M/S JUPITER TRADELINKS PRIVATE LIMITED,LUCKNOW vs. DY,. COMMISSIONER OF INCOME TAX, CC-1, LUCKNOW

Aggrieved with the said assessment order, the assessee company preferred an appeal before the ld. CIT(A)-2, Kolkata under whose jurisdiction the then AO lay. The ld. CIT(A)-2, Kolkata, vide his order under section 250 of the Income Tax Act passed on 7.12.2018, dismissed the appeal of the assessee company on account of its failure to prosecute the appeal. Upon receipt of this penalty order, the ld. AO at Lucknow issued a penalty notice under section 271(1)(c) and states that the notice was personally served on the assessee, but no reply was received in this regard. Therefore, he held that the assessee company had failed to explain the credit entry of Rs.4 Crores in the bank account and also failed to disclose the income earned on the investment of Rs.27,92,00,000/- in the return filed by it, compelling the ld. AO to compute the income A.Y. 2013-14 M/s Jupiter Tradelinks Pvt. Ltd. on the said investment. Since, the assessee had failed to submit any explanation either during the assessment or the penalty proceedings, the ld. AO held that he had no option but to conclude that the assessee company had nothing to say in this regard and therefore, he levied the penalty under section 271(1)(c) of Rs.2,20,41,900/- @ 100% tax sought to be evaded.

Aggrieved by such order of the ld. AO, the assessee went in appeal before the ld. CIT(A)-3, Lucknow. The ld. CIT(A) records that the assessee failed to submit any written submission during the course of appeal proceedings and also failed to appear in the said proceedings. In the circumstances, the ld. CIT(A) decided to proceed with the matter on the basis of the facts already on record. She observed that in the appellate proceedings the burden of proof lay on the assessee, to prove that the facts and findings of the ld. AO were incorrect. If the assessee fails to disprove or rebut with any cogent evidence, the facts and findings of the ld. AO, no interference was required. In the present case, the ld. CIT(A) observed that the assessee has not availed any such opportunity and therefore, relying upon the decision of the Hon’ble Supreme Court in the case of Titaghur Paper Mills Co. Ltd vs State of Orissa and Pinaki Sen Gupta vs. State of Orissa (1983) 142 663 (SC), wherein the Hon’ble Supreme Court had held that the principles of natural justice had been met when notices for compliance were issued on several occasions, and the cases of Vipul Logistic and Warehousing Pvt. Ltd., vs. ITO (ITA No.5454/Del/2010) for A.Y. 2006-07 and the Hon’ble Delhi High Court in the case of CIT vs. Gold Leaf Capital Corporation (ITA No.798/2009), as also many other decisions of the Hon’ble Mumbai and Hon’ble Madhya Pradesh High Court, the ld. CIT(A) held, that since the assessee had failed to submit any reply that would disprove the findings of the ld. AO, the penalty under section 271(1)(c) was fit to be upheld. Therefore, she confirmed the levy of penalty of Rs.2,20,41,900/- and dismissed the appeal against the said assessment.

The assessee is aggrieved against such order passed by the ld. CIT(A) and has accordingly come before us in appeal. Sh. Akshay Agarwal, Advocate (hereinafter referred to as the ld. AR) appearing on behalf of the assessee submitted that no compliance could be made before the ld. AO at Kolkata or after the transfer of the case to Lucknow, during the penalty proceedings for the concerned assessment year. However, it was submitted that there was no failure on the part of the assessee in disclosing all material facts truly and fully. It was submitted that the assessee had maintained regular accounts and all the findings against the assessee had been recorded without pointing out that there was any mistake in the books of accounts. It was submitted that, in fact, the notices that had been sent to the assessee had not been received by it and therefore, compliance could not be made. The ld. AR assured that if the matter was to be restored back to the file of the ld. AO, he would ensure proper compliance before the ld. AO. He pleaded for the matter to be restored back on the grounds that there had not been any real finding of fact in the matter that could visit the assessee with a penalty of concealment of income, because the additions had been made only on the basis of surmises and conjectures. Accordingly, it was pleaded that one more opportunity may be given to the assessee to make its case, so that the ld. AO would see that no case of penalty under section 271(1)(c) was made out.

On the other hand, Sh. R.K. Agarwal, CIT DR (hereinafter referred to as the ld. CIT DR) firmly opposed sending back the case to the ld. AO, pointing out that the assessee had habitually defaulted on notices before the lower authorities both during the assessment and the appeal proceedings. Therefore, the ld. CIT DR prayed that the appeal of the assessee should be dismissed.

We have duly considered the facts and circumstances of the case. It appears from a reading of the assessment order, the penalty order and the respective appeal orders, that no compliance has been made by the assessee at any stage prior to this. Thus, due to this, there has been no real examination into whether the income of the