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Facts
The assessee HUF constructed a residential apartment and hospital building, and the investment was found to be undisclosed. A reference was made to the DVO, who evaluated the cost of construction. The AO initiated proceedings under Section 147 for escapement of income and also initiated penalty proceedings under Section 271(1)(c). The assessee's appeal before the CIT(A)/NFAC was dismissed for non-payment of advance tax.
Held
The Tribunal held that the CIT(A)/NFAC dismissed the appeal summarily without providing an opportunity to be heard. The Tribunal noted that the quantum addition appeal, on which the penalty was based, had already been remanded. Therefore, the Tribunal set aside the order of the CIT(A)/NFAC and remanded the penalty appeal for fresh adjudication on merits.
Key Issues
Whether the CIT(A)/NFAC was justified in dismissing the appeal for non-payment of advance tax without affording an opportunity of being heard, especially when the quantum addition appeal was remanded? Whether the penalty levied under Section 271(1)(c) is sustainable when the quantum appeal is remanded for de novo adjudication?
Sections Cited
147, 148, 142A, 69, 271(1)(c), 249(4), 151, 144, 271(1)(c)
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Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE
Before: SHRI R. K. PANDA & SHRI VINAY BHAMORE
ORDER PER VINAY BHAMORE, JM: Both the above captioned appeals filed by the assessee are directed against the separate orders dated 21.10.2024 passed by Ld. CIT(A)/NFAC for the assessment years 2008-09 and 2011-12 respectively. 2. There is delay of 64 days in filing of the present appeals. We are satisfied with the reasons mentioned in the affidavit for condonation that the applicant was prevented by sufficient cause & 606/PUN/2025 for not filing the appeals within the prescribed time limit. Ld. DR has not raised any serious objection to condone the delay, therefore we condone the delay of 64 days and proceed to adjudicate the appeals.
Since identical facts and common issues are involved in both the above captioned appeals of the assessee, therefore, we proceed to dispose of the same by this common order.
First, we shall take up the appeal of the assessee in for assessment year 2008-09 as the lead case for adjudication. ITA No.605/PUN/2025, A.Y. 2008-09 : 5. The appellant has raised the following grounds of appeal :- “Ground 1. The appellant requests your honor to condone the delay of 64 days in filing the appeal as the delay was due to unforeseen circumstances beyond the control of the appellant. Ground 2. On the facts and circumstances of the case and in law, the learned NFAC erred in dismissing the appeal filed by the Appellant based on the provisions of Section 249(4) of the Income-tax Act, 1961 without providing an opportunity of being heard even though the said provisions do not apply in the present case. Ground 3. Learned CIT(A) has erred in maintaining the addition made by Ld. AO of Rs.13,42,414/- without appreciating the fact that no penalty should be imposed in cases where addition is made on a protective basis. Ground 4. Without prejudice to above ground, the Learned CIT(A) has erred in maintaining the addition made by the Ld.AO of Rs. 41,19,440/- on account of unexplained Investment & 606/PUN/2025 under section 69 of the Income Tax Act, 1961 without appreciating the fact that the reopening of the assessment of the assessee which penalty has been levied is solely based on the valuation report of DVO without satisfying provisions of Section 147 of the Act. Ground 5. The appellant craves leave to add, alter, vary, omit, amend, or delete the above grounds of appeal
1. at any time before, or at the time of the hearing of the appeal, so as to enable the Hon'ble Income-tax Appellate Tribunal (Appeals) to decide this appeal according to law.”
6. Facts of the case, in brief, are that the assessee is a HUF & has not furnished its return of income. On the basis of information that the assessee HUF has constructed a residential apartment consisting of flat and hospital building and the investment was made between financial years 2006-07 to 2009-10, but the aforesaid construction activities of the assessee was found undisclosed in the return of income, therefore in order to determine unexplained investment into the cost of construction a reference under section 142A of the IT Act was made to the Departmental Valuation Officer, Nagpur. The DVO evaluated cost of construction of the above property at Rs.2,24,51,000/- for various years starting from financial year 2006-07 to financial year 2010-11. The DVO calculated the value of investment at Rs.41,19,438/- (Rs.82,38,876 / 2 = Rs.41,19,438) by assessee for assessment year 2008-09. Therefore, as per the AO, there was reason to believe & 606/PUN/2025 that within the meaning of section 147 assessee’s income chargeable to tax at Rs.41,19,438/- being his 50% share into the above property has escaped assessment. Accordingly, after seeking approval u/s 151 of the IT Act for assessment year 2008- 09 a notice under section 148 was issued to the assessee & subsequently notices u/s 142(1) was also issued to the assessee. The Assessing Officer completed the assessment u/s 144/147 and treated an amount of Rs.41,19,438/- in the hands of the assessee on protective basis (since substantive addition was made in the hands of Karta) as unexplained investment u/s 69 of the IT Act and also initiated penalty proceedings u/s 271(1)(c) of the IT Act. Accordingly, notices u/s 271(1)(c) of the IT Act were issued but the assessee did not comply with any of the notices consequently the Assessing Officer vide order dated 27.08.2015 imposed penalty u/s 271(1)(c) of the IT Act of Rs.13,42,440/-.
