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Facts
The assessee filed two appeals for AY 2012-13 against an ex-parte assessment order by the AO adding Rs. 60,90,164/- as accrued interest income and a penalty order of Rs. 18,81,859/- under Section 271(1)(c). Both the AO and CIT(A) orders were passed ex-parte, leading the assessee to contend a lack of proper opportunity.
Held
The Tribunal condoned the delay in filing the appeals, acknowledging that lower authorities failed to grant effective opportunity, thereby violating natural justice. Consequently, both the impugned assessment and penalty orders were set aside, and the issues were restored to the Assessing Officer for fresh adjudication after providing due opportunity to the assessee.
Key Issues
Whether the lower authorities erred in passing ex-parte assessment and penalty orders without granting proper opportunity to the assessee, violating principles of natural justice, and thus whether the additions and penalty were justified.
Sections Cited
253(3), 147, 144, 151, 271(1)(c)
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Income Tax Appellate Tribunal, ALLAHABAD BENCH “DB”, ALLAHABAD
Before: SHRI ANADEE NATH MISSHRA & SHRI SUBHASH MALGURIA
“1. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in upholding the action of Ld. A.O. by sustaining the additions made by the Ld. AO for Rs. 60,90,164/- under the head other sources without appreciating the facts and circumstances of the case.
On the facts and circumstances of the case and in law, the Ld. CIT(A) failed to appreciate the fact that the Ld. AO has simply made addition to the tune of Rs. 60,90,164/- by wrongly alleging the Other Current Asset for the year ending on 31.03.2012 as accrued interest income escaping assessment merely on surmises and conjectures. Thus, said addition confirmed by the Ld. CIT(A) deserves to be deleted.
3. That the Ld. CIT(A) has erred in law and on facts in upholding the action of Ld. A.O. without appreciating the fact, that the reasons recorded for the impugned re-opening are based non-existent facts. Thus, makes the entire reassessment proceedings void ab inito.
4. That the Ld. CIT(A) has erred in law and on facts of the case in confirming the action of the Ld. AO in making the addition to the tune of Rs. 60,90,164/- other sources vide his order passed u/s 147 r.w.s. 144 dated 16.12.2019 which is in violation to provisions of section 147 to 151 of the Income Tax Act, 1961.
5. That on the facts and circumstances of the case and in law, the Ld. CIT(A). erred in law in sustaining the said addition for Rs. 60,90,164/under the head Other Sources made by the Ld. AO without allowing the inter-head set off of current year loss for Rs. 6,69,22,628/-.
6. That each ground is independent and without prejudice to each other and requires separate adjudication.
That the assessee craves to add, alter or amend the grounds of appeal
at any stage and all the grounds are without prejudice to each other.”
2. These appeals have been filed by the assessee, beyond time limit prescribed under section 253(3) of IT Act. The assessee has submitted applications for condonation of delay, supported by affidavit. The Ld. Sr. Departmental Representative for Revenue did not express any objection to the delay being condoned. Being satisfied with the reasons stated in application seeking condonation of delay in filing of these appeals; we condone the delay in filing of these appeals and admit the appeals for decision on merits.
The facts of the case, in brief, are that in this case assessment order dated 16.12.2019 was passed by the Assessing Officer u/s 147/144 of the Income Tax Act, 1961 (“Act”, for short) whereby the assessee’s total income was assessed at Rs.60,90,164/-. The order passed by the Assessing Officer was an ex-parte order qua the assessee. Vide impugned appellate order dated 14.02.2025, the assessee’s appeal was dismissed by the learned CIT(A). The order of learned CIT(A) was also passed ex-parte qua the appellant assessee.
At the outset, the Ld. Counsel for the assessee contended that no proper and effective opportunity was granted by the lower authorities to the assessee. Thus, the Assessing Officer did not comply with the principle of natural justice and which has grossly prejudiced the assessee. Further, he contended that the assessee has a very strong case on merits and also contended that at least one opportunity be granted to the assessee for effectively representing its case before the Assessing Officer. He contended that in the interest of justice matter may be restored to AO for decision afresh.
On the other hand, the Ld. Departmental Representative for the Revenue opposed the submissions and submitted that the assessee has not given any plausible explanation for not filing its explanation as called for by the Assessing Authority as well as Ld. CIT(A). Therefore, he prayed for dismissal of the appeal.
We have heard the rival contention and perused the material available on record. There is no dispute with regard to the fact that the Assessing Authority has categorically stated that there was no compliance on behalf of the assessee to the show cause notice issued by him for treating the assessee in default, so is the case with the First Appellate Authority, where there was no representation on behalf of the assessee. As stated by the Ld. Counsel for the assessee, the reason for non-representation on behalf of the assessee was that the assessee has not received the requisite notice of hearing as issued by the Ld. CIT(A). Considering the material available on record and the submissions made at Bar, we are of the considered view that the assessee ought to have been given adequate opportunity for representing its case effectively. We, therefore, to sub-serve the principles of natural justice do hereby set aside the impugned order and restore the issue to the file of the Assessing Authority to decide it afresh. The assessee is directed to approach the Assessing Officer and file the requisite evidences in support of its claim relating to non-deduction of tax. Grounds raised in this appeal are allowed for statistical purposes.
7. Now, coming to the assesse’s appeal in pertaining to the A.Y. 2012-13, the assessee is aggrieved by this order of the Ld. CIT(A)/National Faceless Appeal Centre (NFAC), Delhi dated 14.02.2025 challenging the same by raising the following grounds of appeal: -
“1. That the Ld. CIT(A) erred both on the facts and in law of the case, in upholding, the penalty order passed under section 271(1\6) dated 01.02.2022 which is not in accordance to the law and deserves to be quashed.
2. That the Ld. CIT(A) erred in law in confirming the impugned penalty imposed by the Ld. AO for Rs. 18,81,859/being not in accordance to the provisions of Section 271(1)(c) deserves to be deleted.
3. That the Ld. CIT(A) erred in law in confirming the impugned penalty imposed by the Ld. AO on account of alleged accrued interest income which is entirely based on incorrect fact and entirely based on mere surmises and conjectures.
4. That on merits, in view of-the facts and circumstances and in law, no penalty ws 271(1)(c) is leviable by the Ld. AO thus, the impugned order levying penalty of Rs. 18,81,859/- @ 100% of the tax sought to be evaded deserves to be quashed. 5. That each ground is independent and without prejudice to each other and requires separate adjudication. 6. That the assessee prays for leave to add, amend or vary any ground either before or at the time of hearing of appeal.” 8. At the outset, Ld. Counsel for the assessee submitted that no reasonable opportunity was granted by the lower authorities and the issue is squarely covered in favour of the assessee. On the other hand, the Departmental Representative for the Revenue opposed the submissions and supported the orders of the lower authorities.
We have heard the Ld. Representatives of the parties and perused the material available on record. It is seen from the record that the impugned penalty has been levied on account of failure of the assessee for filing the explanation before the Assessing Authority as well as before the Ld. Addl. CIT(A). It is the case of the assessee that the issue is squarely covered in favour of the assessee. However, these submissions were not raised before lower authorities. We, therefore, to sub-serve the interest of principles of natural justice do hereby set aside the impugned order of the Ld. Addl. CIT(A) and restore the issue of levy of penalty to the file of the Assessing Authority for re- considering the submissions of the assessee and decide the issue afresh. Grounds raised in this appeal are allowed for statistical purpose.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order was pronounced in open court on 30/09/2025