CHERUKURI VEERAJU,RAJAHMUNDRY vs. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1, RAJAHMUNDRY

Thereafter, the Additional/Joint Commissioner of Income Tax, NaFAC, observed that the assessee during the subject year had carried out certain transactions of sale of immovable property, viz., (A) sale of immovable property to four persons viz., (i) Smt. Adireddy Veeraraghavamma; (ii) Smt. Jagarapu Venkata Botsa; (iii) Shri. Adireddy Srinivasu; and (iv) Shri Kantipudi Rajendra Prasad for a total sale consideration of Rs. 1,39,57,020/- (out of which an amount of Rs. 26,57,020/- was received by him in cash); and (ii) sale of property to two persons, viz. (i) Smt. Jagarapu Venkata Botsa; and (ii) Adireddy Srinivasu, vide Document No.436/2017, for a sale consideration of Rs. 2,60,00,000/- (out of which an amount of Rs. 17,50,000/- was received in cash). The AO based on the fact that the assessee on sale of the aforementioned properties had received cash sale consideration of Rs. 44,07,020/- , thus called upon him to explain that as to why he may not be subjected to penalty under Section 271D of the Act. As the assessee had failed to come forth with any explanation, therefore, the Additional/Joint Commissioner of Income Tax, NaFAC, imposed a penalty of Rs. 44,07,020/- under Section 271D of the Act.

Aggrieved, the assessee carried the matter in appeal before the CIT(A). However, as the assessee, despite having been put to notice on three occasions, had failed to participate in the appellate proceedings, therefore, the CIT(A) was constrained to dismiss the appeal for want of prosecution.

The assessee, being aggrieved by the order of the CIT(A), has carried the matter in appeal before us.

Sri GVN Hari, Advocate, the learned Authorized Representative (for short, “Ld. AR”) for the assessee, at the threshold of hearing of the appeal, submitted that the CIT(A) had grossly erred in law and facts of the case in summarily dismissing the appeal for want of prosecution. Elaborating on his contention, the Ld. AR submitted that though the assessee had failed to participate in the proceedings before the CIT(A), but the latter had grossly erred by not adjudicating the specific grounds of appeals based on which the impugned order was assailed before him and had dismissed the appeal on the standalone ground of want of prosecution. The Ld. AR submitted that though the assessee had vide his “Ground of Appeal No. 3” specifically assailed the validity of the impugned order of penalty passed by the AO under Section 271D of the Act, on the ground that the same was imposed beyond the prescribed time period contemplated under Section 275(1)(c) of the Act, but the same had remained unanswered by him. Apart from that, the Ld. AR submitted that the assessee, in his grounds of appeal, had though also assailed the imposition of penalty under Section 271D of the Act by drawing support from the immunity provided under Section 273B of the Act and a host of judicial pronouncements, but there is no whisper in the CIT(A) order qua the said issue. It was, thus, the Ld. AR’s contention that the impugned penalty order cannot be sustained and is liable to be set- aside.

Per contra, Dr. Aparna Villuri, the learned Senior Departmental Representative (for short, “Ld. DR”), relied upon the orders of the lower authorities.

We have heard the Learned Authorized Representatives of both parties, perused the orders of the lower authorities, and the material available on record.

Admittedly, it is a matter of fact borne from the record that the assessee, despite having been afforded three opportunities to participate in the proceedings before the CIT(A), i.e., vide notices dated 20/02/2024, 14/11/2024, and 28/11/2024, had failed to comply with the same. Although, we principally concur with the CIT(A) that the failure on the part of the assessee/appellant to affect compliance to the notices intimating the fixation of the appeal could not have stalled the said proceedings, which, had to be proceeded with, but at the same time are unable to persuade ourselves to subscribe to the manner in which he had disposed of the present appeal. We say so, for the reason that though the assessee had specifically assailed the validity of the jurisdiction assumed by the AO for imposing the impugned penalty vide order passed by him under Section 271D of the Act, dated 09/02/2022, inter alia, for the reason that the same was imposed beyond the prescribed period envisaged under Section 275(1)(c) of the Act, which as claimed by the assessee was to be reckoned from the date on which the AO had recommended the issuance of “Show Cause Notice” (SCN) to the Additional/Joint Commissioner of Income Tax, NaFAC, but we find that there is no whisper in the CIT(A) order on the said issue. In our view, the CIT(A), despite the absence of participation by the assessee/appellant in the proceedings before him, could have disposed of the aforesaid issue based on the facts borne on the record.

Apart from that, we find that the CIT(A) had also refrained from dealing with the specific ground of appeal that was raised by the assessee/appellant before him, wherein it was claimed that no penalty under Section 271D of the Act based on the immunity contemplated under Section 273B of the Act was liable to be imposed in his case. In fact, we find that the assessee to support his claim had even pressed into service certain judicial pronouncements.

Resultantly, the appeal filed by the assessee is allowed for statistical purposes in terms of our aforesaid observations.