SUMEET N JAIN,MUMBAI vs. ITO, 17(3)(4), MUMBAI

PER RAVISH SOOD, JM

before us: “On the facts and in the circumstances of the case and in law the Hon‟ble CIT(A) erred in upholding the penalty levied by the Ld. A.O of Rs.10,000/- u/s. 271(1)(b) of the I.T. Act, and the reasons assigned for doing are wrong and contrary to the provision of Income Tax and Rules made there under.”

2. Briefly stated, the assessee who is engaged in the business of trading in fabrics had e- filed his return of income for A.Y. 2010-11 on 29.09.2010, declaring his total income at Rs.2,94,450/-. The return of income filed by the assessee was processed as such under Sec. 143(1) of the Act. On the basis of information received from the office of the DGIT (Inv.), Mumbai, that the assessee as a beneficiary had obtained accommodation entries, his case was Shri Sumeet N. Jain Vs. ITO-17(3)(4) 2 reopened under Sec. 147 of the Act. As on 01.04.2015, the A.O issued a notice under Sec.142(1) of the Act to the assessee. However, as the assessee neither appeared as on the aforesaid date of hearing, nor furnished the details as were called for by the A.O, the latter initiated penalty proceedings under Sec.271(1)(b) of the Act. Accordingly, the assessee was called upon to „Show cause‟ as to why penalty may not be imposed upon him under Sec. 271(1)(b) of the Act. As the assessee failed to comply with the aforesaid notice, therefore, the A.O imposed penalty under Sec.271(1)(b) of Rs.10,000/- on the assessee.

3. Aggrieved, the assessee assailed the penalty imposed under Sec. 271(1)(b) by the A.O, vide his order dated 01.10.2015, before the CIT(A). As the assessee despite having been put to notice about the hearing of the appeal failed to put up an appearance before the CIT(A), therefore, the latter without adverting to the merits of the appeal dismissed the appeal, for the reason, that the assessee was not interested in pursuing the same.

4. The assessee being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. We find that the assessee appellant despite having been intimated about the hearing of the appeal, had however, failed to put up an appearance before us. Accordingly, being left with no other alternative, we are constrained to dispose off the appeal after hearing the respondent revenue.

“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 AO to make further inquiry and report the result of the same to him as found in Sec. 250 of the Act. F u r t h e r , Se c . 2 5 0 ( 6 ) o f t h e Ac t o b l i g es th e 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. Sec. 251(1)(a) and (h) 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-s. (2) of s. 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 s. 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 w.e.f. 1st June, 2001 the power of the CIT(A) to set aside the order of the AO and restore it to the AO for passing a fresh order stands withdrawn. Therefore, it would be noticed that the powers of the CIT(A) are co-terminus with that of the AO i.e. he can do all that A.O could do. Therefore, just as it is not open to the AO 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 s. 251(1)(a) and (b) and Explanation to Sec. 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.

Order pronounced in the open court on 06.03.2020