7. Against the above ex-parte penalty order, the assessee HUF preferred appeal before Ld. CIT(A)/NFAC. Since the assessee HUF neither furnished its return of income nor paid any advance tax, Ld. CIT(A)/NFAC was of the view that the assessee has not satisfied the condition of making payment of advance tax as per & 606/PUN/2025 the provisions of section 249(4)(b) of the IT Act, therefore Ld. CIT(A)/NFAC dismissed the appeal filed by the assessee without admitting the same by observing as under :- “4. The appellant has offered ‘No’ comments at sl. No. 9 of Form- 35 and the appellant failed to made payment of amount equal to the advance tax which was due on its income. It is, therefore, clear that information, given at sl. no. 9 of Form-35 is correct and the appellant has not made payment of amount equal to the advance tax which was due on its income. The appellant has also not requested for exemption from operation of the provisions of clause (b) of sub-section (4) of section 249 of the Act.
5. Since the appellant has not filed return of income as well as not paid an amount equal to the amount of advance tax which was payable by it, present appeal is not liable to be admitted. The appeal is infructuous and is, therefore, dismissed. The appeal is dismissed.” 6.
It is the above order against which the assessee is in appeal before this Tribunal.
Ld. AR appearing from side of the assessee submitted before us that the order passed by Ld. CIT(A)/NFAC is unjustified. Ld. AR submitted before the bench that Ld. CIT(A)/NFAC has not provided any opportunity to the assessee before dismissing the appeal or to substantiate the grounds raised in the appeal. Ld. AR further submitted before the bench that time and again coordinate benches of this Tribunal have held that the assessee, as per the provisions of section 249(4)(b) of the IT Act, is not required to make payment of advance tax on the basis of assessed income & 606/PUN/2025 instead he is required to make payment of advance tax as per the income accepted by him and in the instant case according to the assessee his income was below taxable limit therefore he did not paid any advance tax. In support of this contention, Ld. AR relied on the decision passed by coordinate bench of this tribunal passed in the case of Dilip Hiralal Chaudhari vs. ITO in order dated 05.06.2024 and in the case of Vishnusharan Chandravanshi vs. ITO in ITA No.73/RPR/2024 order dated 10.04.2024 and also relied on the judgement passed by Hon’ble Karnataka High Court in the case of Govidappa Setty vs. ITO, 232 ITR 892 (Karnataka).
Apart from above, Ld. AR also submitted before the bench that quantum addition appeal case on the basis of which impugned penalty is levied has already been remanded back to the file of LD CIT(A) by a coordinate bench of this tribunal in & 2601/PUN/2024 vide order dated 14.02.2025 for de novo adjudication on merits of the case. Accordingly, Ld. AR requested before the bench to provide relief by passing appropriate order.
Ld. DR appearing from side of the Revenue relied on the orders passed by the subordinate authorities and requested to confirm the same.
& 606/PUN/2025 12. We have heard Ld. Counsels from both the sides and examined the material available on record, including the paper book submitted and the case laws relied upon by the assessee. On perusal, we find that Ld. CIT(A)/NFAC has neither admitted the appeal nor adjudicated it on merits, and has instead dismissed the same summarily, for the so called violation of section 249(4)(b) of the IT Act since assessee has not paid advance tax before filing of the appeal. We further observe that the quantum addition appeal, on the basis of which penalty under section 271(1)(c) of the IT Act was levied, has already been remanded by a Coordinate Bench of this Tribunal vide order dated 14.02.2025 (supra), to the file of the Ld. CIT(A)/NFAC for de novo adjudication on merits of the case. In the light of the fact that the Coordinate Bench of this Tribunal, in & 2601/PUN/2024, has set-aside the orders passed by Ld. CIT(A)/NFAC in the quantum case appeals for the same assessment years of the assessee, we consider it appropriate to set-aside the impugned order passed by Ld. CIT(A)/NFAC in the penalty appeal. Accordingly, the impugned matter involving the issue of penalty u/s 271(1)(c) of the IT Act is also remanded back to the file of Ld. CIT(A)/NFAC with a direction to adjudicate the penalty appeal afresh, on merits, in accordance with law and & 606/PUN/2025 facts, upon disposal of the quantum appeal and after affording a reasonable opportunity of hearing to the assessee. The assessee is also hereby directed to respond to the notices issued by Ld. CIT(A)/NFAC in this regard, and to produce the requisite documents/additional evidence, if any, in support of the grounds of appeal
, without seeking any adjournment under any pretext, otherwise Ld. CIT(A)/NFAC shall be at liberty to pass an appropriate order as per law. Accordingly, the grounds of appeal raised by the assessee in this appeal are partly allowed.
13. In the result, the appeal filed by the assessee in for A.Y. 2008-09 is allowed for statistical purposes. ITA No.606/PUN/2025, A.Y. 2011-12 :
14. Since the facts and issues involved in the appeal of the assessee for the assessment year 2011-12 are identical to the facts of the case for assessment year 2008-09, therefore, our decision in for A.Y. 2008-09 shall apply mutatis mutandis to this appeal of the assessee in ITA No.606/PUN/2025 for A.Y. 2011-12. Accordingly, the appeal of the assessee in ITA