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Facts
The assessee, an individual engaged in the business of purchase and sale of liquor, filed an appeal against the assessment order and penalty orders. The assessment was made after an addition for disallowance of expenses and rent, and the CIT(A) dismissed the assessee's appeals ex-parte due to non-compliance.
Held
The Tribunal found that the assessee's representation was inadequate at both the assessment and CIT(A) stages due to communication issues. Therefore, in the interest of justice, the Tribunal set aside the orders of the CIT(A) and the AO.
Key Issues
Whether the appeals filed by the assessee are to be allowed or dismissed given the ex-parte orders passed by the CIT(A) and the assessee's claim of insufficient opportunity.
Sections Cited
250, 147, 144, 144B, 271(1)(c), 271(1)(b), 234B, 142(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PATNA BENCH AT KOLKATA
Before: SHRI GEORGE MATHAN & SHRI RAKESH MISHRA
PER RAKESH MISHRA, ACCOUNTANT MEMBER:
These appeals filed by the assessee are against the separate orders of the Commissioner of Income Tax (Appeals)-NFAC, Delhi [hereinafter referred to as Ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for AY 2016-17 dated 11.02.2025, which have been passed against the assessment order u/s 147 r.w.s. 144 r.w.s. 144B of the Act, and penalty orders under section 271(1)(c) I.T.A. Nos.: 216, 217 & 218/PAT/2025 Assessment Year: 2016-17 Sanjay Yadav and 271(1)(b) of the Act respectively. Since all these appeals were taken up together, they were heard together and are being decided vide this common order for the sake of convenience and brevity.
The assessee is in appeal before the Tribunal raising the following grounds of appeal: “I. ITA No. 216/PAT/2025:
For that the Ld. CIT (A) NFAC has erred in passing ex-parte order and confirmed the assessment order passed by the Ld. A.O. on a total income of Rs. 24,65,123/-.
For that the Ld. CIT (A) NFAC has order passed without giving proper opportunity which is violating of principles of equity, natural justice and fair play.
For that the Ld. CIT (A) NFAC has not adjudicating the case on merit as ground taken by the appellant which is wrong, illegal and unjustified on the facts and circumstances of the appellant's case.
For that the Ld. CIT (A) NFAC has confirmed the addition of concealed purchase of Rs. 37,64,839/- @ 38.60% i.e. Rs. 14,53,228/- which is wrong, illegal and unjustified on the facts and circumstances of the appellant's case.
For that the Ld. CIT (A) NFAC has affirmed the order of Ld. AO and not allowing payment of rent of Rs. 6,60,000/- in respect of TDS on rent is wrong, illegal and unjustified on the facts and circumstances of the appellant's case.
For that the Ld. CIT (A) NFAC has erred in affirming charging interest u/s 234B amounting to Rs.3,94,200/- which is bad in fact and law of the case.
For that the appellant may not be treated as assessee in default in respect of the disputed demand including interest amounting to Rs.9,80,636/-.
For that the appellant reserves its right to furnish detailed written submission along with evidences and documents on or before the date of hearing.
For that the appellant may be given opportunity of personal hearing physically or virtually as the law permits at the time of hearing of the appeal.
For that the whole order is bad in fact and law of the case and is fit to be modified /annulled. I.T.A. Nos.: 216, 217 & 218/PAT/2025 Assessment Year: 2016-17 Sanjay Yadav
For that the other grounds, if any, shall be urged at the time of hearing of appeal. II. ITA No. 217/PAT/2025:
For that the ld. CIT (A) NFAC has erred in affirming imposition of penalty u/s 271(1)(c) of Rs. 5,47,559/-
For that the Ld. CIT (A) NFAC has failed to appreciate that imposing penalty without proper service of notice and adequate opportunity and thus has violated the principles of equity and natural justice.
For that the sustenance of penalty by CIT (A) NFAC is wrong, illegal and unjustified on the facts and in the circumstances of the appellant's case.
For that the whole order is bad in fact and law of the case and is fit to be cancelled.
For that the other ground, if any, shall be urged at the time of hearing of appeal. III. ITA No. 218/PAT/2025:
For that the ld. CIT (A) NFAC has erred in affirming imposition of penalty u/s 271(1)(b) amounting to Rs. 10,000/-.
For that the Ld. CIT (A) NFAC has failed to appreciate that imposing penalty without proper service of notice and adequate opportunity and thus has violated the principles of equity and natural justice.
For that the Id. CIT(A) NFAC has erred in affirming imposition of penalty u/s 271(1)(b) for allegation non-compliance to the provision of section 142(1) of the Income- tax Act which is wrong, illegal and unjustified on the facts of the case.
For that the Ld. CIT (A) NFAC has failed to appreciate that no penalty is livable sustainable u/s 271(1)(b) in view of order of the Juri ictional Tribunal directly on the issue which has been followed in umpteen numbers of orders of the Tribunal, Patna Bench, Patna.
For that the sustenance of penalty by CIT (A) NFAC is wrong, illegal and unjustified on the facts and in the circumstances of the appellant's case.
For that the whole order is bad in fact and law of the case and is fit to be cancelled.
