SHARDABEN DHANJIBHAI SAVANI,SURAT vs. ITO, WARD 2(3)(4), SURAT

Facts

The assessee's income tax returns were selected for scrutiny, leading to an ex-parte assessment where a significant addition of Rs. 1.42 crores was made, assessing total income at Rs. 1.46 crores. The assessee also faced penalties for non-compliance with notices during assessment and appellate proceedings. The CIT(A) dismissed the appeals. Before the Tribunal, the assessee contended that notices were not properly served due to a specific instruction in Form-35 and miscommunication with her Authorized Representative.

Held

The Tribunal condoned a 32-day delay in filing the appeal. It remitted the quantum assessment (ITA 385) and the related penalty under Section 271AAC(1) (ITA 386) back to the AO for fresh adjudication, setting aside the CIT(A)'s orders, subject to the assessee paying a cost of Rs. 5,000/- to the Prime Minister Relief Fund. For the penalty under Section 271(1)(d) (ITA 387), the Tribunal partly allowed the appeal, deleting penalties for two defaults but confirming a Rs. 10,000/- penalty for one default, attributing non-compliance to the tax consultant's mistake.

Key Issues

Whether the ex-parte quantum addition and penalties for non-compliance were justified, given the assessee's claim of improper notice service and her reliance on a tax consultant, and whether the matters should be remanded for fresh adjudication.