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Income Tax Appellate Tribunal, PUNE BENCHES “B” :: PUNE
Before: MS.ASTHA CHANDRA & DR.DIPAK P. RIPOTE
Assessment Year: 2017-18 Sardar Dastur Schools Trust, V The Dy.Commissioner of 3 LT COL Tarapore Road, s. Income Tax Exemption, Camp, Pune – 411001. Pune. Maharashtra. PAN: AAATS4768F Appellant/ Assessee Respondent / Revenue Assessee by Shri Abhilash Hiran – AR Revenue by Shri Ajitesh Kumar Meena – Addl.CIT(DR) Date of hearing 12/06/2025 Date of pronouncement 16/06/2025 आदेश/ ORDER
PER DR. DIPAK P. RIPOTE, AM:
This is an appeal filed by the assessee against the order of ld.Commissioner of Income Tax(Appeals)[NFAC] under section 250 of the Income Tax Act, 1961 dated 26.02.2025 for A.Y.2017-18 emanating from the penalty order under section 270A of the Act, dated 18.01.2022. The assessee has raised following grounds of appeal :
“1. Ground 1: General Ground In the facts and circumstance of the case and in law, the leamed CIT(A) erred in upholding the action of the learned Assessing Officer (Ld. AO) in levying penalty of INR 10,20,174 under section 270A of the Act on the premise that the Appellant has underreported the income.
Ground 2: Levy of Penalty under section 270A of the Act is invalid since the tax payable in respect of under-reported income Is Nil In the facts and circumstances of the case and in law, the learned CIT(A) has grossly erred in confirming the penalty order passed by the learned Assessing Officer, without appreciating that the tax payable under section 270A(10)(c) of the Act is Nil. The Appellant, being a charitable trust, continues to be assessed at Nil even after imputing the alleged addition, on account of the excess application of income beyond the prescribed threshold of 85% under section 11(1)(a) of the Act. Consequently, the very foundation for levy of penalty stands vitiated.
3. Ground 3: Accounting Reclassifications do not constitute Underreporting of Income In the facts and circumstances of the case and in law, the learned Assessing Officer has grossly erred in levying penalty under section 270A of the Act, without appreciating that the difference in the gross receipts as per the return of income and the Income and Expenditure Account arose solely due to a bona fide accounting reclassification and presentation on a netting-off basis. The reconciliation clearly establishes that the surplus remains unchanged. and thus, no underreporting of income has occurred. The penalty has been levied mechanically, without proper appreciation of facts or application of mind, and is therefore wholly unsustainable and liable to be deleted.
Ground 4: Opportunity of hearing Without prejudice to the above grounds, the Appellant respectfully submits that it could not attend the hearing scheduled by the learned CIT(A) due to an inadvertent lapse on the part of the Authorized Representative engaged in the matter, who failed to regularly monitor the e-filing portal and the registered email address where the notices were uploaded and sent. The non-appearance was neither deliberate nor with any malafide intent. The Appellant humbly prays that, in the interest of justice and fair play, the ex-parte order passed may kindly be recalled and the appeal be restored for adjudication on merits after granting an opportunity of being heard.
The Appellant craves leave to add, amend, alter, modify or withdraw any grounds of appeal in the interest of justice.” Findings & Analysis :
2. We have heard both the parties and perused the records. In this case, the ld.CIT(A) has dismissed the appeal of the assessee for non-compliance without adjudicating the grounds on merit.
2.1 During the hearing, ld.AR filed an Affidavit of the Trustee stating that their Chartered Accountant Mr.A.T.Hozdar was severely ill and hence submission could not be filed before the ld.CIT(A). Ld.AR requested that one more opportunity may kindly be accorded to the assessee to file details before the ld.CIT(A).
2.2 In these facts and circumstances of the case, we agree with ld.AR that due to illness of the Chartered Accountant, Assessee could not file details before the ld.CIT(A). It is also noted that ld.CIT(A) has not adjudicated the grounds of appeal raised by the assessee on merits.
2.3 The Hon’ble Bombay High Court has held in the case of Pr.CIT(Central) Vs. Premkumar Arjundas Luthra (HUF)(Bombay)/[2017] 297 CTR 614 (Bombay) as under :
Quote, “8.From the aforesaid provisions, it is very clear once an appeal is preferred before the CIT(A), then in disposing of the appeal, he is obliged to make such further inquiry that he thinks fit or direct the Assessing Officer to make further inquiry and report the result of the same to him as found in Section 250(4) of the Act. Further Section 250(6) of the Act obliges the CIT(A) to dispose of an appeal in writing after stating the points for determination and then render a decision on each of the points which arise for consideration with reasons in support. Section 251(1)(a) and (b) of the Act provide that while disposing of appeal the CIT(A) would have the power to confirm, reduce, enhance or annul an assessment and/or penalty. Besides Explanation to sub-section (2) of Section 251 of the Act also makes it clear that while considering the appeal, the CIT(A) would be entitled to consider and decide any issue arising in the proceedings before him in appeal filed for its consideration, even if the issue is not raised by the appellant in its appeal before the CIT(A). Thus once an assessee files an appeal under Section 246A of the Act, it is not open to him as of right to withdraw or not press the appeal. In fact the CIT(A) is obliged to dispose of the appeal on merits. In fact with effect from 1st June, 2001 the power of the CIT(A) to set aside the order of the Assessing Officer and restore it to the Assessing Officer for passing a fresh order stands withdrawn. Therefore, it would be noticed that the powers of the CIT(A) is coterminous with that of the Assessing Officer i.e. he can do all that Assessing Officer could do. Therefore just as it is not open to the Assessing Officer to not complete the assessment by allowing the assessee to withdraw its return of income, it is not open to the assessee in appeal to withdraw and/or the CIT(A) to dismiss the appeal on account of non-prosecution of the appeal by the assessee. This is amply clear from the Section 251(1)(a) and (b) and Explanation to Section 251(2) of the Act which requires the CIT(A) to apply his mind to all the issues which arise from the impugned order before him whether or not the same has been raised by the appellant before him. Accordingly, the law does not empower the CIT(A) to dismiss the appeal for non- prosecution as is evident from the provisions of the Act.” Unquote. 2.4 Thus, the Hon’ble Bombay High Court has categorically held that ld.CIT(A) has to decide the appeal on merit and ld.CIT(A) does not have any power to dismiss appeal for non-prosecution.
2.5 In view of the above, in the interest of justice, we set-aside the order of the ld.CIT(A) to ld.CIT(A) for denovo adjudication. Ld.CIT(A) shall provide opportunity to the assessee. Assessee shall file all the necessary documents before the ld.CIT(A). Accordingly, grounds of appeal raised by the assessee are allowed for statistical purpose.
In the result, appeal of the assessee is allowed for statistical purpose. Order pronounced in the open Court on 16 June, 2025.