Loading judgment…
Facts
The appellant-company did not have business activity for several years due to management disputes and did not file income tax returns. For AY 2017-18, interest income was detected from Form 26AS, and assessment was completed under Section 147. Penalty proceedings under Section 270A were initiated, and a penalty was levied.
Held
The Tribunal noted that the appellant had requested a personal hearing from the CIT(A) but it was not granted, which violated the principles of natural justice under the Faceless Assessment Scheme. The ITAT set aside the CIT(A)'s order and directed it to decide the appeal afresh after granting a personal hearing.
Key Issues
Whether the CIT(A) erred in dismissing the appeal without granting a personal hearing to the appellant despite a specific request, given the management deadlock and circumstances.
Sections Cited
270A, 143(3), 147
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, F BENCH, MUMBAI
IN THE INCOME TAX APPELLATE TRIBUNAL "F" BENCH, MUMBAI SHRI OM PRAKASH KANT, ACCOUNTANT MEMBER SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER Jayant Metal Mfg Co. Pvt. Ltd., 16, Sayani Road, Mumbai – 400025 [PAN: AAACJ1152B] …………. Appellant Vs Deputy Commissioner of Income Tax, Circle 6(1)(2), Mumbai, …………. Aayakar Bhavan, Maharishi Karve Road, Respondent Mumbai - 400020 Appearance For the Appellant/Assessee : Shri Ketan Vajani For the Respondent/Department : Ms. Rajeshwari Menon Date Conclusion of hearing : 25.04.2024 Pronouncement of order : 29.04.2024 O R D E R Per Rahul Chaudhary, Judicial Member: 1. By way of the present appeal the Appellant has challenged the order, dated 01/11/2023, passed by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [hereinafter referred to as ‘the CIT(A)’] for the Assessment Year 2017-18, whereby the Ld. CIT(A) had dismissed the appeal of the Assessee against the Penalty Order, dated 19/09/2022, passed under Section 270A of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’).
The Appellant has raised following grounds of appeal:
“1. On the facts and under the circumstances of the case and in law the Ld. Commissioner of Income Tax (Appeals) has Assessment Year 2017-18 erred in confirming the penalty of Rs. 18,85,195/- levied by the ld. AO under section 270A of the Act without accepting the explanation of the appellant. He ought to have deleted the penalty levied by the ld. A.O.
2. On the facts and under the circumstances of the case and in law the Ld. Commissioner of Income Tax (Appeals) has erred in confirming the penalty ignoring the fact that the impugned penalty order was passed in gross violation of principle of natural justice as no personal hearing was allowed either by the ld. A.O. or by the Ld. Commissioner of Income Tax (Appeals) despite request being made by the Appellant.
3. The Appellant craves leave to alter, amend, modify or substitute any ground/grounds and to add any new ground or grounds on or before the appeal is disposed off.”
The relevant facts in brief are that Appellant-company did not have any business activity for last many several years due to deadlock in management arising from disputes between the two shareholder directors. For many years the Appellant-company did not file return of income. However, the income from Assessment Year 2011-12 to Assessment Year 2014-15 was declared under Income Declaration Scheme (IDS), 2016 and taxes were paid accordingly.
It was stated that for the previous year relevant to the Assessment Year 2017-18, the Appellant-company had earned interest income. No return of income was filed by the Appellant- company for the relevant assessment year and assessment under Section 143(3) read with Section 147 of the Act was completed on the basis of interest of INR 1,14,03,652/- reflected in Form 26AS. Penalty proceedings were also directed to be initiated under Section 270A of the Act. Subsequently, penalty under Section 270A of the Act was levied on the Appellant vide order, dated 19/09/2022. The Appellant preferred appeal before 2 Assessment Year 2017-18 CIT(A) challenging levy of penalty. Vide order dated 01/11/2023, the CIT(A) dismissed the appeal. Therefore, the Appellant is now in appeal before us against the order of CIT(A) on the grounds reproduced in paragraph 2 above.
When the appeal was taken up for hearing, the Ld. Authorised Representative for the Appellant advanced submission on Ground No. 2 raised in the present appeal and submitted that the order passed by the CIT(A) was bad in law as personal hearing was not granted to the Appellant by the CIT(A) despite specific request. It was submitted that in the present case where there was deadlock in the management, the Appellant should have been granted to explain the prevailing circumstances and make out a case for non-levy of penalty in personal hearing. It was submitted that once request for personal hearing was made the CIT(A) was required to grant the same. Per contra, the Learned Departmental Representative submitted that the Appellant has not been prejudiced in any manner and the CIT(A) has dismissed the appeal after taking into consideration the submission filed before the CIT(A). Therefore, the Ground No. 2 raised by the Appellant should be rejected.
We have considered the rival submissions recorded hereinabove and perused the material on record. The averments made by the Appellant regarding the subsisting dispute between the shareholder-directors of the Appellant-company stands corroborated by the orders passed the Hon’ble Bombay High Court placed at page 30 to 38 of the paper-book 2 filed by the Appellant. Further, the copy of the letters/submissions dated 09/03/2022, 10/08/2022 and 10/10/2023 show that the Appellant had requested for opportunity of being heard and personal hearing from CIT(A). Admittedly, no personal hearing 3 Assessment Year 2017-18 was granted to the Appellant. Under Rule 12 of the applicable Faceless Assessment Scheme, 2021 personal hearing is to be granted in case so requested by the Appellant. We note that the CIT(A) has failed to grant personal hearing despite specific respect having been made by the Appellant. Accordingly, the order dated 01/11/2023, passed by the CIT(A) is set aside with the directions to the CIT(A) to decide the appeal afresh after granting the Appellant personal hearing as per law. Thus, Ground No. 2 raised by the Appellant is allowed while Ground No. 1 and 3 are dismissed as being infructuous.
In result, the appeal preferred by the Assessee is allowed for statistical purposes.