) on 29.11.2010. The assessee appealed to the CIT(A), who confirmed the AO's order, stating the assessee provided no proof of travel or adjournment letters. The ITAT, in the first round, remanded the matter to the CIT(A) for fresh adjudication, citing principles of natural justice. In the second round, the assessee again failed to produce evidence before the CIT(A), who dismissed the appeal. The assessee then filed the present appeal before the ITAT.

What were the issues?

1. Whether the penalty order passed by the Ld. CIT(A) under section 250 is erroneous both on facts and in law to the extent it is prejudicial to the assessee (mixed question of law and fact, concerning the validity of the penalty order). 2. Whether the Ld. CIT(A) erred in dismissing the assessee's appeal (mixed question of law and fact, concerning the appellate authority's decision). 3. Whether the Ld. CIT(A) erred in holding that the assessee lacks documentary evidence to substantiate his claim (question of fact, concerning the evidence presented). 4. Whether the Ld. CIT(A) ought to have considered the assessee's letters regarding non-attendance of summons under section 131 and ought not to have levied penalty under section 272A(1)(c) for Rs.60,000 (mixed question of law and fact, concerning the reasons for non-attendance and the levy of penalty). 5. Whether the assessee had a reasonable cause for failure to respond to summonses under section 131 (question of fact, concerning the justification for non-compliance). 6. Whether the penalty should be quashed as the main appeal was allowed in favour of the assessee (question of law, concerning the consequential effect on penalty). Assessee's contentions: The assessee argued that as a movie director, frequent travel made it impossible to attend summonses. He claimed to have submitted letters explaining his absence and later submitted evidence to the CIT(A) within the stipulated time. He prayed for one more opportunity to produce evidence. The assessee relied on the principle of natural justice and the fact that the penalty arises from the main appeal, which was allowed in his favour. The revenue contended that the assessee failed to produce necessary evidence even after the ITAT's direction in the second round and rejected the request for a fresh opportunity.

Which sections of the Income-tax Act were involved?

Section 131,Section 143(2),Section 142(1),Section 272A(1)(c),Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, Hydrabad B Bench, Hyderabad

Before: SHRI LALIET KUMAR & SHRI MADHUSUDAN SAWDIA

For Appellant: Shri P. Murali Mohan Rao, C.A, Dr. Sachin Kumar, SR-DR
For Respondent: Dr. Sachin Kumar, SR-DR
Hearing: 08/01/2025

आदेश/ORDER PER MADHUSUDAN SAWDIA, A.M.: This appeal is filed by Shri Ram Gopal Varma Penumatsa (“the assessee”), feeling aggrieved by the order passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (“Ld. CIT(A)”), dated 27.06.2024 for the A.Y. 2008- 09. 2. The assessee has raised the following grounds : “ 1. The penalty order passed by the Ld. CIT(A) u/s 250 of the Act dt. 27.06.2024 is erroneous both on facts and in law to the extent the order is prejudicial to the interest of the appellant.

2.

The Ld. CIT(A) erred in dismissing the appeal.

3.

The Ld. CIT(A) has erred in holding that the appellant does not have any documentary evidence to substantiate his claim.

4.

The Ld. CIT(A) ought to have considered the assessee's letters submitted mentioning the reasons for not attending the summons u/s 131 of the Act and ought not to have levied the penalty u/s 272A(1)(c) of the Act for Rs. 60,000/-. 5. The Ld. CIT(A) ought have appreciated the fact that the appellant has reasonable cause for his failure to respond to the summonses issued u/s 131 of the Act. 6. The Ld. CIT(A) ought to have appreciated the fact that the CIT(A) has allowed the main appeal in favour of assessee, therefore penalty arises on the same should be quashed. 7. Appellant may, add or alter or amend or modify or substitute or delete and/or rescind all or any of the grounds of appeal at any time before or at the time of hearing of the appeal.”

1.

1. 3. The brief facts are that, the assessee is an individual and carrying on the profession of directing the films. He filed his Return of Income (“ROI”) for the A.Y. 2008-09 on 07.10.2008 declaring total income of Rs.60,64,590/-. The case of the assessee was selected for scrutiny through CASS and accordingly notice u/s.143(2) and 142(1) of the Income Tax Act, 1961 (“the Act”) were issued to the assessee. The Learned Assessing Officer (“Ld. AO”) also issued summons requiring the personal attendance of the assessee on six occasions. However, no response was made by the assessee to any of the summons. Accordingly, the Ld. AO passed penalty order u/s.272A(1)(c) of the Act on 29.11.2010 levying penalty of Rs.60,000/- for each of the default @ Rs.10,000/-.

