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Facts
The assessee, a state government nodal agency, initially filed returns of income and subsequently revised them. The case was selected for scrutiny, leading to disallowances for prior period expenses, contribution to Consumer Welfare Fund, and delayed payments of PF and ESI. A penalty was also initiated. The assessee's appeals against these actions were partly ex-parte.
Held
The Tribunal condoned the delay in filing one appeal, noting the assessee's status as a State Govt. Public Undertaking. For one appeal, the matter was restored to the Assessing Officer for fresh hearing due to a communication gap, with a direction for proper notice and participation. For the other appeals, the issues were found to be identical and allowed for statistical purposes.
Key Issues
Whether the CIT(A) erred in passing ex-parte orders without sufficient opportunity of hearing. Whether the disallowances and penalty imposed were justified. Whether the delay in filing appeals should be condoned.
Sections Cited
250, 271(1)(c), 143(3), 80G, 139(1), 142(1), 133(6), 144, 282
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, JAIPUR BENCH “B”, JAIPUR
Before: SHRI GAGAN GOYAL & SHRI NARINDER KUMAR
These three appeals by the assessee are directed against the order of NFAC, Delhi dated 14.09.2023passed u/s. 250 of the Income Tax Act, 1961 (in short ‘the Act’).
(A.Y. 2012-13), the assessee has raised the following grounds of appeal: -
1. That in law and in the facts and in circumstances of the case, the Ld. CIT (Appeals) grossly erred in passing order without providing sufficient opportunity of being heard as no notices of the hearing was served properly on the assessee appellant.
1.1 That in the facts and in circumstances of the case, the Ld. CIT (Appeals) grossly erred in confirming ex-parte assessment order passed by the Ld. Assessing Officer.
2. That on the facts and in circumstances of the case, the Ld. Assessing Officer grossly erred in imposing a penalty of Rs. 2,14,16,468/- u/s. 271(1)(c) of the Income Tax Act, 1961 on account for furnishing inaccurate particulars of income.
3. The appellant craves leave to add, alter, modify or amend any ground on or before the date of hearing.
2. The brief facts of the case are that the assessee company is working as nodal agency of the State Govt. for distribution and supplies of foods and civil items including PDS and non PDS items as per the directions of the State Govt. filed its return of income on 03.09.2013 declaring total income at Rs. 15,91,94,200/-. Subsequently the return was revised on 30.01.2014 declaring total income at Rs. 15, 48, 78,740/-. The case of the assessee was selected for scrutiny and the assessment was completed on 31.01.2015 u/s. 143(3) of the Act at a figure of Rs. 22, 68, 25,240/-. During the assessment proceedings disallowance of prior period expenses of Rs. 11,04,524/-, Disallowance for contribution to Consumer Welfare Fund of Rs. 6,60,08,530/- and disallowance on account of 80G and delay in payment of PF and ESI was made. On disallowance of Rs. 6,60,08,530/- made on account of contribution to Consumer Welfare Fund, penalty was also separately initiated u/s. 271(1)(c) of the Act. The assessee being aggrieved with the same filed an appeal before the Ld. CIT (A), who in turn confirmed the Disallowance for contribution to Consumer Welfare Fund of Rs. 6, 60, 08,530/-vide his order dated: 30.03.2017.
3. Thereafter a show cause was issued by the AO on 27.02.2019, that why a penalty u/s. 271(1) (c) of the Act should not be imposed on above disallowance confirmed by the Ld. CIT (A). Date of compliance as per the above notice was 05.03.2019 and there was no compliance made by the assessee till passing this order of penalty and ultimately, the order of penalty was passed and a penalty of Rs. 2,14,16,468/- (being 100% of the tax sought to be evaded) was imposed. The assessee being aggrieved with the same preferred an appeal before the Ld. CIT (A), who in turn the appeal of the assessee ex-parte as there was no participation/appearance made by the assessee. The assessee being further aggrieved with this order preferred an appeal before us.
We have gone through the order of the AO, Ex-parte order of the Ld. CIT (A) and submissions made by the assessee before us alongwith the grounds of appeal taken. It is observed that the AO passed the order only after the quantum issue confirmed by the Ld. CIT (A), procedurally we do not see any fault in the order of the AO as the penalty order must be getting time barred and by not passing the order, he would have been a defaulter in terms of procedure to be followed for penalty proceedings. Although, it is not brought to our knowledge by either side that what is the fate of the issue decided by the Tribunal on quantum proceedings based on which this penalty has been levied.
5. Now before coming to any conclusion on grounds taken by the assessee, it is come to our knowledge that the appeal of the assessee is time barred by 109 days and duly communicated to the assessee. In response to this the assessee has filed an application for condonation of delay alongwith an affidavit. We have gone through the same and found the same to be order especially being a State Govt. Public Undertaking, a lenient view is being taken and bonafide is also presumed. Hence delay in filing of the appeal is condoned for further adjudication.
