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Facts
The assessee, a construction firm, had its income for AY 2016-17 (and other years) reassessed under Section 148 due to violating RBI norms by accepting public deposits and claiming substantial interest as financial charges, leading to a large disallowance. The CIT(A) subsequently dismissed the assessee's appeal ex-parte due to non-compliance with notices.
Held
The Tribunal found that the assessee had reasonable cause for non-compliance, citing a serious accident, arrest, property seizure, and staff leaving. It set aside the ex-parte order of the CIT(A) and remanded the matter back for a fresh decision on merits after providing a proper opportunity of hearing. Consequential penalty appeals were also remanded.
Key Issues
Whether the ex-parte dismissal by CIT(A) was justified given the assessee's circumstances, and the validity of reassessment under Section 147, disallowance of interest, and consequential penalty.
Sections Cited
147, 148, 271(1)(c)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE
Before: SHRI MANISH BORAD & SHRI VINAY BHAMORE
ORDER PER BENCH: These appeals filed by the assessee are directed against the separate orders dated 24.09.2024 passed by Ld. CIT(A)/NFAC for the assessment years 2013-14, 2014-15 & 2016-17 respectively. 2. Since the identical facts and common issues are involved in all the above captioned five appeals of the assessee, we proceed to dispose of the same by this common order.
2016-17 as a lead case for adjudication.
A.Y. 2016-17 : 4. The appellant has raised the following grounds of appeal :- “1] The learned CIT(A) erred in dismissing the appeal of the assessee ex-parte on the ground that there was non compliance on the part of the assessee to the various notices issued by him and thereby erred in confirming the addition of Rs.29,35,06,820/- made by the learned A.O. 2] The assessee submits that there was a reasonable cause on its part for the non compliance to the notices issued by the learned CIT(A) and accordingly, requests for one more opportunity to present its case before the learned CIT(A). 3] The assessee submits that it had not received the notices issued by the learned CIT(A) and therefore, there was non compliance on its part to the notices issued by the learned CIT(A) and hence, requests for one more opportunity to present its case before the learned CIT(A). 4] The assessee submits that the reopening u/s. 147 is bad in law and accordingly, the reassessment order be declared null and void. 5] The assessee submits that the disallowance of interest made by learned A.O. of Rs.29,35,06,820/- is not justified and accordingly, the learned CIT(A) ought to have deleted the said addition. 6] The assessee requests for admission of additional evidences in support of its case. 7] The appellant craves leave to add, alter, amend or delete any of the above grounds of appeal.”
5. Facts of the case, in brief, are that the assessee is a firm engaged in the business of construction work. The assessee filed its to 2421/PUN/2024 return of income for assessment year 2016-17 on 17.10.2016 declaring total income of Rs.1,17,11,354/-. The assessee has violated the norms of Reserve Bank of India since they have accepted deposits from public at large & failed to return the principal as well as interest. The assessee has also claimed huge amount of interest of Rs.29,35,06,820/- in the name of financial charges. Accordingly, the case of the assessee was reopened and notice u/s 148 of the IT Act was issued on 30.03.2021. The assessee did not responded to the notices issued by the AO. The assessment was completed by determining total income of Rs.30,52,18,170/- as against income returned by the assessee at Rs.1,17,11,350/-. The above assessed income includes disallowance of interest of Rs.29,35,06,820/- being the interest claimed on deposits taken from the public against the law.
6. Since the assessee remained absent before Ld. CIT(A)/NFAC, the appeal of the assessee was dismissed. It is this order against which the assessee is in appeal before this Tribunal.
7. Ld. AR appearing from the side of the assessee submitted before us that the order passed by Ld. CIT(A)/NFAC is unjustified. Ld. AR further submitted that Ld. CIT(A)/NFAC has not provided proper opportunity to the assessee. It was submitted by Ld. AR of to 2421/PUN/2024 the assessee that the circumstances were beyond the control of the assessee since he met with a serious accident & thereafter several cases & police FIR was lodged against him with regard to not refunding the amount of the public & ultimately he was arrested by the police. All his properties including office premises were seized & the staff also left the job. In such kind of situation even if any notices were issued there was no one to look after those notices, which resulted in ex-parte orders passed by the subordinate authorities. It was therefore submitted by Ld. AR of the assessee that the assessee has reasonable cause for non-compliance to the notices issued by Ld. CIT(A)/NFAC and therefore he requested for one more opportunity to substantiate its case. Accordingly, it was requested before the Bench to set-aside the ex-parte order passed by Ld. CIT(A)/NFAC.
8. Ld. DR appearing from the side of the Revenue relied on the orders passed by the subordinate authorities and requested to confirm the same.
We have heard Ld. Counsels from both the sides and perused the material available on record. In this regard, we find that admittedly Ld. CIT(A)/NFAC has issued hearing notices and since the assessee was in prison & his office premises was seized , his to 2421/PUN/2024 staff also left the job, he could not respond to above notices which resulted in unfortunate ex-parte order . Considering the totality of the facts of the case, & in the interest of justice, without going into merits of the case, we deem it appropriate to set-aside the impugned ex-parte order passed by Ld. CIT(A)/NFAC and restore the matter back to him with a direction to decide the appeal afresh on merits of the case as per fact and law after providing 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 produce requisite documents/ additional evidences/explanations in support of grounds of appeal
without taking any adjournment under any pretext, otherwise Ld. CIT(A)/NFAC shall be at liberty to pass appropriate order as per law. Thus, the grounds of appeal raised by the assessee are partly allowed.
10. In the result, the appeal filed by the assessee in A.Y. 2016-17 is allowed for statistical purposes.
& 2421/PUN/2024, A.Ys. 2013-14 & 2014-15 : 11. Since the facts and issues involved in above two appeals of the assessee are identical, therefore, our decision in ITA to 2421/PUN/2024 No.2418/PUN/2024 for A.Y. 2016-17 shall apply mutatis mutandis to the above two appeals of the assessee in & 2421/PUN/2024 for A.Ys. 2013-14 & A Yr 2014-15 respectively.
In the result, both the appeals of the assessee in & 2421/PUN/2024 for A.Ys. 2013-14 & 2014-15 are allowed for statistical purposes. ITA Nos.2417 & 2420/PUN/2024, A.Ys. 2016-17 & 2013-14 : 13. In the above two appeals assessee has challenged the confirmation of penalty u/s 271(1)(c) of the IT Act by Ld. CIT(A)/NFAC. Since we have set-aside the quantum appeals of the assessee and remanded the matter back to the file of Ld. CIT(A)/NFAC to decide the appeal afresh, therefore, this being the consequential penalty order also needs to be set-aside and accordingly we set-aside and remand the penalty appeal order back to the file of Ld. CIT(A)/NFAC to decide the penalty appeal afresh after providing reasonable opportunity of hearing to the assessee. Thus, the grounds raised by the assessee in both the above appeals are partly allowed.