4. Aggrieved by the order of Ld. AO, the assessee filed appeal before the Ld. CIT(A). Before the Ld. CIT(A), the assessee submitted that, he being a movie director requires frequent travelling, due to which it was not possible for him to attend on the dates summoned by the Ld. AO. However, the Ld. CIT(A) confirmed the order of Ld. AO on the ground that the assessee did not file any proof of adjournment letter as well as did not file proof of travelling at the relevant point of time.

5. Aggrieved by the order of Ld. CIT(A), the assessee filed appeal before the ITAT. The ITAT remanded the issue back to the file of Ld. CIT(A) for fresh adjudication, the relevant portion of the decision of ITAT is reproduced as under : "We have considered the rival submissions and perused the material on records as well as gone through the orders of revenue authorities. It is observed that the assessee neither appeared during the course of assessment proceedings nor appeared in the penalty proceedings initiated by the Assessing Officer. Before the CIT(A) filed written submissions, wherein, it was contended that assessee was not given sufficient time to respond to the summons and further stated that the assessee being movie director requires frequent travelling, due to which it was not possible for the assessee to attend on the dates summoned by the Assessing Officer. However, the CIT(A), confirmed the order of the Assessing Officer on the grounds that the assessee has not filed proof of adjournment letters as well as not filed proof of travelling at the relevant point of time. Even before us, the Ld. Counsel for the assessee has not filed any documentary evidence to substantiate assessee's case. On considering the totality of the facts and circumstances the case, on the grounds of principles of natural justice, we are of the view that one more opportunity should be given to the assessee to represent his case. Accordingly, we set aside the order of CIT(A) and remit the matter to the file of CIT(A) with a direction to decide the issue afresh after providing reasonable opportunity of being heard to the assessee in the matter. Accordingly, the grounds raised by the assessee are allowed for statistical purposes.”

In second round, the Ld. CIT(A) called for the evidences from the assessee in support of his claim. However, in second round of appeal also, the assessee could not produce the same before the Ld. CIT(A). Accordingly, the Ld. CIT(A) dismissed the appeal of the assessee.

6.

Again aggrieved with the order of Ld. CIT(A), the assessee filed appeal before the Tribunal.

7.

The Learned Authorised Representative (“Ld. AR”) submitted that, the assessee had made submission before the Ld. CIT(A) within the stipulated time along with all the required evidences called by the Ld. CIT(A). However, the Ld. CIT(A), without considering the submission of the assessee, dismissed the appeal of the assessee. In support of their submission, the Ld. AR brought to our notice to page no.1 of paper book containing the acknowledgement of the submission made before the Ld. CIT(A). Finally, the Ld. AR prayed before the bench for providing one more opportunity to produce the necessary evidence before the Ld. CIT(A) and get their issue decided on merits.

8.

Per contra, the Learned Department Representative (“Ld. DR”) rejected to the request of the assessee for fresh opportunity. He submitted that even after the direction of ITAT, in second round also, the assessee could not produce the necessary evidence in support of his claim before the Ld. CIT(A).

9.

We have heard the rival contentions and also gone through the record in the light of the submissions made by either side. We have gone through the page no.1 of paper book containing the acknowledgement of the submission made before the Ld. CIT(A) and found that, the assessee had filed their submission before the Ld. CIT(A) on 27/06/2024 and the Ld. CIT(A) also passed his order on the same date. However, the Ld.CIT(A) passed his order without considering the submission of the assessee filed on 27/06/2024, which resulted in passing the orders without consideration thereof on merits. Further, it is a fact that the assessee does not stand to gain by not producing such documents. Be that as it may, now the assessee is ready to produce once again all such documentary evidences in support of their contentions and get the matter disposed of on merits. The highest that would happen by allowing an opportunity to the assessee is that a cause would be decided on merits. With this view of the matter and considering the principle of natural justice, we are of the view that one last opportunity should be given to the assessee. Accordingly, we set aside the impugned order and restore the issue to

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