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Facts
The assessee, a co-operative society of farmers, faced ex-parte quantum additions under Section 144 and consequential penalties for AY 2017-18 & 2018-19. Their appeals were also dismissed ex-parte by the CIT(A) due to delay. The assessee argued that non-compliance and delay resulted from their reliance on their appointed Chartered Accountant and their belief that their income was exempt, considering their uneducated background.
Held
The Tribunal found the assessee's reasons for non-representation justifiable, acknowledging their dependence on the CA, despite some negligence on their part. It set aside the quantum assessment orders and remanded the matter to the AO for de novo assessment, conditional on the assessee depositing Rs. 20,000/- to the Prime Minister's National Relief Fund. The consequential penalty orders were deleted, with liberty granted to the AO to re-initiate penalties after the fresh assessment, if applicable.
Key Issues
Whether ex-parte assessments and appeals should be set aside due to assessee's non-representation and alleged negligence of their CA, and the validity of consequential penalties.
Sections Cited
144
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Income Tax Appellate Tribunal, “A” BENCH, AHMEDABAD
Before: Shri Sanjay Garg & Shri Narendra Prasad Sinha
आदेश/O R D E R
Per Sanjay Garg, Judicial Member:
The captioned are bunch of seven appeals out of which & 1769/Ahd/2025 are appeals agitating the quantum additions for AY 2017-18 & 2018-19 respectively made by the Assessing Officer (AO) in ex-parte/best judgement assessment orders passed u/s.144 of the to 1771/Ahd/2025 Thol Seva Sahakari Mandali Ltd. vs. ITO Asst.Years : 2017-18 & 2018-19 2 Income Tax Act, 1961 (hereinafter referred to as “the Act”) and further confirmed by the Ld.CIT(A). The rest of the appeals are relating to the consequential penalties levied by the AO under different provisions of Income Tax Act.
At the outset, the Ld. Counsel for the assessee, has brought our attention to the impugned assessment orders in both the quantum appeals to show that the same are ex-parte/best judgement assessment orders passed by the AO. The Ld. Counsel for the assessee has further brought our attention to the impugned orders of the CIT(A) to show that the same are also ex-parte orders. There is no representation of the assessee either before the AO or before the Ld. CIT(A). The Ld. Counsel has further submitted that the Ld. CIT(A) has dismissed the appeals of the assessee being barred by limitation as there was a considerable delay in filing the appeals before the Ld. CIT(A). The Ld. Counsel has further submitted that the assessee is a Co-operative Society of farmers and its main activity is to provide financial accommodation to its members for agricultural purposes or for the purposes connected with the agricultural activities including purchase of agricultural implements, seeds and other related articles. The Ld. Counsel has submitted that the members of the Society are farmers and are mostly uneducated or less educated. They were not aware of the nitty- gritties of the Income-tax proceedings. That the accounts of the Society were being audited through the Government Auditor and apart from that they had also appointed a Chartered Accountant (CA), namely Mr.Piyush S. Patel, who was supposed to look into the other government compliances account related issues, income-tax issues, etc. The Ld. Counsel has further submitted that the members of the assessee-society were told that the income of the assessee- society was exempt from taxation and, therefore, they need not to file any income-tax return, etc. and, therefore, no return of income was filed.
1. to 1771/Ahd/2025 Thol Seva Sahakari Mandali Ltd. vs. ITO Asst.Years : 2017-18 & 2018-19 3 2.1. That when the notice for assessment proceedings were received by the assessee-society in the year 2019, immediately, they consulted CA Mr. Piyush Patel and paid him requisite fees and he assured the assessee-society that he will to look into the matter and do the needful. It has been pleaded that the members of the society being themselves not much educated and being farmers, were totally dependent upon the CA Mr. Piyush Patel for the Income-tax proceedings. However, the said CA neither put in appearance nor filed the requisite details before the Income-tax Authorities, resulting into passing of the impugned assessment orders and delay in filing the appeals before the Ld. CIT(A). It has been pleaded that the assessee-society is a co-operative agricultural society and that the income of the assessee-society is exempt from taxation and further that there was no intention to avoid any tax on the income of the assessee and that all the lapses had occurred due to the negligence of the CA appointed by the assessee-society. The Ld. Counsel for the assessee brought our attention to the application for condonation of delay that was filed before the Ld. CIT(A), wherein, each of the factual aspect has been explained in detail.
We, after considering the aforesaid submissions and going through the record, asked the Ld. Counsel for the assessee as to whether he can show that the assessee-society had engaged the CA for income-tax proceedings and had paid any fees to him. At this, the Ld. Counsel for the assessee had furnished before us the Profit & Loss Account for Financial Year (FY) 2019-20 ending on 31/03/2020, wherein, the expenditure of Rs.21,500/- has been shown as “INCOME TAX/SALE TAX VAKIL FEES”. This shows that the assessee- society had engaged a Counsel for Income-tax proceedings. Further we note that the first hearing in the assessment proceedings was fixed by the AO on 02/09/2019 and the impugned assessment order was passed on 25/12/2019. to 1771/Ahd/2025 Thol Seva Sahakari Mandali Ltd. vs. ITO Asst.Years : 2017-18 & 2018-19 4 This shows that the assessment proceedings were conducted in the year 2019 and as per the P&L Account of the assessee-society, the assessee-society had booked expenditure as Income-tax Vakil Fees, which shows that the assessee- society duly consulted it’s income-tax consultant for income-tax proceedings. Therefore, the reason given by the assessee-society for non-representation before the lower authorities, seem to be justified. However, no doubt there remains negligence on the part of the assessee-society also for not pursuing its matter with the concerned CA and also not enquiring about the income-tax proceedings before the lower authorities. Even the assessee-society had not filed its return of income for the assessment years under consideration. Considering the overall facts and circumstances of the case, in our view, the interest of justice will be well-served if the assessee-society is given an opportunity to present is cases before the AO subject to burdening it with a reasonable costs of Rs.10,000/- in respect of each of the appeal against quantum additions. It is, therefore, directed that the assessee will deposit a sum of Rs.10,000/- each in respect of & 1769/Ahd/2025 totalling to Rs.20,000/- to the Prime Minister’s National Relief Fund and furnish the proof of the deposit of the aforesaid amount before the AO. We, therefore, set aside the impugned orders in quantum related appeals i.e. & 1769/Ahd/2025 and restore the matter to the AO for de novo assessment, however, subject to deposit of costs. It is made clear that we are simply restoring the matter to the AO for de novo assessment and while doing so, we have not given any finding on any issue either legal or factual in the case. The AO will pass the fresh assessment orders after giving opportunity to the assessee to present its cases and thereafter by way of a speaking order in accordance with law. to 1771/Ahd/2025 Thol Seva Sahakari Mandali Ltd. vs. ITO Asst.Years : 2017-18 & 2018-19 5
So far as the penalty related captioned appeals are concerned, since we have set aside the impugned orders of the Ld. CIT(A) relating to quantum additions, therefore, at this stage, quantum additions have accordingly been also set aside. Therefore, the impugned penalties, at this stage, have no legs to stand and, therefore, the same are accordingly ordered to be deleted. However, it is made clear that if during or at the conclusion of assessment proceedings relating to quantum additions, the AO will be of the view that the penalties under the relevant provisions of the Act are also leviable, he will be at liberty to initiate and impose the same afresh in accordance with law.
With the above observations, all the appeals of the assessee are treated as allowed for statistical purposes.
Order pronounced in the Open Court on 27/11/2025.