6. As discussed, (supra) there was no compliance being made by the assessee in view of the communication gap between the office of the Ld. CIT (A) and the assessee. The matter is restored back to the office of the Ld. CIT(A) for fresh hearing in the matter specially after considering the order of the coordinate bench on the issue of quantum and directed to follow the procedure as laid down in section 282 of the Act for service of notice. The assessee is directed to positively participate in the proceedings without seeking any adjournment and come forward with relevant explanation/evidence relied upon. In these terms grounds raised by the assessee are allowed for statistical purposes.
In the result, the appeal of the assessee is allowed for statistical purposes.
(A.Y. 2013-14), the assessee raised the following grounds of appeal: -
1. That in law and in the facts and in circumstances of the case, the Ld. CIT (Appeals) grossly erred in passing order without providing sufficient opportunity of being heard as no notices of the hearing was served properly on the assessee appellant.
1.1 That in the facts and in circumstances of the case, the Ld. CIT (Appeals) grossly erred in confirming ex-parte assessment order passed by the Ld. Assessing Officer.
That on the facts and in circumstances of the case, the Ld. Assessing Officer grossly erred in imposing a penalty of Rs. 6,04,19,802/- u/s. 271(1)(c) of the Income Tax Act, 1961 on account for furnishing inaccurate particulars of income.
The appellant craves leave to add, alter, modify or amend any ground on or before the date of hearing. 8. As the issue involved in this appeal also is identical to what we have discussed and decided in (A.Y. 2012-13), (except the amount involved), our findings will apply mutatis mutandis here also. In these terms grounds raised by the assessee are allowed for statistical purposes.
In the result, the appeal of the assessee is allowed for statistical purposes.
That in law and in the facts and in circumstances of the case, the Ld. CIT (Appeals) grossly erred in passing order without providing sufficient opportunity of being heard as no notices of the hearing was served properly on the assessee appellant.
2. That in the facts and in circumstances of the case, the Ld. CIT (Appeals) grossly erred in confirming ex-parte assessment order passed by the Ld. Assessing Officer.
3. That on the facts and in circumstances of the case, the Ld. Assessing Officer grossly erred in making the addition of Rs. 8,86,57,237/- on the basis of estimation of income as per the previous year’s which is illegal and bad in law.
4. That on the facts and in circumstances of the case, the Ld. Lower Authorities grossly erred in making the addition of Rs. 3,57,63,520/- on account of cash deposit during the period of demonetization.
The appellant craves leave to add, alter, modify or amend any ground on or before the date of hearing.
The brief facts for this year are that the assessee was amongst the non- filers of return for this year u/s. 139(1) of the Act. Information was received from the office of the DG (Systems) that during the year under consideration (Demonetization Year) the assessee had deposited cash of Rs. 3, 57, 63,250/- during the demonetization period. A notice u/s. 142(1) of the Act was issued to the assessee but no return in compliance to the same was filed. Further notice u/s. 133(6) of the Act was issued on 01.06.2018, in compliance to this notice the assessee furnished the details of cash deposit and stated that no cash has been deposited at its head office rather the cash were deposited at district offices by its FPS dealers. As no return was filed and there was no compliance further made by the assessee against the notices issued by the AO as narrated in para 2 of the assessment order, the case of the assessee was assessed u/s. 144 of the Act at a figure of Rs. 12,44,20,757/- (Rs. 8,86,57,237/- as regular income from business on estimated basis + Rs. 3,57,63,520/- as income from other sources being unexplained cash deposit). The assessee being aggrieved with the same filed an appeal before the Ld. CIT(A), but here also there was no appearance/compliance made by the assessee and ultimately, appeal was dismissed. The assessee being further aggrieved with this order filed an appeal before us.
We have gone through the order of the AO; order of the Ld. CIT (A) and submissions alongwith the grounds taken before us. It is observed that the overall conduct of the assessee is not professional despite the fact that the same is involved in commercial transactions on behalf of the State Govt. and certainly have technically qualified manpower to handle the issues relating to finalization of accounts, audits, tax audits and filing of return. Still, the assessee is not able to demonstrate its bonafide that why it has not filed its return of income despite of receiving notice u/s. 142(1) of the Act. Partial reply was filed on the issue of cash deposit and thereafter there is no response to any notice and the same attitude before the office of the Ld. CIT (A), clearly establishes that the assessee is at serious default. Even before us other than seeking the matter restored no evidence in the form of Audited Financial Results, Tax Audit Report, ITR etc. filed for our perusal so that the matter can be restored back after examining the same. It rather crystallizes the casual and unprofessional attitude of the assessee towards legal compliances of the law. We are not sure whether this restoration of the matter back to the authorities below will serve any purpose or not. But, still as held (supra) being a State Govt. Public Sector Undertaking, we would like to have a lenient approach and a second inning we are granting to the assessee subject to cost.
In above terms, the matter is restored back to the file of the AO for fresh hearing after giving the assessee proper opportunity of being heard and the assessee is directed to appear and participate in the hearing without any default and seeking any adjournment.
In the result, the appeal of the assessee is allowed for statistical purposes.
In the result, all the three appeals of the assessee are allowed for statistical purposes subject to cost of Rs. 5,000/- each for first two appeal and a cost of Rs. 15,000/- for the last appeal, i.e. A.Y. 2017-18.
The Order is pronounced in the open court on the 24th day of April 2025.