MONALISA PRADHAN,BHUBANESWAR vs. ITO WARD-3(1), BHUBANESWAR
Facts
The assessee purchased a flat for ₹51,00,000/- and took a loan of ₹40,80,000/-. The AO issued a show-cause notice for the balance amount of ₹10,20,000/- and granted only one day for response, subsequently treating the amount as unexplained income. The CIT(A) confirmed the order.
Held
The Tribunal found a violation of the principles of natural justice as the assessee was granted only one day to respond to the show-cause notice. Consequently, the quantum appeal was restored to the AO for re-adjudication with an opportunity to be heard.
Key Issues
Whether the AO's action of treating ₹10,20,000/- as unexplained income after granting only one day for response violated natural justice principles. Whether the penalty under Section 271(1)(c) survives when the quantum appeal is set aside.
Sections Cited
271(1)(c), 69A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “CUTTACK” BENCH, CUTTACK
Before: SHRI GEORGE MATHAN, JM & SHRI RAJESH KUMAR, AM
IN THE INCOME TAX APPELLATE TRIBUNAL “CUTTACK” BENCH, CUTTACK BEFORE SHRI GEORGE MATHAN, JM AND SHRI RAJESH KUMAR, AM ITA No. 183 & 184/CTK/2025 (Assessment Year: 2016-17) Smt. Monalisa Pradhan Income Tax officer, Plot No. n-3/33, IRC village Ward 3(1) Nayapalli, Bhubaneswar-751015 Bhubaneswar-751007 Vs. Odisha Odisha (Appellant) (Respondent) PAN No. ASIPP1161B Assessee by : Shri Niranjan panda, AR Revenue by : Shri Nishanth Rao B, DR Date of hearing: 23.07.2025 Date of pronouncement: 23.07.2025
O R D E R PER PENCH: These are the appeals filed by the assessee against the order of ld. CIT (A), NFAC, in appeal no. ITBA/NFAC/S/250/2024- 25/1072675235(1) dated 29.01.2025 for A.Y. 2016-17. ITA 184/CTK/2025 is the quantum appeal and IA ITA No. 183/CTK/2025 is the appeal against the penalty levied and confirmed under Section 271(1)(c) of the Income-tax Act, 1961 (the Act).
Shri Niranjan panda represented on behalf the assessee and Shri Nishanth Rao B, represented on behalf of the Revenue.
In respect of the ITA No. 184/CTK/2025, being the quantum appeal, it was submitted by the Learned AR that the assessee is an individual who is a research assistant with the Rice Institute. It was a submission that the assessee had purchased a flat for ₹51,00,000/- and had taken a loan of ₹40,80,000/- from the bank. It was submission that in the
In reply, the learned DR submitted that the assessee became aware of the issue only when the rectification application had been rejected. It was submission that he had no objection if the AO examine the issue.
We have considered the rival submissions. As it is noticed that the AO in the course of NaFAC proceedings, the assessee had been granted only one day's time to respond to the show cause notice issued by the AO. We feel that there has been violation of the principles of natural justice. This being so, in the interest of justice, the issue in this appeal in respect of the amount of ₹10,20,000/- is restored to the file of the AO for re-adjudication after granting the assessee adequate opportunity of being heard.
In the result, the appeal of the assessee is partly allowed for statistical purposes.
We are of the view that as the quantum has been restored in quantum appeal and assessment has been restored to the file of the AO, the foundation for the levy of penalty under section 271(1)(c) of the Act, no more survives and consequently, the penalty as levied and confirmed under section 271(1)(c) of the Act, stands deleted.
Liberty is granted to the ld. AO to initiate fresh proceedings under Section 271(1)(c) of the Act, if so require as per law in the set-aside proceedings.
In the result, the appeal in ITA No. 183/CTK/2025 is allowed and ITA 184/CTK/2025 is partly allowed for statistical purposes.
Order pronounced in the open court on 23.07.2025.
Sd/- Sd/- (RAJESH KUMAR) (GEORGE MATHAN) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) Kolkata, Dated: 23.07.2025 Sudip Sarkar, Sr.PS Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT DR, ITAT, 4. 5. Guard file. BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Cuttack
