MOHIT GARG,NEW DELHI vs. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 16, NEW DELHI, NEW DELHI

I.T.A.Nos.2570 & 2571/Del/2023 adjudication after affording reasonable opportunity of hearing to the assessee in accordance with law observing as under:

“2. Shri Salil Kapoor, appearing on behalf of the assessee submitted that the assessee could not appear before the Assessing Officer and the CIT(A) on account of medical exigency. The assessee is suffering from blood cancer and was under treatment when penalty proceedings were initiated against the assessee. The Ld. Counsel pointed that the assessee has furnished an affidavit citing reasons for no- appearance before the Lower Authorities. The said affidavit is accompanied by medical records of the assessee. He further, stated that the assessee has prima facie good case in his favour on merits, if these appeals are restored to the file of Assessing Officer, the assessee would make submissions on merits before the AO.

3. Per contra, Shri S.L. Verma representing the Department vehemently defending the impugned orders stated that quantum appeals of the assessee have been decided by the Tribunal upholding the additions, therefore, no useful purpose would be served for restoring these penalty appeals to the AO. Thus, he prayed for dismissing both the appeals of the assessee.

4. We have heard the submissions made by rival sides, these two appeals are against ex-parte orders passed by the First Appellate Authority confirming levy of penalty u/s. 271 (l)(c) of the Act in AY 2016-17 and u/s. 271 AAB of the Act in AY 2017-18, respectively. The Id. Counsel for the assesseee pointed that the assessee is a cancer patient and hence, could neither defend his case before the Assessing Officer nor before the CIT(A). The assessee has filed an affidavit alongwith medical treatment records to substantiate that assessee was undergoing treatment for blood cancer. The Id. DR has asserted that the Tribunal has upheld quantum additions arising out of assessment proceedings in the respective assessment years, therefore, penalty should be upheld. It is a well settled law that assessment proceedings and penalty

I.T.A.Nos.2570 & 2571/Del/2023 proceedings are distinct and independent. [Re. CIT vs. Khoday Eswarsa & Sons, 83 ITR 369 (SC) and CIT vs. Aretic Investment (P.) Ltd., 190 Taxman 157 (Delhi)]. Hence, penalty proceedings have to be adjudicated separately. Merely, for the reason that quantum addition has been upheld would not mean that levy of penalty u/s. 271(1)(c) of the Act is automatic. Taking into consideration entire facts of the case, without commenting on merits, we deem it appropriate to restore these appeals back to the file of AO for fresh adjudication after affording reasonable opportunity of hearing/ make submissions to the assessee, in accordance with law. The assessee is directed to make submissions before the AO on service of notice. If, the assessee fails to respond to the notice served by the AO, the Assessing Officer shall be at liberty to proceed ex- parte and conclude penalty proceeding, in accordance with law.”