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Facts
The appellant's appeal was directed against the order of the NFAC/CIT(A) for AY 2015-16. The appellant contended that the penalty proceedings were initiated without specifying the reasons, making the notice vague and void ab initio. Furthermore, the penalty amount was imposed on an addition that was subsequently reduced, rendering the penalty order uncalled for.
Held
The Tribunal found that the CIT(A) had passed an ex-parte order despite the appellant not substantiating their grounds of appeal, due to non-compliance with notices. However, considering that tax laws are welfare legislation and the possibility of circumstances beyond the assessee's control, the Tribunal decided to restore the matter to the CIT(A) for a fresh decision.
Key Issues
Whether the penalty proceedings were validly initiated and if the penalty imposed is justified, considering the subsequent reduction in the assessed addition and the principles of natural justice.
Sections Cited
271(1)(c), 274
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Income Tax Appellate Tribunal, RANCHI BENCH, RANCHI
Before: SHRI GEORGE MATHAN & SHRI RATNESH NANDAN SAHAY
Assessee represented by Shri Devesh Poddar, Adv. Department represented by Shri Khubchand T. Pandya, Sr.DR Date of hearing 27/03/2025 Date of pronouncement 27/03/2025 O R D E R PER: BENCH 1. This appeal by the appellant is directed against the order of National Faceless Appeal Centre, Delhi (NFAC)/ learned Commissioner of Income Tax (Appeals), [in short, the ld. CIT(A)] dated 13/12/2022 for the Assessment Year (AY) 2015- 16. In this appeal, the appellant has raised following grounds of appeal:
1. For that the initiation of penalty proceedings vide notice dated 19/12/2017 is bad in law to the extent that the relevant portion or the reasons for initiation of penalty has not been specified. Notice issued U/s 274 read with section 271 is vague and as such, initiation of proceedings is ab initio void.
2. For that the penalty of ₹ 4,07,070/- has been imposed against the total addition made for ₹ 13,17,380/- which was made during the assessment proceedings, however, the fact remains that the addition made stands reduced to ₹ 1,50,000/- in total and as such, the impugned penalty order is uncalled for.
3. For that the Hon'ble ITAT vide its order dated 03/03/2020 has estimated the addition of ₹ 1,50,000/- as against ₹ 13,17,380/- which was made during the assessment proceedings on which the AO has imposed this impugned penalty. Anyhow, as the case may be, since the income has been modified, this penalty order is bad in law.
4. For that in any view of the case, since now the addition made/income assessed stands to be completed on estimate basis no penalty U/s 271(1)(c) is called for.
5. For that the other grounds in detail shall be argued at the time of hearing."
Jitendra Singh Vs DCIT/ACIT 2. At the outset of hearing, the learned Authorised Representative (ld. AR) of the appellant submits that the Assessing Officer, while passing the assessment order, made addition of ₹ 11,32,165/- on account of unexplained creditors, ₹ 1,85,215/- as bogus expenses. Penalty proceedings were initiated under Section 271(1)(c) of the Act for concealment of income or furnishing inaccurate particulars of income. However, on appeal before the ld. CIT(A), the appellant could not make any compliance due to unavoidable reasons and thus, the assessee prayed to give one more opportunity to explain and the matter may be restored back to the file of ld. CIT(A). No proper and reasonable opportunities were provided to the assessee and the appeal of assessee was dismissed by passing ex parte order.
On the other hand, the learned Senior Departmental Representative (ld. Sr.DR) for the revenue supported the orders of the lower authorities and stated that sufficient opportunities have already been provided to the assessee as evident from the order of the ld. CIT(A) in para 7 of his order. Thus, the assessee does not deserve any leniency and penalty imposed by the Assessing Officer may be upheld.
We have considered the submissions of both the parties. We have also gone through the orders of the lower authorities carefully. We find that the ld. CIT(A) has passed ex parte order as the assessee did not substantiate the various grounds of appeals raised before ld. CIT(A) despite the fact that several notices were issued and served on the assessee. Though, it is a fact that there was no compliance on the part of the appellant, the facts remain that the income tax laws are within the ambit of welfare legislation which are absolutely separate from penal legislation and therefore, given the facts and 2