For that the other ground, if any, shall be urged at the time of hearing of appeal.” I.T.A. Nos.: 216, 217 & 218/PAT/2025 Assessment Year: 2016-17 Sanjay Yadav
Brief facts of the case are that the assessee is an individual carrying on the business of purchase and sale of liquor and he had filed the return for A.Y. 2016-17. The return was selected for complete scrutiny through CASS with the reason “low income from TCS receipts”. The assessment was made at the total income of ₹ 5,39,632/- after making an addition of ₹1,87,735/-. The revenue audit subsequently raised an objection that certain expenses were liabilities of the assessee which were either deducted by the supplier at the time of supplying the liquor or were paid by the assessee on the gross purchase amount and could not be debited on proportionate basis in the trading account. The Assessing Officer (“Ld. AO”) computed a sum of ₹12,65,491/- as the disallowance. Another sum of ₹ 6,60,000/- on account of rent was also examined and after issuing a show cause notice and on considering the fact that the assessee did not respond to the notice issued, the Ld. AO added a sum of ₹ 19,25,091/- and the total income was assessed at ₹ 24,65,123/-. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A), who issued several notices for hearing but since there was no compliance, he dismissed the appeal of the assessee. Similarly appeals were dismissed against both the penalty orders as well. Aggrieved with the orders of the Ld. CIT(A), the assessee has filed the appeals before the Tribunal.
Rival contentions were heard and the submissions made have been examined. Before us, the Ld. AR submitted that the matter may be remanded to the Ld. AO as the assessee has sufficient evidence for the relief claimed and proper representation could not be made either before the Ld. AO or even before the Ld. CIT(A) on account of lack of communication. Being aggrieved with the assessment order the assessee had filed appeals before the Ld. CIT(A) on 26.10.2022. I.T.A. Nos.: 216, 217 & 218/PAT/2025 Assessment Year: 2016-17 Sanjay Yadav Thereafter, the assessee engaged a Tax Consultant for pursuing the appeals. Notices were issued by the NFAC Delhi, for hearing on 10.01.2025. 20.07.2025, and 27.01.2025. It is mentioned in the statement of facts that the first notice was issued by the NFAC, Delhi dated 10.01.2025 for hearing after a long gap i.e. about 3 Years after filing of the aforesaid mentioned appeals and pursuant to notices of hearing, the assessee missed out the due date by mistake, and thereafter, nothing was required on the e-portal of the Ld. CIT(A) as compliance to be made by the assessee. Also, no notice of hearing of the above-mentioned appeal was served either through the e-mail id or in the form of a hard copy on his address given in Form No. 35 filed by him. Therefore, no compliance could have been made in response to the above notices. An ex parte order has been passed by the Ld. CIT(A) on 11.02.2025 and additions/disallowances made by the A.O. have been confirmed and the appeal has been dismissed. The assessee had shown the turnover of the principal which can be demonstrated before the Ld. AO if another opportunity of being heard is provided before the Ld. AO.
We have considered the submissions made, gone through the facts of the case and perused the record and the order of the Ld. CIT(A). We find that at both the stages of assessment order before the Ld. AO as well as before the Ld. CIT(A) in the appeal, proper representation was not made on behalf of the assessee. The Ld. AR requested that the matter may be remitted to the Ld. AO while the Ld. DR supported the order of the Ld. CIT(A). After considering the facts of the case, we deem it appropriate in the interest of justice and fair play that another opportunity needs to be provided to the assessee to represent his case properly before the Ld. AO as the assessee claims to have sufficient evidence in support of the relief claimed. We, therefore, set aside the I.T.A. Nos.: 216, 217 & 218/PAT/2025 Assessment Year: 2016-17 Sanjay Yadav orders of the Ld. CIT(A) as well as of the Ld. AO and remit the matter to the Ld. AO to frame the assessment afresh, after affording an opportunity of being heard to the assessee and thereafter pass an order in accordance with law. The assessee shall not seek unnecessary adjournment and shall be at liberty to file all evidence in possession for the relief claimed. For statistical purposes, the appeal of the assessee is allowed.
Since we have set aside the appeal against the assessment order and directed the assessment to be done de novo by the Ld. AO, consequently, both the order of the Ld. CIT(A) in the appeals against the penalty under section 271(1)(c) and 271(1)(b) are also hereby set aside and the issues are remanded to the Ld. AO who shall consider the outcome of the assessment order to be framed afresh and thereafter take appropriate action as per law in respect of these two penalty orders as well. Hence, both these appeals are also partly allowed for statistical purposes.
In the result, all the three appeals filed by the assessee are partly allowed for statistical purposes. Order pronounced in the open Court on 11th September, 2025. [George Mathan] [Rakesh Mishra] Judicial Member Accountant Member Dated: 11.09.2025 I.T.A. Nos.: 216, 217 & 218/PAT/2025 Assessment Year: 2016-17 Sanjay Yadav Copy of the order forwarded to:
Sanjay Yadav, Bajitpur, Makhdumpur, Jahanbad, Jehanabad, Bihar, 804422. 2. The Assessing Officer, NFAC, Delhi.
CIT(A)-
CIT-
CIT(DR), Patna Bench, Patna.
Guard File. //// By order